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L’Oréal is a long-term portfolio holding in Global Portfolio Trust. It illustrates the global demand for consumer beauty products and the importance of corporate sustainability. L’Oréal is a household name and is the number one firm in global beauty products with the market leadership position it has achieved through strong product development and successful marketing.
Leadership in the e-commerce space allows Loreal to target key markets such as China and South-east Asia. This is a high margin channel and positive for the long-term revenue growth prospects. In fact, e-commerce now accounts for 50% of the company’s sales in China.
And although e-commerce is a competitive channel to market, we believe L’Oréal’s brand loyalty, ongoing marketing and digital capability are competitive advantages that should help to maintain its leadership position.
L’Oréal’s brand loyalty, ongoing marketing and digital capability are competitive advantages that should help to maintain its leadership position.
In the group’s retail travel segment, the Asia Pacific region accounts for 90% of revenue. L’Oréal has already built a strong presence in China’s Haitang Bay, the world largest Duty-Free shopping complex and will be expanding into the Haikou International Duty-Free City, opened in October 2022, which is twice the size of Haitang.
L’Oréal benefits from several of the long-term structural growth drivers in our megatrend framework, particularly those taking advantage of middle-class wealth and consumerism from the “Emerging Consumer” trend.
We judge L’Oréal to already be an industry leader in terms of its approach to sustainability – and it continues address tough challenges head on. The ‘L’Oréal for the future’ programme, launched in 2020, is an ambitious set of sustainability goals tackling environmental and social challenges with clear targets and measures.
We judge L’Oréal to already be an industry leader in terms of its approach to sustainability
On climate change, science-based targets are aligned with a 1.5-degree scenario, and it is committed to carbon neutrality across all its sites by 2025. It is clearly focused on its wider environmental footprint, banning raw materials linked to deforestation and by 2030 all bio-ingredients will be from traceable, sustainable sources, and 100% of sites will have a positive impact on biodiversity.
We have high conviction in this company and its growth potential.
The information provided should not be considered a recommendation to purchase or sell any particular security. It should not be assumed that any of the security transactions discussed here were or will prove to be, profitable.
Important Legal Information
This information is issued and approved by Franklin Templeton Investment Management Limited (FTIML). It does not constitute investment advice.
The information provided should not be considered a recommendation to purchase or sell any particular security. It should not be assumed that any of the security transactions discussed here were or will prove to be profitable. These opinions are not intended to be a forecast of future events, research, a guarantee of future results or investment advice.
Past performance is not a guide to future returns. The return may increase or decrease as a result of fluctuations in the markets, in currency and/or in the portfolio.
Market and currency movements may cause the capital value of shares, and the income from them, to fall as well as rise and you may get back less than you invested.
The analysis of Environmental, Social and Governance (ESG) factors form an important part of the investment process and helps inform investment decisions. The strategy does not necessarily target particular sustainability outcomes.
The opinions contained in this document are those of the named manager(s). They may not necessarily represent the views of other Martin Currie managers, strategies or funds.
Shares in investment trusts are traded on a stock market and the share price will fluctuate in accordance with supply and demand and may not reflect the value of underlying net asset value of the shares. The majority of charges will be deducted from the capital of the company. This will constrain capital growth of the company in order to maintain the income streams.