This article first appeared on GuruFocus.

Adjusted Like-for-Like Growth: 6.5% for the first half of 2026, accelerating from 4.9% in the second half of 2025.

Gross Margin: 74.8%, an increase of 10 basis points.

Operating Margin: Record 21.3%, up 20 basis points.

Operating Net Cash Flow: Over EUR3 billion, up 13.9%.

Sales Growth: Increased by 5.8% on a reported basis; 8.6% excluding the impact of exchange rates.

Foreign Exchange Impact: Negative 2.8% impact on sales.

Scope of Consolidation Impact: Contributed 1.8% to sales growth.

E-commerce Growth: Grew by 18%, reaching EUR7.4 billion in sales.

Advertising and Promotional Expenses: EUR8 billion, or 32.6% of sales, a 70 basis point increase.

Operating Profit: Increased by 6.8% to EUR5 billion.

Net Profit (excluding non-recurring items): EUR4 billion.

Diluted Earnings Per Share: EUR7.40, up 4.8% year-on-year.

Net Profit (attributable to owners): EUR3.5 billion, an increase of 5.3% year-on-year.

Gross Cash Flow: EUR4.8 billion, up 9.7%.

Capital Expenditures: EUR760 million, or 3% of sales.

Net Debt: EUR12.7 billion at the end of June.

Professional Products Division Growth: Adjusted like-for-like growth of 11.6%.

Consumer Products Division Growth: Adjusted like-for-like growth of 4.3%.

Luxe Division Growth: Adjusted like-for-like growth of 5.1%.

Dermatological Beauty Division Growth: Adjusted like-for-like growth of 10.6%.

Europe Region Growth: Adjusted like-for-like growth of 6.1%.

North America Region Growth: Adjusted like-for-like growth of 6.7%.

North Asia Region Growth: Sales grew 4.6% (6.1% without travel retail).

Emerging Markets Region Growth: Grew at close to 10%.

Hair Care Category Growth: 15.6%.

Fragrances Category Growth: 10.3%.

Skin Care Category Growth: 5.8%.

Hair Color Category Growth: 3.5%.

Makeup Category Growth: 2.5%.

Release Date: July 30, 2026

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

L’Oreal SA (LRLCF) delivered an excellent first half with adjusted like-for-like growth of 6.5%, accelerating from previous semesters.

The company achieved a record operating margin of 21.3%, up 20 basis points, driven by strong gross margin and cost control.

E-commerce grew 18%, nearly twice as fast as the market, reaching EUR7.4 billion in sales and gaining over 200 basis points in group weight.

Dermatological Beauty delivered a third consecutive quarter of double-digit growth at 10.6%, with strong contributions from CeraVe and La Roche-Posay.

The company is confident in the second-half outlook, with a strong innovation pipeline, skincare comeback, and expected recovery in North Asia and Travel Retail.

Negative Points

Foreign exchange had a negative 2.8% impact on sales due to euro appreciation against key currencies.

The Luxe division’s operating margin declined 20 basis points to 22.1%, partly due to the dilutive impact of consolidating Kering Beauty.

Makeup growth was penalized by service levels in the Americas, growing only 2.5%.

The IT transformation caused a slight adjustment to like-for-like growth, reducing it from 6.8% to 6.5%.

Non-recurring items amounted to a negative EUR430 million, including restructuring costs and product liability lawsuits.

Q & A Highlights

Q: Can you shed some light on L’Oreal’s winning playbook in Europe, particularly regarding online growth and the sustainability of the 6% like-for-like growth rate? Also, can you unpack the strong performance in Greater China, including the 618 event and the outlook for the second half?A: (Nicolas Hieronimus, CEO) In Europe, the market remains dynamic, growing mid-single-digits, and we are outperforming across all divisions. This is driven by a mix of strong categories like hair care and fragrances, a significant acceleration in e-commerce (especially on Amazon), and organizational transformations like clustering countries and implementing new ERPs, which have freed up resources to fuel brands. We intend to keep this pace. In Greater China, the market is stabilizing at around 2% growth, but there’s a shift back to premium segments (luxury and derma beauty growing ~7%), which plays to our strengths. We outperformed the market during the 618 festival, maintaining our number one positions. We are confident in a continuation of this trend in the second half, supported by improving consumer confidence.

Q: On skincare, can you provide more granularity on the performance across divisions, particularly the role of Medicaid and its potential to replicate the success of CeraVe? Also, on A&P and SG&A, should the reduction in SG&A be viewed as structural, and is the A&P increase primarily driven by mix?A: (Nicolas Hieronimus, CEO & Christophe Babule, CFO) Skincare is back to mid-single-digit growth, above the market. LDB (Dermatological Beauty) is very strong, led by CeraVe in the mid-teens. Lux is improving, boosted by China and brands like Medicaid, which is growing close to 50% but is still relatively small. CPD (Consumer Products) is slightly behind. Medicaid is a more selective, premium-derma brand compared to the mass-medical CeraVe, but we have high ambitions for it in the US with Sephora. On the P&L, the 70 bps reduction in SG&A is structural, driven by IT transformation and AI, and we expect 20-30 bps improvement annually. The 70 bps increase in A&P was a deliberate decision to fuel strong innovations and new brands, funded by top-line growth and SG&A control. It doesn’t mean this level is permanent.

Q: On the Sapmena (South Asia Pacific, Middle East, Africa, North America) region, can you talk about the sustainability of this growth, the potential size of the region, and the acquisition of Innovist in India? Also, on the Gucci license, what are the priorities and how does it compare to YSL?A: (Nicolas Hieronimus, CEO & Christophe Babule, CFO) Sapmena is a clear priority for growth, where most new consumers will come from. Our market share is around 12-13%, well below our global average, so there is significant headroom. E-commerce is a key driver, and we are getting better at platforms like TikTok Shop. The region is not massively dilutive to group profits. On Innovist, it brings two interesting brands (skincare and hair care) and a strong e-commerce platform in India, which is a key learning opportunity. The multiple is decent compared to the expensive Indian M&A market. On Gucci, we are super ambitious. The brand has the potential to be a multi-billion euro beauty brand. We will start working on the transition in September, with first products expected in 2028. It will take time, similar to our successful track record with Prada and Valentino.

Q: Can you provide more detail on the organizational changes with clusters in Europe and how they have driven improvement? Also, can you give an update on the Sanofi stake?A: (Nicolas Hieronimus, CEO & Christophe Babule, CFO) Over the last five years, we have doubled down on clustering in Europe (e.g., Nordics, UK/Ireland, Germany/Austria/Switzerland). This has created one P&L per cluster, reducing high-level management and freeing up resources to focus on the consumer and customer. Combined with a common ERP, this has created significant synergies and cost savings, making us more agile and effective. On the Sanofi stake, it remains a financial asset. It brings in ~365 million in dividends (net of taxes). We have no need to convert it into cash right now, as our balance sheet is strong and leverage will be well below 1x by year-end 2026.

Q: On the market growth acceleration, where is it happening, and what are your expectations for the second half, particularly in North America? Also, can you explain the dilution impact from the Kering Beauty acquisition and provide guidance on tax and net financial charges?A: (Nicolas Hieronimus, CEO & Christophe Babule, CFO) The market growth for the first half was around 4.5%, with all regions contributing. North America accelerated to mid-single-digits, driven by hair care. We see the second half as a continuation of Q2’s pace, not another acceleration. On Kering Beauty, for the full year 2026, it will be slightly dilutive to group REX (around 10 bps) and slightly negative to EPS. We expect it to return to small EPS growth in 2027. On financial charges, we project around 40 million for the full year 2026. The tax rate will be slightly above last year due to geographic mix and exceptional French taxes.

Q: On the outlook, you previously used the word “optimistic” and now use “confident.” Is there a change in meaning? Also, on the model, when you get an extra 1% volume, what sort of margin do you expect to earn on that volume?A: (Nicolas Hieronimus, CEO & Christophe Babule, CFO) The change in wording is simply a reflection of having six months of results in hand. We start the year optimistic, become confident after the first half, and hope to be happy at year-end. On volume leverage, the cost of goods is a small part of our P&L (gross margin is ~75%). Therefore, an extra 1% volume has a marginal benefit on factory added value but is not critical to the group’s margin. Many other factors are more important.

Q: Can you provide the volume component of growth for Q1 and Q2? Also, with the adoption of LLMs (Large Language Models), do you think this will stop indie beauty brands from taking share?AFor the complete transcript of the earnings call, please refer to the full earnings call transcript.