The Cosmetics/Toiletries business sector is active both in the branded consumer goods segments of hair cosmetics, body care, skin care and oral care, and in the professional hair salon business. Our intention is to further expand the brands business on a regional basis with the emphasis on developing our strong market positions in Western and Eastern Europe and North America, accompanied by specifically focused activities in Asia. Further growth in Eastern Europe is to be achieved primarily through organic expansion derived from the broad base that we have now established. And we will be resolutely pursuing the globalization strategy of our hair salon business.

We intend to achieve growth primarily through the organic expansion of our businesses, and especially through the development and rapid commercialization of innovative products. We will continue looking at appropriate acquisitions to supplement our organic growth strategy in both our branded consumer goods and our professional businesses.

As proponents of the active portfolio management approach, we also regularly scrutinize our businesses, disposing of non-strategic marginal activities as appropriate. One such was our fine fragrance business Morris Profumi S.p.A. of Italy, a non-core operation which we divested as of March 30, 2007.

At the same time, we are focusing on the international expansion of our core branded consumer goods businesses hair cosmetics, body care, oral and skin care. The emphasis in our hair cosmetics strategy is on further developing our leading umbrella brand Schwarzkopf and driving consumer-led innovation in the core product categories of colorants, hair care and styling. In our body care business, we intend to build on the momentum generated by the latest market successes achieved in Europe through our innovation offensive; in North America we are concentrating on the expansion of our core brand Dial and the Right Guard brands portfolio acquired in 2006. In growing our successful skin care brand Diadermine, we will be concentrating on Europe, as we will in the further development of our oral care business. Our hair salon business, currently the number three in the world, is to be further strengthened with product innovations. Here we also want to develop new regional potential on a selective basis.

Our strategy of expanding and further strengthening our core businesses and key competences is aligned to the objective of achieving further, continuous improvements in profitability.