Beiersdorf AG (ETR:BEIG) (BEI.DE), the global skincare company, has reported outstanding results for the full year of 2023, with a record-high €9.5 billion in sales and a 10.8% increase in organic sales growth. The company's Consumer Business Segment was instrumental in driving this growth, showcasing a 12.5% organic increase.
Notably, the NIVEA brand achieved an impressive 16.2% organic growth, surpassing €5 billion in sales for the first time. The company's Derma business also performed exceptionally well with a 24% organic sales growth.
Despite facing challenges in 2023, luxury brands La Prairie and Chantecaille are expected to improve in 2024. Beiersdorf announced plans for a dividend increase and a share buyback program of up to €500 million. They also highlighted their success in achieving a gender-balanced leadership and their commitment to sustainability, aiming for net-zero emissions by 2045.
Key Takeaways
- Beiersdorf's full-year 2023 sales reached a record €9.5 billion with a 10.8% organic growth.
- NIVEA brand sales exceeded €5 billion, with a 16.2% organic growth.
- Derma business saw a 24% organic growth, driven by e-commerce and strong pricing.
- The company plans to propose a 43% dividend increase and launch a €500 million share buyback program.
- Beiersdorf achieved a 50:50 gender balance in leadership positions ahead of its 2025 target.
- The company is focusing on six growth drivers and expects continued profitable growth above market in 2024.
Company Outlook
- Beiersdorf anticipates mid-single digit organic sales growth in the Consumer Business Segment for 2024.
- Positive growth is expected for La Prairie and Chantecaille in 2024, with a stronger performance in the second half of the year.
- The company aims to expand into strategic markets, including the United States, Japan, and India.
- Plans are in place to launch new products in the field of skin rejuvenation and epigenetics in 2024.
Bearish Highlights
- Challenges were faced by luxury brands La Prairie and Chantecaille during 2023.
- NIVEA experienced a market share loss in Europe due to strong price increases.
- The anticipated boost from the holiday season and Double 11 in China did not materialize as expected.
Bullish Highlights
- Beiersdorf expects a rebound in growth in the second half of 2024, with an expansion of gross margins.
- The company has resolved issues with retailers, regaining market share for NIVEA in Europe.
- Beiersdorf's profitability in the Americas region is on the rise, driven by key brands.
Misses
- Slight growth is expected in Q1 and Q2 of 2024 due to inventory cleanup and historical impacts.
- The W630 launch in China is delayed until 2026, pending regulatory approval.
Q&A Highlights
- Beiersdorf is working on regulatory approvals for the launch of W630 and plans to start selling Chantecaille in China in August 2024.
- The company expects to negotiate reasonable price increases with retailers to counteract rising transportation and labor costs.
- Beiersdorf remains optimistic about the NIVEA and Derma businesses in Europe despite a lackluster holiday season.
In summary, Beiersdorf AG has demonstrated strong performance in 2023 and is laying the groundwork for continued growth and expansion in the coming year. The company's strategic focus on innovation, market expansion, and sustainability positions it favorably for future success.
Full transcript - None (BDRFF) Q4 2023:
Jens Geissler: Good morning to all of you. I would like to welcome you to Beiersdorf’s Full Year Analyst Meeting here in Hamburg. With me this morning is Beiersdorf’s CEO, Vincent Warnery; and our CFO, Astrid Hermann. We would like to share with you a review of last year as well as the outlook featuring our growth drivers to win and the guidance for the year 2024. Before we begin, just some technical comments. If you have come to this website via the link without registration, you will remain in listen-only mode. If you have registered for the Q&A, you can participate via video chat, if you wish. Okay. So we will start now, and I hand over to Vincent for the review of 2023.
Vincent Warnery: Thank you, Jens, and good morning from our Beiersdorf Campus in Hamburg. Welcome to our 2023 full year results conference call. Astrid and I now have the pleasure to not only guide you through our financial figures but also to share an update on our strategic plans for 2024 and beyond. Before we look into the future, let’s talk about our results in the fiscal year 2023. In short, they were outstanding. Yes, 2023 was challenging. It was intense. And macroeconomic volatility remained high throughout the year. But 2023 was also exciting. We were proactive and ultimately successful from start to finish. It was a proud year for our company, and we achieved a truly remarkable performance in 2023. We were the fastest-growing beauty company worldwide. We achieved a record high in sales for the group and especially our iconic NIVEA brand as well as our Derma business performed at an unprecedented level. We delivered on our promises and drove profitability. We reached a new all-time high with our share price. Our teams showed exceptional unity in light of the tough market conditions and together pushed our brands to new heights, thereby highlighting our robust and crisis-resistant business model. Fueled by this success, we, at the same time, invested significantly in the future viability of our company. All in all, 2023 was the best year in Beiersdorf’s history. I want to sincerely thank our teams for their passionate and remarkable commitment to Beiersdorf. The display level of adaptability, creativity and dedication was truly outstanding in the past year and was the foundation for these fantastic results. Now in more detail the financial figures for 2023. For the second full year in a row, we achieved powerful double-digit growth at group level with an organic sales increase of 10.8% in 2023, leading to record sales of €9.5 billion in nominal terms. Moreover, we kept our promise of profitable growth and increased our EBIT margin for the group. The key driver for this growth was the Consumer Business Segment with a formidable organic increase of 12.5%. We achieved a strong expansion of our EBIT margin by 60 basis points year-on-year, which surpassed the expectation we have set at the beginning of 2023. The tesa Business Segment grew slightly despite a demanding market environment by 3.2% in organic terms. All in all, a year of growth. Now to a more in-depth analysis of our performance at brand level and the reasons why we outperformed the market and we’re the fastest-growing beauty company in 2023. NIVEA and our Derma business with Eucerin and Aquaphor are leading the way with outstanding results. NIVEA grew organically by 16.2%, a level of growth which our icon had not yet achieved this century. The Derma business continued its remarkable success story with organic sales growth of 24%, thereby marking the third year in a row with growth of 20% or more. This best-in-class performance was driven by both strong pricing and volume growth. Another important contributor to this positive development was the continuous success of the e-commerce business, which outperformed the market for the third consecutive year in 2023 and grew by 19%. The Healthcare business reported continuous growth of 4.2%, while our luxury business with La Prairie, as previously mentioned, faced difficult market circumstances in the travel retail business and in Mainland China, which caused a decline in sales of the brand by 15.4%. Now to – more details on the success of NIVEA. The success of our icon and our overall positive development as a company are intertwined, of course. But ‘23 was not just a good year for NIVEA, it was the brand’s best this century. Double-digit growth in every region and every category, well-balanced mix in price and volume and outperformance of the competition led to outstanding organic growth of 16.2%. It means NIVEA including Labello, surpassed the €5 billion threshold for the first time in history. This broad-based success was fueled by fewer but better and bigger innovations and the successful shift to a more globalized approach in NIVEA’s operating model. The e-commerce business also contributed to the stellar performance, driving market share gains and the highest growth rate in the industry in 2023. I can underline with confidence that the sky is the limit for iconic NIVEA brand, and I will share later on how we intend to continue this growth. But first, let’s take a closer look at one of the reasons for these great results in 2023, our performance in the Face Care category. The Face Care category was a significant growth driver for NIVEA in all regions around the globe. In the second half of the year, it was our strongest category overall for NIVEA. For the full year, we achieved organic growth of 18%. This great performance is a result of tremendous growth in our core product ranges and our innovation series, such as the Q10 Antiwrinkle Filler. These popular innovations enabled a strong mix of pricing and volume within the face category. Our patented ingredient, LUMINOUS630 is a powerful engine behind the success in the Face Care category, all under the new and competitive claim, the most effective anti-spot ingredient in the world. With our LUMINOUS product range, we achieved stellar organic growth across all regions in 2023, for example, by plus 6% in emerging markets and by plus 32% in our already established markets in Europe. In China, our sales more than doubled, which is particularly impressive as we are currently only selling via cross-border e-commerce activities. On a global level, this translates to an organic increase of 51%. This is all fueled by an extremely successful expansion into new categories with a LUMINOUS ingredient in the past year and high-performing launches such as LUMINOUS anti-age serum. Now leaving the world of NIVEA, let’s talk about Derma. Our Derma business really is a blueprint for profitable growth. Our brands Eucerin and Aquaphor continued their remarkable success story with fantastic organic sales growth of 24%, thereby continuing the years of strong double-digit growth for our dermatological brands. Similarly to NIVEA, we are growing in all regions and all categories. In addition to continued growth of our online business by 28%, innovation has also been a key driver of this success globally, which is underlined by the popularity of our products containing our breakthrough ingredient, Thiamidol. We grew again in this segment by 49% year-on-year and we are still expanding our product ranges and categories. Another reason for the Derma success is the sun category. Our innovations like all oil control under our Eucerin Sun led to organic growth of 58%. This showcases our commitment to staying ahead in the market and meeting diverse consumer needs. The overall demand for our products remains high in regions such as Latin America, the Middle East and Africa, where market share and net sales have seen a significant acceleration in 2023. With our dermatological brand, Aquaphor, we achieved the best year-to-date in the brand’s history in the United States. In terms of organic sales, Aquaphor reported outstanding growth of 36% in 2023. This level of growth also means Aquaphor was the fastest-growing brand in the body market. A crucial success factor but this growth was an effective social commerce strategy with a focus on leveraging TikTok, which also enables us to significantly drive the success of our Aquaphor lip range in the highly important Gen Z target group. Further proof of our strong Derma business and its versatility is our performance in Korea. In the Korean market, we are not yet allowed to use our patented ingredient, Thiamidol due to Korean formula regulations. However, with the right setup, with specific expertise, local innovations and the valued Made in Germany connotation, we achieved outstanding results, 40% organic growth in the full year 2023. For our luxury and selective brands La Prairie and Chantecaille, we look back on 2023 as a challenging year with a decline in organic sales for both brands, respectively down 15.4% for La Prairie and 18.4% for Chantecaille. As previously stated, we faced difficult market circumstances in the travel retail business and in Mainland China, which is why we made the decision to utilize 2023 as a transition year to clean up stocks and normalize inventory levels. We are now looking positively at 2024 with mostly healthy stock levels for both brands, and travel retail stocks in Hainan will also be healthy at the end of Q1. In the case of La Prairie, Q4 sellout returned to double-digit growth, allowing us to look more optimistically at the future. Throughout 2023, we prepared a stronger strategic e-commerce set-up for the luxury brand with a special focus on the utilization of TikTok while also investing in future innovations. As for Chantecaille, we’ll also enhance our social e-commerce setup for the brand in 2023, and moreover, expect improved performance due to the expansion of the travel retail business. The first numbers for Q1 2024 for Chantecaille already look promising. We expect a return to growth for both brands in 2024. 2023 was also a year marked by substantial investments aimed at ensuring the long-term success of our company. Let me highlight four impactful topics on 2023. Beiersdorf invested heavily in its global supply chain and digital infrastructure in the past year. The new site in Leipzig, Germany is at almost €300 million, the largest investment Beiersdorf has ever made in a production side and with a capacity of up to 450 million products per year started producing in September 2023. The expanded and modernized plants in Poznan, Poland and Silao, Mexico are going live in 2024 and are also adhering to the highest environmental and technological standards. An important milestone in our global digital infrastructure was a seamless switch to the latest SAP technology S/4HANA for all global affiliates at the end of the year, thereby enhancing the efficient digital transformation and further automation of Beiersdorf global business processes. Following an investment of €250 million, Beiersdorf of opened its new global headquarters in 2023, the Beiersdorf Campus, on an array of 51,000 square meters in its founding city of Hamburg. The employees significantly shape this new global head of the organization and influence the creation of a modern and sustainable work environment, which embraces the future of work, well-being of the employees and the exchange of ideas. In line with creating the right physical surroundings for its employees, Beiersdorf also continuously improved the cultural working environment in 2023. In 2021, the company committed to achieving a 50:50 gender balance leadership across all management levels worldwide by 2025. By September 2023, the representation of women in management positions had already increased to 50.3%, achieving a gender parity ambition 18 months ahead of schedule. Now to a topic which we have been talking about and working on tirelessly in the background in the last few years of dividend increase. Following the exceptional business performance of Beiersdorf in recent years, the Executive and Supervisory Boards have decided to propose an increase of the dividend for fiscal year 2023 for the first time since 2007. With a significant increase of 43%, a dividend of €1 per dividend-bearing share will be proposed to the Annual General Meeting on April 18, 2024, and thus enable our shareholders to participate in Beiersdorf of profitable growth. At the same time, Beiersdorf will also start a share buyback program equivalent to up to €500 million. And with that, I will now hand over to our CFO, Astrid Hermann, to take you through our detailed for your financials, also including the performance of tesa.
Astrid Hermann: Thank you so much, Vincent and good morning from me as well. I’m happy to guide you through our full year 2023 results in more detail. Let’s start with the figures at group level. We can report double-digit organic sales growth of plus 10.8%, which represents sales growth of plus 7.4% in nominal terms, mainly due to an unfavorable exchange rate effect. At the same time, we increased our EBIT excluding special factors significantly, improving our EBIT margin as well as our earnings per share. The EBIT margin increased by 20 basis points to 13.4% and our earnings per share increased from €3.56 to €3.80. Our profit after tax margin slightly decreased due to a higher tax rate driven by onetime taxes charged for prior years and onetime adjustments related to the new more centralized operating model, which will benefit our tax rate midterm. Let’s continue with our development at segment levels. In the full year 2023, Beiersdorf Consumer Business grew organically by plus 12.5%. Adverse foreign exchange effects led to a nominal growth of plus 9.1%. We also increased our profitability with an EBIT margin increase of 60 basis points, driven by strong top line as well as gross margin growth and strict cost control while further increasing our marketing budget. Our tesa business finished the same period with organic growth of plus 3.2%. Structural and foreign exchange effects led to a nominal flat development. Our EBIT margin decreased by 70 basis points due to continued strategic investments in innovation, sustainability, digitalization as well as increased R&D investments. On top of the great performance of the previous year with plus 10.5% organic sales growth, our Consumer Business division delivered high growth in all four quarters, leading to double-digit growth again in the full year. This growth was well balanced in terms of volume and pricing and especially impressive in Q4, where our growth was predominantly driven by strong volume growth with pricing moderating from previous high levels. Let’s take a look at the performance of our brands in the Consumer Business Segment. Vincent has already shared details about the performance in the full year, so I will just briefly comment on the performance by brand for the fourth quarter. NIVEA continued to outperform the market with broad-based growth of plus 12.1%. All main regions grew significantly, as did both personal care and skin care in almost all categories. The split between pricing and volume is getting closer to balance ratio quarter after quarter with a higher contribution of volume compared to price in Q4 for the first time in 2023. The success story of Derma continued in Q4 with plus 21.2% sales growth. Eucerin and Aquaphor remain amongst the market leaders both in net sales as well as market share terms. The performance in the fourth quarter was driven by both Europe and Americas growing above plus 20%. As mentioned previously, our innovation power, led by our hero ingredient, Thiamidol, is a key success for the business as is our strong e-commerce performance. Based on a successful previous year with double-digit growth and significant market share gains, Healthcare grew by plus 3.7% in the fourth quarter and further expanded its leading market position. Main drivers of the success were Australia with significant double-digit growth and good performances in our key markets in the UK and India. Coming to La Prairie. As expected, the quarter was negatively impacted once again by the challenges in travel retail and our decision to clean our stocks for a fresh start into 2024. Despite these challenging factors around the Chinese ecosystem, we saw encouraging Q4 results in the rest of travel retail and in local markets, particularly in APAC with Japan growing plus 41% and Hong Kong plus 30%. In addition, we see encouraging sales growth acceleration in the U.S. in the course of 2023. Looking at sales growth at regional level, you can clearly see the well-balanced geographical growth within the Consumer business. Apart from Western Europe, which was negatively affected by the disruptions in the travel retail business, all regions grew double-digit in 2023. In Western Europe, sales were driven by healthy growth in Spain, Italy, UK and France and the great performance of the NIVEA and Derma businesses. In Eastern Europe, the excellent plus 22% sales growth was mainly driven by Poland and Romania. From a category perspective, both Western and Eastern Europe, the excellent performances of NIVEA Deo, lip and sun as well as our Eucerin Face, sun and body businesses are standing out. Americas finished the year with plus 19.1% sales growth. Key drivers of our double-digit growth in North America were our brands NIVEA, Aquaphor and Eucerin. Strong growth in Brazil, Mexico and Colombia, especially with NIVEA and Eucerin made Latin America our top region in terms of relative growth. The Africa, Asia, Australia region reports plus 11.1% sales growth with very positive trends, especially in Australia, Nigeria, Thailand and South Africa driven by both NIVEA and Derma. The strong performance of both brands could compensate for the difficulties in the luxury market segment. Let’s now have a look at our Consumer gross margin development. With our consistent global pricing policy, we were able to offset most of the cost increases. A positive mix contribution driven by the strong performance of Nivea skin care and Derma led to a gross margin improvement of plus 40 basis points despite the well-known challenges in the luxury segment. If we exclude the luxury segment, our mix impact would have been up triple-digit basis points. As expected, our working capital increased slightly to 5.8% of consumer sales. This was mainly driven by an increase of inventories to ensure service levels throughout the S/4HANA transition. Higher trade receivables driven by the successful year of our sun business were another reason for the increased working capital as we have longer payment terms in the sun category. Further optimizations in the trade payables partly compensated for this. Let’s now move to the tesa business in more detail. Driven by a strong last quarter, tesa grew by plus 3.2% in the full year 2023. Both segments, the consumer segment as well as the industry segment are growing and contributing positively to the overall performance. Particularly worth mentioning are the automotive and electronic divisions. Strong innovations in the e-mobility sector led to double-digit growth in automotive for all regions in an environment marked by positive market development. For the electronics division, we can report a positive trend with strong double-digit growth in Q4, driven by new projects and innovations as well as a slightly recovering Chinese market in the second half of the year. The tesa EBIT decreased from 16.7% in the previous year to 16%, in-line with our ambitions to invest in our main strategic pillars. These investments will help us to continue to seize business opportunities, for example, in the electric vehicle business. Additionally, 2023 was a year of capacity expansions for tesa. With the opening of the new production site in Haiphong in Vietnam and the expanded site in Sparta in the United States, we are following our strategy of expanding our regional capacity in growing markets and, at the same time, are optimizing our supply chain. That’s it for the year 2023. And I will now hand over to Vincent, who will focus on the upcoming year and the future.
Vincent Warnery: Thank you, Astrid. So we are on the right path and our strategic choices are yielding the intended financial results. This success instills great confidence in our vision to become the best skin care company in the world, a goal that requires continuous effort and an unwillingness to rest on the laurels of past success. I said at the beginning of this call that we will also share an update on how we plan to enhance and extend this current level of growth moving forward. In order to do exactly that, we’ll focus on these six growth drivers. I will now take you through each of them. Starting with the first growth driver, global white space opportunities. Let’s break this down with regard to our leading brands. Despite the record figures NIVEA is already achieving, we are not yet present with NIVEA in 60% of the global face care market and also still absent from 50% of the sun market. I said earlier that sky is a limit for icon NIVEA, and with the enhanced infrastructure and supply chain capabilities, we’ll continue to exploit this potential, meet the growing demand and focus on growth in these white spaces. This translates to concrete ambitions in specific countries, for example, driving premiumization of our products in China and expanding our success in India to the face care category in 2025. Moreover, NIVEA has not been very active in conquering new categories in our established markets, and we are now also aiming to change that. Moving to our Derma business. With Eucerin, we are not yet present in half of the global derma market and are absent with our products from two-third of the worldwide face care market. We have already made great progress with several successful market entries for Eucerin since 2017, Brazil, China, Poland, Egypt, Kenya, Nigeria and Tunisia. There is still tremendous potential to not only further grow in these countries but also to enter additional strategic markets. For example, the face care market in the United States, one of the largest market segment in skin care globally. We’re also planning to introduce Eucerin to new countries such as Japan and India.
whole: Talking about travel retail, even though the Daigou business was a relevant part of our business, we are happy to see that unauthorized distribution contributed to price erosions is now regulated. We are also working on the launch of Chantecaille in this vibrant market and on the extension and registration process of our hero ingredient W630 to allow us the market entry in Mainland China with several product ranges across our whole brand portfolio. Our next growth driver is already creating a significant impact on our financial results today, our e-commerce business. And we will enhance the success of our online business for all our brands even further based on the proven global infrastructure. Let me share three building blocks for this. Firstly, we will fully leverage and further upskill the talent and the expertise we have developed and acquired to advance from already very good to best-in-class in digital commerce. At the same time, we will further enhance our strong presence with key retailers across the world. Secondly, we will continue to enhance our e-commerce operating model and resourcing for future growth. Here, we will especially focus on full funnel media data and insights as well as on a strong omni-channel strategy. Lastly, we accelerate the expansion of our global e-commerce footprint for our luxury brands, La Prairie and Chantecaille. Online access and the accompanying smart data analysis allows very precise targeting of future and current consumers. At the same time, we can also virtually create an exceptional shopping ambience that respects the individual equities of our brands. We have already demonstrated this capability for La Prairie in China. Now to the next growth driver, which is part of our company’s DNA. Our pioneering spirit and curious mindset paired with the goal of making people feel good in their skin. To develop and cascade impactful innovations is therefore naturally one of our key growth drivers for the future and always will be. Looking ahead to the coming years, you could say the following regarding our hero ingredient, W630, is our new W360. It means that we still have huge opportunities to leverage its impact across all of our brands, geographies and categories. Moreover, our innovation pipeline is stacked with promising projects to further accelerate these breakthrough innovations, though that make a significant difference in the life of the consumers and cascade them across our portfolio, we also created an early innovation team a few years back. That team played a crucial role in one of our most exciting innovations. We will be turning back the skin’s age clock with a product launch in 2024 in the field of skin rejuvenation and epigenetics. Stay tuned for more info throughout the year. Success in R&D relies on data knowledge, data which we gather and analyze via an unrivaled SKINLY study, that is one of the world’s largest consumer skincare studies. To date, we have collected over 870 million data points from more than 18,000 participants, enriching our AI systems with a wealth of information. This not only provides insights into the effectiveness of consumer skin care routines, but also subsequently leads to the product innovations of tomorrow. Another focused field for R&D is skin microbiome science, ultimately leading to skin care products for the increasingly relevant field of acne treatment. For that purpose, we acquired S-Biomedic in 2022 as one of the leading start-ups in this area, which is now fully integrated into our global R&D infrastructure, at the same time, contributes a variable start-up mentality and entrepreneurship to our company. More to come here as well. We aim to further accelerate our growth with intensified activities in the area of M&A while also pushing ahead with our acquired brands such as Coppertone and Chantecaille. The set up for both these brands and the full integration into the Beiersdorf organization is now complete, and we look positively forward to 2024 and beyond. We analyze the market for potential additions to further strengthen our portfolio, especially in the field of premium skin care and with a focus on North America. Due to our stellar performance of recent years, we have the financial power and the backing of our Supervisory Board to follow this strategic path. I’m happy to share that yesterday we signed an agreement to acquire the real estate assets of Clinique La Prairie, the prestigious medical health clinic in Montreux, Switzerland. Through this acquisition, we’ll strengthen La Prairie by reuniting it with its historical birthplace and intensifying the collaboration with Clinique La Prairie. The transaction is subject to the customary closing condition and is expected to be completed later this year. Becoming ready for the future and ready for growth also means putting tremendous effort into the realization of our CARE BEYOND SKIN Sustainability Agenda. We are working the talk as we have made and continue to make great progress in transforming our products. We successfully relaunched the formula of one of our best sellers, NIVEA Soft. NIVEA Sun’s bottles, caps and trigger pumps are now made of recycled plastic. We launched an innovative refill jar for our Hyaluron-Filler range of Eucerin, reducing the plastic material used by 90%. We already achieved 100% microplastic-free cosmetic products for NIVEA in 2021 and now also for Eucerin. Our revised formulas have a lower environmental footprint as well as our new packaging solutions. Our iconic NIVEA cream will be re-launched in a more sustainable packaging in 2024. We are also modernizing our global supply chain to the highest environmental standards. A testament to the impact of our actions is that for the second year in a row, Beiersdorf received a AAA rating from the renowned non-profit organization, CDP, and was recognized with this best-in-class score for its efforts in target setting, performance and transparency in the three dimensions of climate change, forest and water security. This ranks Beiersdorf as one of only 10 companies worldwide leading the sustainability transformation out of over 21,000 companies scored. And progressing with impactful actions and as a sustainability leader into the future, we are now free to share our ambitious net zero target that has recently been validated by the Science Based Targets initiatives to be in line with a 1.5-degree pathway. Beiersdorf aims to reach net zero and reduce its emission along the entire value chain by 90% by 2045. We are proud that our actions are already making an impact, although we are still just at the beginning of this crucial journey. Now summarizing these six growth drivers, what is the objective behind them, what is the overall goal. The goal is to win and to win with care. By conquering white space opportunities across the globe and developing breakthrough innovations, by meeting our consumers where they are, and proposing new beauty aspirations to them, by driving sustained financial value and making a positive social and sustainable impact by leveraging the power of digitalization. We will provide even more details on the overall strategic directions and these growth drivers during the upcoming Capital Markets Day, which is scheduled for the 18th of June, 2024. I am convinced that we have everything in place for continued success in the years to come, and I am personally very excited about the journey ahead of us. We are indeed ready for the future. And lastly, let’s now turn to our guidance for 2024. While the volatility in the markets remains high due to a variety of macroeconomic and geopolitical reasons, we mentioned earlier that our business model has proven to be dependable, successful and crisis-resistant in recent years. We are stronger across various brands, categories and regions. Hence we look ahead with confidence and expect continued profitable growth above market and a further step in margin expansion in 2024. The Consumer Business segment is expected to generate mid-single digit organic sales growth in an environment of normalized pricing levels. The EBIT margin, excluding special factors, is expected to be 50 basis points higher than the previous year’s level, which is in line with the mid-term goal for profitable growth in the Consumer Business segment. For the tesa Business segment, Beiersdorf expects organic sales growth to be in the low to mid-single digit range in 2024, subject to certain market development. The EBIT margin excluding special factors is expected to remain at the previous year’s level. Based on this forecast for the two business segments, organic group sales growth is expected to be in the mid-single digit range and the consolidated EBIT margin, excluding special factors, will be slightly above the previous year level. At this point, I would like to remind you that our consumer business did have a pretty good start to the year and that we are optimistic about 2024. For this reason, I tend to assume that our consumer top line might even grow at least mid-single digits in the full year. This of course, based on the recovery for luxury business as planned and also in the absence of major macroeconomic events, we would render any guidance useless. Following this journey throughout our 2023 financial results and dedicated growth driver for the coming years, I am now looking forward to your questions. Therefore, I will hand back over to Jens, who will start the Q&A session.
A - Jens Geissler: Thank you. At this time we will begin the question-and-answer session. [Operator Instructions] So, we can now open the queue and I can see Guillaume is on the line. Hello, Guillaume.
Guillaume Delmas: Could you hear me in the call or…?
Jens Geissler: Yes. No.
Guillaume Delmas: Okay. So, good morning, two questions for me. First one on the outlook for both La Prairie and Chantecaille. I mean you said you expect both brands to return to positive growth in 2024, whilst I think inventory reduction in the travel retail channel should be largely completed by the end of the first quarter of 2024. So, my question is, should we anticipate a slow start to the year for the two prestige brands with a return to positive growth in the second quarter and then subsequent acceleration in the second half of the year? So, is that the kind of phasing you would be anticipating? And then my second question for Astrid is, if you could walk us through the key moving parts of the Consumer division 2024 EBIT margin. As in, would it be fair to assume further significant gross margin expansion, in part, thanks to the recovery of La Prairie and against that a further marked step-up in marketing spend? So, any color you could provide on these key building blocks would be helpful. Thank you very much.
Vincent Warnery: Thanks Guillaume. I will take the first question. You are absolutely right. We are expecting some slight growth in Q1 and Q2 because Q1, we still have to finish cleaning the inventory in Hainan. We are absolutely clean everywhere else. Hainan, we have still a few millions to absorb. And then in Q2, we have the historical of last year. We are all hoping that the market will reopen. So, Q1, Q2 soft, but extremely optimistic about Q3 and Q4, where we will see clearly the brand rebounding.
Astrid Hermann: Very good. And now your question on the 2024 EBIT consumer margin, indeed, we do expect our gross margin to continue to expand quite substantially, obviously, in light also of the growth that we are seeing from the luxury business, but also in light of declining input costs that will help as well as we look for continued very strong mix impact to our business as well. And we are looking to invest further in marketing budget both in absolute as well as percent of sales.
Guillaume Delmas: Thank you very much.
Jens Geissler: Okay. Thank you. Next in our queue, I can see we have Bank of America, so Vica, good morning.
Victoria Petrova: The first question, you talked about 40% volume contribution and 60% price contribution. Can you provide some color on the mix in 2023? As well as going forward, when we think about 2024 both for NIVEA and between the divisions, how should we think about that?
Astrid Hermann: Sure. I can take that.
Victoria Petrova: And my second…
Jens Geissler: Please go ahead.
Victoria Petrova: Sorry, second is also probably to you. Could you maybe provide a bit more color on your Americas profitability in 2023 with the impact of peso and maybe how should we think about it into next year and how it would have looked without this impact? Thank you.
Astrid Hermann: Thank you. So, in terms of the mix impact, it is positive. You saw our expression of mix in the end on our gross margin report. And you saw even in the year 2023, where we had the luxury business obviously declining. We saw very positive mix impact without the luxury business, triple-digit up, so really significant impact from mix. And we continued to see a very positive trend into the future as the key parts of our business, NIVEA skin care and Derma continue to grow strongly. And then in terms of Americas profitability, yes, we have made progress there, actually quite substantial progress there. Key drivers there is the fantastic Aquaphor performance that you saw there with 36% growth. It’s a highly profitable brand for us. The same obviously on NIVEA and Eucerin, growing double digit and really helping that profitability, absolutely. We have at the same time, though, also invested in the business. As you know, we launched Eucerin Sun. And we are also launching this year Eucerin Face. So, we continue to also invest in the business to accelerate the growth in North America.
Vincent Warnery: Thank you.
Jens Geissler: Okay. Well, thank you. Next on our queue would be JPMorgan. Good morning Celine?
Celine Pannuti: Alright. Good morning everyone. You can hear me?
Jens Geissler: Yes.
Celine Pannuti: Excellent. My first question is on pricing. So, Astrid, you mentioned that cost of goods sold are declining for you this year. I don’t know, what should we assume, low-single, mid-single digit decline? Can you talk about the pricing environment given that you had strong pricing in ‘23? What does that mean for the consumer business? Maybe if you can talk about this on the different regions. And then my second question is on NIVEA. There has been a slowdown in the fourth quarter, which I presume is linked to maybe the impact of pricing. But can you talk about NIVEA performance in Europe and how you are doing in terms of market share performance as well? Thank you.
Vincent Warnery: Hi Celine, I will perhaps take the two questions. On the first one, on the pricing, we are expecting a much favorable situation of our cost of goods in 2024. So, we are expecting a slight decline of the material price, but we are also expecting an increase of transportation cost and also the cost of labor. So all-in-all, we should have a good situation, which is also why we will do a more reasonable price increase in both Europe and emerging markets. So, more in the area of 3% in Europe, 4%, 5% in emerging markets in order to finish offsetting the big ICP increase of ‘22 and 2023 and be able to continue to grow our gross margin. So, this is what we are negotiating right now with the retailers which like always, the necessary exchange and discussions with them. On your second point on NIVEA Europe, you have to remember that what was a little bit of a revolution for us is that we did a very strong price increase. As a matter of fact, the price increase we did in Europe in 2023 was even above market and by far above any kind of price increase we have done in the past, which resulted in some disruption with retailers, particularly in France and Germany, which is also why we lost also some market share in the beginning of the year. And also the fact that in terms of phasing, we ended up having a very strong Q4 in 2022 because this is the moment when we are benefiting for this big price increase, which obviously was difficult to compensate in Q4 2023 leading to a slight growth. What is good is that we are back to everywhere, we are back to shelf. We have absolutely zero issue with the retailers. We went back even to a discount in Germany. We are able to promote our products. We have been investing a lot. So, we are regaining market share in Europe in the last quarter, which is making us pretty optimistic for NIVEA in the quarters to come.
Celine Pannuti: Thank you.
Jens Geissler: Thank you, Celine. We will move on to Barclays. I can see Iain on the line.
Iain Simpson: Good morning. Two questions for me, if I could. Firstly, I wondered if you could give some color on the timing of the W630 launch and the Chantecaille launch into China and the anticipated timing on the various stages of regulatory approval that will be needed to get there. And then secondly, I wondered if I could just quickly go through Q4 in Western Europe again. So, you have talked about tough comps in the Q4 ‘22, which obviously we can see. In terms of the pricing dynamics, is it that you had a final round of pricing just before the Q4 ‘23 that had some volume disruption, or is it that you are lapping volume returning in the Q4 ‘22 around that pricing? I am just trying to make sure that I fully understood exactly what you are talking about, the comp period in the Q4 in Europe. Thank you so much.
Vincent Warnery: Thank you, Iain. On your first question, the journey of regulatory approval of W630 in China is a long journey. The last time China validated a brightening ingredient was 10 years ago. I can tell you that we are progressing well. I was myself in January meeting the local FDA, the NIFDC. We are also meeting last week also to finalize the submission of the file. And we will present the file officially to the NIFDC next week in Beijing. So, we are optimistic. It means that if we get and we hope to get it, the regulatory approval on the ingredient, we will then have to get the regulatory approval on the formula, which is why we are still planning to have a launch of W630 on the various brands of the portfolio in ‘25, beginning of 2026, depending on, of course, the questions the regulatory authorities can ask and the test we have to submit. On Chantecaille, we are almost ready. We have already two-third of the portfolio, which has been regulatory approved. We are waiting for the last third, and we are planning to start selling Chantecaille in China in August 2024. So, with the full launch in September 2024 with media, with influencers, with online, offline, so really a big hope and we have an extremely positive reaction from the field. You want to take the second question?
Astrid Hermann: Sure. So, Q4 Western Europe, we have to remind you, Iain, that in our Western Europe number, you have the impact of the La Prairie travel retail business, which has a significant impact. There, we had a much stronger Q4 in 2022, also in anticipation of a better holiday season and so on, Double 11 in China then, and you know that unfortunately it didn’t happen as planned. So, that’s part of really the significant impact you are seeing there. In terms of the rest of the business, NIVEA and Derma, we feel very strongly about our business. Europe continues to be a bright spot. We see a strong start to the year as well, so really no reason for concern there at all.
Iain Simpson: Thank you very much.
Jens Geissler: Okay. Well, thank you. We don’t see any other callers here in our queue. So, double checking, no, we don’t have anyone. So, well, this concludes our Q&A session. And I can just say, thank you for having joined our analyst meeting. We appreciate your interest in Beiersdorf. Thank you and goodbye.
Vincent Warnery: Thank you so much.
Astrid Hermann: Thank you.
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