L’Oréal CEO Nicolas Hieronimus has weighed in on the impact of US President Donald Trump’s trade tariffs, which had been due to kick in from today (August 1).
Speaking on a call with investors about the French beauty giant’s second quarter financial results, Hieronimus said the company has stockpiled inventory but could consider raising prices to mitigate the impact.
The EU, where L’Oréal is headquartered, and the US agreed a deal this week to cap tariffs at 15%.
Trump today announced a last minute extension of today’s implementation deadline, and new tariffs for some countries, throwing markets into chaos.
“I cannot give you a definite number for the impact tariffs will have on our margins since we are still missing certain elements,” Hieronimus said.
“What I can tell you, however, is that it will be manageable.
“Our 36 factories and more than 150 distribution centers around the world give us significant flexibility as most of the units we sell are manufactured where we sell them.
“The one exception are luxury fragrances, which are made in Europe.
"We have ensured that we have built sufficient inventory and we consider raising prices to offset at least part of the tariff impact.”
Beyond the current year, the company, which owns brands such as CeraVe and Maybelline, is “waiting for the dust to settle”.
Short term, it is manageable in the P&L this year,” Hieronimus continued.
“If we look mid-term, I think we are really waiting for, if I can use that expression, for the dust to settle, because there are other bilateral discussions that are happening between the US and Mexico, the US and Canada, [and] the US and Brazil.
“So we are waiting to have the clear picture to see whether we need to make any production moves from here to there, a few other mitigations like we can do first sales in products that are exported to France, which reduces the base for tariff applications.
“So there are several mitigations being studied, and we’ll see when they are done.”
In Trump’s latest update on tariffs, the White House said Canada faces a 35% levy, and Brazil’s 10% tariffs are at risk of being increased to 50%.
Hieronimus added that he would continue to lobby the EU Commission to negotiate some exemptions for cosmetics.
In March, he joined other beauty giants, including Beiersdorf, Puig and Givaudan, in warning the EU against including the industry in retaliatory trade tariffs against the US.
In the investor call, L’Oréal CFO Christophe Babul added that the company had already put plans in place to mitigate the impact of tariffs on margins in the second half, but is looking at what can be done longer term.
He said: “We, first, have now much more visibility on what will be the second half, maybe to give a little bit more colour on what could be the impact.
"When Nicolas says the situation is manageable, it means that the impact could be less than 40 basis points as of today.
“Second, as you know, we’ve been building a little bit of stock there to mitigate the impact on the second half.
“So this, of course, is helping. And obviously, there are some divisions that have been already planning for tariff increases in the second half and this also will help on the P&L of this year.
“What is important is already to foresee what will be the impact on 2026.
“And here, I have to say that we have different initiatives, mainly in operations to see on some categories.
“We’re thinking in the perfume, for example, what can be done to mitigate those tariffs on the long term.”
L’Oréal reported an uptick in sales in Q2 but narrowly missed analyst expectations for the quarter.
Like-for-like sales increased 2.4% to €10.74bn, bolstered by fragrance and hair care within its Professional Products and Consumer channels.
LVMH Chairman and CEO Bernard Arnault this week welcomed an agreement between the EU and the US on trade tariffs amid criticism by some EU leaders.
Many big names have or plan to hike prices for customers to mitigate rising costs.