L’Oreal CEO Braces for a ‘Chaotic’ Year as Political Risks LoomGeraldine Amiel and Caroline Connan
Agon says it’s too soon to see any Trump effect on business
French withdrawal from euro bloc would be ‘very bad’
L’Oreal SA is finding long-term planning more difficult amid a “chaotic” political environment, said Chief Executive Officer Jean-Paul Agon.
France remains a tough market at a time the country is engulfed in one of its most uncertain presidential elections, the CEO said after the cosmetics company reported reported full-year earnings that met analysts’ estimates and announced a share buyback. Far-right presidential candidate Marine Le Pen has pledged to take France out of the euro zone, and the U.K. is negotiating its exit from the European Union.
“The world is so unpredictable now that it’s very difficult now to plan for the very long term,” Agon said Friday in an interview with Bloomberg Television. “L’Oreal is flexible so we can adapt to the evolution of the world, which is very important in times like now.”
A French exit from the euro currency bloc “would be really bad,” he said. Yet Brexit so far has provided a favorable environment for L’Oreal sales in the U.K., he said, thanks to the weakening of the pound which has brought more tourists to the country.
“This year will be chaotic,” he said. “Last year I said the world was becoming ‘VUCA’ -- volatile, uncertain, complex, ambiguous. It’s getting more and more VUCA.”
One uncertainty lies with the new U.S. administration under President Donald Trump and potential threats to rein in imports. The U.S. accounts for 27 percent of L’Oreal’s sales, making it by far the company’s No. 1 market, Agon said.
"It depends what kind of protectionism it is,” he said. “But we’ve always had the policy of manufacturing where we sell. We manufacture in the U.S. for our U.S. consumer, in China for the Chinese consumer. So most of what we sell in the U.S. is made in the U.S. "