3.94 BILLION EUROS, UP BY + 11.3%
SIGNIFICANT REBOUND IN WESTERN EUROPE
RAPID GROWTH IN NEW MARKETS

The sales of the L'Oréal group, at March 31st 2006, amounted to 3.938 billion euros, an increase of + 11.3%.
Like-for-like, i.e. based on a comparable structure and identical exchange rates, the increase in the group's sales was + 6.0%.
The net impact of changes in consolidation, mainly as a result of the acquisition of SkinCeuticals in June 2005 and Delial in August 2005, amounted to + 0.5%. Growth excluding exchange rate impact was + 6.5%.
Currency fluctuations had a positive impact of + 4.8%.

Commenting on the figures, Sir Lindsay Owen-Jones, Chairman and Chief Executive Officer of L'Oréal, said: "It is important to emphasise, as we do every year at this time, that the significance of the growth rate for a single quarter is limited. Nonetheless, this promising start to the year, and the prospect of positive exchange rate effects, mean that we can be confident about the outlook for 2006".

Cosmetics sales growth by operational division and geographic zone

1st quarter 2006 1st quarter 2006 1st quarter 2006
  €m Growth like-for-like Growth reported
By operational division
Professional Products 522.9 +0.6% +4.8%
Consumer Products 2,061.4 +6.1% +10.7%
Luxury Products 903.4 +6.5% +13.0%
Active Cosmetics 359.2 +14.0% +19.8%
Cosmetics total 3,872.2 +6.0% +11.2%
       
By geographic zone
Western Europe 1,849.4 +4.2% +4.5%
North America 1,013.9 +2.9% +13.5%
Rest of the World. of which: 1,008.9 +13.0% +23.2%
- Asia 388.0 +6.4% +15.3%
- Latin America 224.4 +18.1% +39.6%
- Eastern Europe 214.4 +28.8% +35.1%
- Other Countries 182.1 +6.1% +11.5%
Cosmetics total 3,872.2 +6.0% +11.2%
Dermatology (1) 66.1 +7.5% +15.1%
Group total 3,938.3 +6.0% +11.3%
(1) Group share, i.e. 50%

Sales trends by cosmetics division were as follows:

The Professional Products Division recorded a like-for-like growth rate of + 0.6%, and + 4.8% based on reported figures, with good scores in Western Europe, strong expansion in the Rest of the World, and a dip in North America. Activity in the United States was affected by a substantial inventory reduction in professional distribution to hair salons, because of higher interest rates and following a plan to merge the two main distributors. Excluding the United States, the division's like-for-like growth amounted to + 6.0%.
L'Oréal Professionnel benefited again from the success of Richesse - Hi Richesse hair colourant and from the launch of the new haircare product Série Expert Sensi Balance. Kérastase continued the launch of the Volume Active line. Redken launched Blonde Glam haircare products in the US and a new hair colourant, Shimmer One. Matrix relaunched its Vavoom styling range and continued the global roll-out of the new Biolage line.

The Consumer Products Division achieved a like-for-like growth rate of +6.1% and + 10.7% based on reported figures, reflecting an acceleration in Western Europe, with growth rates maintained in North America and the Rest of the World. All the Division's brands contributed to this advance. L'Oréal Paris strengthened its positions with Elsève in the haircare segment, with Collagen Filler in facial skincare, and Infaillible foundation in make-up. Garnier sales increased sharply in hair colourants with Nutrisse and Color Naturals and in facial skincare with Ultralift and Nutritionist. Maybelline turned in very good quarterly figures, with successful launches for Superstay lipstick and Lash Stylist mascara.

The sales of the Luxury Products Division grew by + 6.5% like-for-like, and by + 13% based on reported figures. Sales were bolstered by the success of launches in the fourth quarter of 2005, including Platinéum skincare and Hypnôse fragrance by Lancôme, and Polo Black by Ralph Lauren.
Furthermore, the launch of High Résolution Collaser (Lancôme), Biofirm Lift (Biotherm) and Life Pearl Cellular (Helena Rubinstein) enabled the Division to improve its skincare product positions in the first quarter. Lastly, initial consumer reaction to the new perfume Code Donna from Giorgio Armani, launched in Europe in March, is also promising.

Active Cosmetics is continuing to achieve strong like-for-like growth at + 14%, and + 19.8% based on reported figures.
This growth across all zones reflects the success of launches and revamps, such as Lift-Activ Pro anti-wrinkle firmness skincare from Vichy, and Redermic, the first anti-wrinkle skincare product from La Roche-Posay. Innéov also achieved strong sales growth.

Significant rebound in Western Europe

With like-for-like growth of + 4.2%, Western Europe confirmed the return to growth seen in the fourth quarter of 2005.
There were solid growth rates for Professional Products, particularly in hair colourants and haircare. Sales trends for the American brands Redken, Matrix and Mizani were extremely dynamic.
Consumer Products made a good start to the year, returning to growth both in Germany and France. Strong sales of high-value-added products and successful launches in buoyant segments strengthened the positions of Elsève in haircare and L’Oréal Dermoexpertise in skincare. Collagen Filler and Revitalift from L’Oréal Paris and Ultralift by Garnier performed particularly well.
The Luxury Products Division achieved strong growth thanks to the success of products launched in the last quarter of 2005, particularly in skincare and perfumes.
Active Cosmetics sales are continuing to grow strongly.

North America: Good prospects for the year.

In North America, like-for-like sales growth amounted to + 2.9%, held back by the merger between the two main luxury department store chains, and by the sharp inventory reduction in professional distribution to hair salons.
Despite this difficulty, growth in hair salon sell-through was positive thanks to successes in hair colourants, haircare and styling, and to the continuing very rapid growth of Kérastase sales in the top American salons.
Excluding the Professional Products Division, like-for-like sales growth was + 5.6%.

Growth was particularly strong at the Consumer Products Division. Maybelline set a new market share record thanks to its successful launches; Fructis from Garnier confirmed its breakthrough with strong growth in shampoos, conditioners and styling. L’Oréal Paris successfully launched two major innovative products: Natural Match in hair colourants and the HIP line in make-up.
Lastly, at the Luxury Products Division, the start of the year saw the launch of the women's fragrance Hypnôse from Lancôme, which became the market leader within a few weeks, and the remarkable growth rate of Lancôme in skincare with Collaser.

Rapid like-for-like growth in new markets: + 13%

Like-for-like growth in the Asia zone amounted to + 6.4%, and + 15.3% based on reported figures, driven by China and Indonesia. South Korea confirmed its return to growth.
Professional Products took advantage of the roll-out of Matrix and the dynamism of the professional channel in Japan. Sales of Consumer Products were boosted by the success of Revitalift White skincare and True Match foundation from L’Oréal Paris. Unstoppable mascara from Maybelline was very well received by customers. Luxury Products sales were bolstered by the brands Kiehl’s and Biotherm, and by Lancôme, with the success of Blanc expert. Lastly, Active Cosmetics recorded very strong growth.

Growth in the Latin America zone increased by + 18.1% like-for-like. This figure reflects positive growth in all the countries, particularly in Brazil, Argentina and Venezuela.
Professional Products took advantage of the successful launch of Platinium lightening paste and the growth of Redken.
Consumer Products sales continued to grow with the success of Nutrisse, the number one brand in the hair colourant market, and the promising launches of Nutrigloss by Elsève and Chemiresist by Fructis.
At Luxury Products, Biotherm, and the new perfumes from Giorgio Armani and Ralph Lauren, are strengthening the leadership of the Division in this zone.
Active Cosmetics achieved strong growth in all the major countries.

Sales in Eastern Europe, with like-for-like growth of + 28.8%, were again very strong in all divisions, boosted by major product successes such as Volume Shocking mascara, Infaillible foundation and Elsève Nutri Gloss shampoo from L’Oréal Paris, and Lift Activ Pro skincare from Vichy. Matrix is continuing its rapid expansion.
Meanwhile, the growth of our major luxury brands is continuing.

In the Other Countries, like-for-like sales growth was +6.1%, reflecting very strong sales growth, particularly in India and Turkey. "This news release does not constitute an offer to sell, or a solicitation of an offer to buy, L’Oréal shares. If you wish to obtain more comprehensive information about L’Oréal, please refer to the public documents registered in France with the Autorité des Marchés Financiers.
This news release may contain some forward-looking statements. Although the Company considers that these statements are based on reasonable hypotheses at the date of publication of this release, they are by their nature subject to risks and uncertainties which could cause actual results to differ materially from those indicated or projected in these statements."

Contacts at L'OREAL

Individual shareholders and market authorities
Mr Jean-Régis CAROF
Tel. : +33.1.47.56.83.02
http://www.loreal-finance.com

Financial analysts and institutional investors
Mrs Caroline MILLOT
Tel. : +33.1.47.56.86.82
Fax : +33.1.47.56.80.02

Journalists
Mr Mike RUMSBY
Tel. : +33.1.47.56.76.71
http://www.loreal.com

15/05/06 : Pre-tax Consolidated sales of the L'Oréal group at end-march 2006 (B.A.L.O. 15.05.06) (french)