Henkel AG & Co. KGaA (OTC:HENKY) reported robust financial results for the full year of 2023, surpassing their goals with an organic sales growth of 4.2%. The company's Adhesive Technologies and Consumer Brands sectors experienced growths of 3.2% and 6.1% respectively. Notably, Henkel's adjusted EBIT margin improved significantly, reaching 11.9%.
The company has also invested in innovation, opening new centers for battery engineering and R&D for consumer brands, and achieving growth in digital sales. Henkel's acquisitions, including Shiseido Professional and the Vidal Sassoon brand in China, have bolstered their global presence in the hair care market.
Looking forward, Henkel anticipates further growth in 2024, with organic sales expected to increase by 2% to 4% and adjusted EBIT margins projected between 12% and 13.5%.
Key Takeaways
- Henkel achieved a 4.2% organic sales growth in 2023, with the Adhesive Technologies sector growing by 3.2% and Consumer Brands by 6.1%.
- Adjusted EBIT margin improved to 11.9%, with an increase in adjusted gross profit by 340 basis points.
- The company opened new centers for battery engineering and consumer brands R&D, contributing to innovation and growth.
- Digital sales and sustainability efforts saw notable progress.
- Acquisitions in the MRO and infrastructure markets, including Shiseido Professional and Vidal Sassoon in China, have strengthened Henkel's market position.
- Henkel plans to divest €350 million worth of underperforming products by the end of 2024.
- The company expects organic sales growth of 2% to 4% and adjusted EBIT margins of 12% to 13.5% for 2024.
Company Outlook
- Henkel forecasts further top and bottom-line growth for 2024, with organic sales growth of 2% to 4%.
- Adjusted EBIT margins are projected to be between 12% and 13.5%.
- The company aims to surpass pre-COVID sales levels of 2019, although they will remain below all-time highs.
- Henkel plans to invest in business and focus on portfolio optimization, including divestments of up to €350 million in the Consumer Brands business.
Bearish Highlights
- Despite overall growth, Henkel's volumes saw a decrease in the Consumer Brands business.
- The Packaging (NYSE:PKG) & Consumer Goods segment experienced a decline due to softer demand.
- Asia-Pacific was the only region that did not show organic growth.
Bullish Highlights
- Henkel's Adhesive Technologies sector showed improved profitability, with the Mobility & Electronics business area driving growth.
- The company generated a strong free cash flow of €2.6 million.
- Key customer wins from 2023 are expected to drive future growth, particularly in the Industrial and Electronics segments.
Misses
- Henkel's sales are expected to remain below all-time highs despite surpassing pre-COVID levels.
- The company's volumes in Consumer Brands decreased, although this was offset by double-digit pricing.
Q&A Highlights
- Henkel's marketing spend significantly increased in 2023, with plans to maintain this level in 2024.
- The company is well-positioned for M&A activities in 2024, with a focus on expanding the regional footprint and acquiring attractive targets.
- Henkel acknowledged the challenge of predicting currency fluctuations but expects a mid-single-digit FX effect on the top line.
- The company had a strong start to the year in January and February.
Henkel's financial performance in 2023 reflects a company on the rise, with strategic investments and acquisitions paving the way for continued success in the coming year. The company's focus on innovation, sustainability, and portfolio optimization, combined with a robust marketing strategy, positions Henkel favorably in the global market.
Despite some challenges, Henkel's leadership remains confident in their strategy and capabilities, setting optimistic targets for 2024. As Henkel continues to adapt and grow, the market will watch closely to see how their plans unfold in an ever-changing economic landscape.
InvestingPro Insights
Henkel AG & Co. KGaA (HENKY) has shown a resilient financial performance, and InvestingPro data provides a deeper look into the company’s valuation and profitability metrics. With a market capitalization of $28.74 billion and a P/E ratio that has adjusted to 17.47 in the last twelve months as of Q2 2023, the company appears to be trading at a valuation that could be attractive to investors looking for potential growth at a reasonable price.
The PEG ratio, which stands at 0.85 for the same period, suggests that the company's stock may be undervalued relative to its earnings growth potential.
An InvestingPro Tip highlights that Henkel has been trading near its 52-week low, which could indicate a buying opportunity for value investors. Additionally, the company has a track record of maintaining dividend payments for 29 consecutive years, with a current dividend yield of 1.98%, which may appeal to income-focused investors.
The company's stable cash flows, which can sufficiently cover interest payments, combined with a moderate level of debt, provide it with financial flexibility. This is further supported by the fact that analysts predict Henkel will be profitable this year, having already been profitable over the last twelve months.
For those interested in further insights and metrics, InvestingPro offers additional tips on Henkel's financial health and future outlook. Readers can utilize the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, which includes access to these valuable tips. There are 6 more InvestingPro Tips available for Henkel at https://www.investing.com/pro/HENKY, which can help investors make more informed decisions.
Full transcript - Henkel AG & Co KGAA (HENKY) Q4 2023:
Operator: Good morning. And welcome to the Henkel Conference Call. For the duration of the call, you will be on listen-only. [Operator Instructions] I will now hand over to Leslie Iltgen, Head of Investor Relations. Please go ahead.
Leslie Iltgen: Thank you and good morning to everyone. A warm welcome to everyone joining Henkel’s Full Year 2023 Results Conference Call today. I’m Leslie Iltgen, Head of Henkel’s Investor Relations. Today, I’m joined by our CEO, Carsten Knobel; and our CFO, Marco Swoboda. Carsten will begin with an overview of 2023, including key achievements and highlights and a first glance at the guidance for full year 2024. Marco will follow with a review of the full year 2023 financial results in more detail and also elaborate on the key assumptions around the 2024 guidance. As always, following the presentation, we will open up the lines and Carsten and Marco will be happy to take your questions. Before handing over to Carsten, please let me remind you that this call will be recorded and a replay will be made available on our Investor Relations website shortly after this call. By asking a question during the Q&A session, you agree to both the live broadcasting, as well as the recording of your question, including solicitation, to be published on our website. Also, please be reminded that this presentation contains the usual formal disclaimer in regard to forward-looking statements within the meaning of relevant U.S. legislation. It can also be accessed via our website at henkel.com. As always, the presentation and discussion are conducted subject to this disclaimer. With this, it is my pleasure to hand over to our CEO, Carsten Knobel. Carsten, please go ahead.
Carsten Knobel: Thank you, Leslie, and a warm welcome also from my side to everyone joining our call today. After highlighting the key developments of the full year, we will walk you through our business performance and the outlook for the full year 2024 in more detail, and of course, we are looking forward to taking your questions. So let’s get started with the major topics and achievements in 2023. In 2023, Henkel delivered a strong top and bottomline growth, and that includes a Q4 where we saw a continued strong performance and a further sequential volume development improvement. We clearly overachieved the financial targets we had set ourselves at the beginning of last year. Both business units contributed to this excellent performance. On Group level, Henkel recorded very strong organic sales growth of 4.2%. Adhesive Technologies delivered 3.2% OSG, which is clearly above the peer average. Our Consumer Brands business clearly stood out with 6.1% OSG, certainly driven to a large part by strong pricing, but also supported by a sequentially improved volume development. Turning to the margins, with focus and discipline, we made significant progress in restoring our profitability, both in terms of adjusted gross profit, where we saw an increase of 340 basis points versus the prior year, as well as in regard to the adjusted EBIT margin, which reached 11.9% on Group level, a plus of 150 basis points versus the prior year. This significant increase was supported by strong pricing to further compensate for the still elevated input costs, ongoing measures to reduce cost, and enhance production and supply chain efficiency, but also by accelerating savings from the Consumer Brands merger and the continued portfolio optimization measures behind. At the same time, we are putting strong emphasis on investing in growth. We have been stepping up our marketing investments in the Consumer space to further strengthen brand equity and to continue fostering innovations in both business units. Also be in mind that all of this was achieved despite the fact that we divested our business in Russia, which was over-proportionately profitable. This excellent performance also resulted in an adjusted EPS growth of plus 20% at constant exchange rates for the full year. And on top, we also significantly improved our free cash flow. We reached a new all-time high of €2.6 billion, backed by the strong financial position we propose, a stable dividend of €1.85, which represents a payout ratio of 42.4%, just slightly above the targeted payout range of 30% to 40%. So, all in all, a very strong set of results. Looking to 2024, we had a strong start to the year, in both months, in January and in February, and we are poised for further top and bottomline growth. We are highly confident that we have the right strategy, portfolio and capabilities to deliver on our targets, not just in the year 2024, but also when it comes to our mid- to long-term financial ambitions. Besides driving financial performance, we are also strengthening our competitiveness. In this context, investing in our innovation capabilities is key, for example, into new R&D and customer centers. A great example is the new Battery Engineering Center for Adhesive Technologies, which is quite unique in the industry. Unveiling the first Battery Engineering Center here at our headquarters in Germany solidifies our role as a premier design and innovation partner for automotive OEMs and a battery test center. It follows us to create a digital twin of any battery and simulate the performance of our solutions under various conditions. These can be validated through real-life stress tests, ensuring both the reliability of our data and the efficacy of our solutions. Another highlight is our new R&D Center for Consumer Brands in Shanghai, which we opened just recently. With a floor space of over 2,500 square meters, the center is our largest for Consumer Brands in the Asia-Pacific region. It will focus on both core categories Hair, as well as Laundry & Home Care. And it’s aiming to attract the best scientific minds and enhance our regional capabilities. For us, this is more than just an R&D facility. It is a hub to foster agile product innovation tailored to the needs and habits of consumers across 11 diverse markets in Asia. In parallel, we are also leveraging digitalization across our businesses, leading to further organic growth in digital sales, as in Consumer Brands where we saw a double-digit increase. In Adhesive Technologies, AI, for instance, plays an increasing role when it comes to the optimization of formulation properties. Sustainability is yet another important contributor to drive Henkel’s competitive edge. Also here, we made significant progress. We reduced emissions from operations by 61% compared to the base year 2010. We increased the share of recycled plastic in Consumer Packaging to now 19%. And last but not least, we brought the share of women in management to around 40%. Thus, we are not only delivering on our financial targets, but also continue to focus on these important strategic pillars, always backed by a strong company culture and the great people which we have on board at Henkel around the globe. Let me now turn to Adhesive Technologies and the megatrends that clearly serve as catalysts for growth. With the portfolio we have in place already today, we act as an enabler for our customers offering innovative solutions which support them in their needs and in achieving their respective goals. With the solutions we offer we foster circularity and recyclability across industries and thus clearly contribute to driving sustainability globally. Mobility is another theme which plays into our cars. Reliable thermal management and functional coating solutions contribute to more safety in cars and allow large-scale production. Thinking of connectivity and the need to extend Mobility around the globe, being able to offer high-performance solutions for 5G connectivity is absolutely key. Another megatrend is for sure our digitalization. Automizing and digitalization global labs clearly increases the speed and also the impact of innovation. And last but not least, when it comes to urbanization there is for instance a high need for sustainable engineered wood solutions, which allow the construction of multi-story buildings unimaginable until just a few years ago. In 2023 we continue to strengthen our portfolio with innovative solutions providing added value to customers and consumers while shaping the relevant megatrends I just referred to. For example, we launched a new solution for bonding camera lenses in driver assistance systems which combines production efficiency and performance capability enabling fast and reliable production of cameras for the automotive industry. We further developed our packaging adhesives making it easier for manufacturers to switch to a more sustainable solvent-free alternative while maintaining quality and a sophisticated appearance. And at the same time, a high standard of food safety is guaranteed. It sounds like a simple solution. However, it is technologically demanding. Just think about coffee for example which requires sophisticated packaging solutions to maintain its unique properties. To further support the construction industry while pivoting towards sustainable practices we launched our first bio-based polyurethane adhesives for load-bearing timber construction aimed at significantly reducing the CO2 equivalent emissions compared to their fossil-based alternatives. Part of our strategic growth agenda compelling acquisitions play a key role in actively shaping our portfolio. The maintenance repair and overall business is highly attractive delivering above average organic sales growth in the high single-digit territory. With the two recent acquisitions we are expanding our MRO platform by adding competencies in the area of repair and overhaul to our existing portfolio. Critica Infrastructure is a specialized supplier for innovative composite repair and reinforcement solutions, which will add around €100 million in sales and is growing at the fast pace. With Seal for Life Industries we acquired a specialized supplier of protective coating and sealing solutions for infrastructure markets. Once the transaction is closed it will add approximately a further €250 million in sales. With these transactions we are expanding into sustainability driven future-oriented growing and profitable markets. Turning now to our Consumer Brands business and major trends that drive growth as we are addressing consumer needs with products that feature superior technology. Washing at lower temperatures for sure is a trend that many of us already follow today. We are all keen on saving energy and cost. However, at the same time, we don’t want to give up on good cleaning performance. The same applies to hygienic cleanliness. We don’t want to be confronted with bad odors coming from washing machines and ending up in our laundry. There is and this is where innovative solutions are required and where we already have products in the portfolio we can offer customers today. I’ll come to specific examples just in a minute. When thinking of consumer trends in Hair, for sure, one major trend is that of gentle hair coloration in order to avoid hair breakage. Healthy hair including strengthened hair structure is another trend we see amongst consumers driving demand for products and treatments in this area. Our innovative HaptIQ bonding system which we are introducing to our formulations protects and strengthens the natural bonds in hair fibers, thus repairing the hair, giving it strength and resilience and protecting it against future damage. Amongst our fast-growing billionaire brands, Schwarzkopf and Persil, you will find impactful product innovations which address exactly these trends already today. And we are continuously investing in value-adding innovations to drive future growth as we speak. And in the meantime, most of you may already know the deep clean formulation of Persil. Its unique enzyme-based formula not only cleans your laundry, but also removes deposits creating bad odors of laundry on laundry and in the washing machine itself. With this new innovative product, we generated double-digit organic sales growth in 2023. In our category Hair, we recently launched a completely new treatment product called Gliss Night Excellix -- Elixir. This product, which contributed to significant organic sales growth of Gliss Core last year, is quite unique. We were the first company to launch this kind of product creating a new subcategory and we are planning to roll it out in more countries in 2024. The advanced formula with the HaptIQ bonding system combines both inner and outer hair repair while sleeping, supporting the hair to regenerate overnight. In the Professional area, Schwarzkopf BlondMe contributed with double-digit organic sales growth in 2023, addressing the need for general coloration and bleaching solutions with our innovative dual bond technology, which minimizes hair breakage even with high-level bleaching. There are just a few selected examples which showcase the technology expertise we have at Henkel and the vast opportunities which exist to further drive organic growth going forward. I would now like to turn to our global category Hair in more detail. In this category, we are already more advanced with the portfolio optimization measures versus Laundry & Home Care and we see the measures clearly bearing fruit. The numbers speak for themselves. We saw significant organic sales growth of around 9% in 2023 with a strong contribution from our top branch, Schwarzkopf. Volumes showed a positive development and we recorded market share gains, for instance, in styling with plus 30 basis points year-over-year. For 2024, we expect volumes in Hair to remain in the positive territory, of course, based on the current macroeconomic and market assumptions we have for 2024. Besides driving organic sales growth, we are also looking for attractive opportunities to grow our global key categories via M&A, while at the same time strengthening our regional footprint in attractive markets, such as the APAC region. The integration of Shiseido Professional in APAC, which we acquired in 2022, is well on track with our R&D expertise now pooled in a new innovation hub in Japan. And just a few weeks ago, we acquired the selling inspired Vidal Sassoon brand and the related hair care business in greater China, thus addressing a white spot in the premium Retail segment, which is shampoos and conditioners plus products around styling and treatment. The business holds a strong position in the Chinese market and generated sales of more than €200 million in fiscal year 2022-2023. The brand holds a strong presence within China’s Consumer Hair Care market and exhibits well established brand fundamentals with significant opportunities to further harness the brand equity in the market. With a strong and successful hair business globally, including Asia, we have developed an in-depth understanding of the intersection between the Professional and the Retail space. Given this authority in Hair, Henkel is well positioned to capture the full potential of the Vidal Sassoon brand. Alongside a clear strategy to invest into the brand, we have many exciting ideas which we aim to implement to ensure the acquisition is a success including product relaunches, new innovations to broaden the product portfolio and renewed marketing measures. And we have a strong regional team in both Professional and Consumer Hair Care with additional expertise from the successful integration of Shiseido Professional. I would now like to give you an update as to where we stand in terms of the merger of the two Consumer businesses and the integration process. As you all well know, we have defined two phases; Phase 1 with a clear focus on optimizing the organizational setup and the portfolio; and Phase 2, focusing on the optimization of our supply chain. In the meantime, we have stringently worked on the numerous initiatives and are clearly ahead of the plan which now also leads to higher net savings. While we initially had expected to achieve a total of around €400 million in net savings by 2026, we now expect to achieve approximately €525 million and I will elaborate in more detail on the progress we have made within the two phases in just a minute. And at the same time, we are also driving investments to accelerate growth. Very important. Looking into more detail into the progress we made in Phase 1. As already referred to in earlier quarterly calls, we are very well advanced in optimizing the entire organizational setup. This also includes the reduction of headcounts by more than 2000 positions for which we were able to conclude agreements by the end of last year. Overall, the successful and swift execution will lead to an increase in net savings from initially around €250 million to now around €275 million by the end of 2024. Thereof, more than €200 million have been already achieved by the end of last year, means 2023. As you all know, Wolfgang and his teams are also stringently working on optimizing the portfolio. In the meantime, around €650 million in sales have either been divested or discontinued. The number of SKUs was reduced by a double-digit percentage rate already. While we are clearly more advanced in the Hair category, where we already started to see a positive volume development in 2023, as I pointed it out a minute ago, there is still some more work to do, particularly in the Laundry & Home Care category, which is why also for 2024 you should still expect some impact deriving from the still ongoing portfolio measures. But be assured, we are striving to finalize the portfolio optimization process by the end of this year, means end of 2024. And as promised in our Q3 call, I would like to take and provide you a deep dive now on Phase 2. Focus of the initiated measures is the optimization of our supply chain network, the commercial integration and operational excellence. And to give you further perspective here, we are talking about more than 800 projects which have been launched. We are targeting an average complexity reduction of 25% and have already initiated a reduction by 15% in the first step. So far, for example, we already reduced the number of production lines by around 45 and also the number of contract manufacturers and co-packers by around 100. In addition, we also reduced headcount by around 800 FTEs by the end of 2023. Commercial integration is also progressing as planned. And in the meantime, our 1-1-1 approach, meaning one order, one shipment, one invoice is live in seven countries. Together, this already led to first net savings deriving from Phase 2 initiatives in 2023 in the magnitude of approximately €80 million. And based on the progress we have made so far already and what we expect from the launched measures still to materialize, we are able to increase our expectations in regard to net savings, which we want to achieve now in full swing by 2026 from initially €150 million to now €250 million. And to give you some more color, we added an overview here including some selected examples. So when referring to commercial integration, we specifically mean the global rollout of our 1-1-1 approach. So far, we have implemented this approach in seven countries and the plan is to continue the rollout country-by-country and have the process completed by end or within 2025. As a prerequisite, this, of course, requires the harmonization of systems and logistical processes which is well on track. Second part, in order to optimize our supply chain network, we kicked off a large number of large-scale projects in order to respond to the portfolio shift, accelerate capacity consolidation and leverage synergies from the merger. To give some examples, so far we consolidated the logistic footprint in North America and optimized our production footprint in various regions such as Europe, North America and Latin America, as well as EMEA. This also includes the insourcing of contract manufacturing activities for Hair in North America and establishing Latin America as a coloration hub for the Americas. Driving operational excellence, the third part, means fostering operational efficiency in all production and logistic processes. Here, savings are ahead of our initial ambition due to strong results we achieved with our pilot programs in our larger production sites in the U.S. and in Germany. We were also able to reduce logistic costs, improve productivity and line utilization in numerous sites and also roll out flex shift models in order to further increase efficiency in various sites. It goes without saying that this is a huge task for the entire team, but the progress we have already made so far, the fact that we are ahead of plan plus the positive outcome already reflected in our financials are altogether strong proof points that the strategy is clearly bearing fruit and we are not at the end of this road yet. So wrapping it up, we can state that we are successfully executing on our strategic initiatives and consistently delivering the targeted top and bottomline growth. Besides fostering organic growth, we are also increasingly taking advantage of attractive M&A opportunities, which are adding a total of more than €0.5 billion to Group sales when considering Vidal Sassoon’s Critica Infrastructure and the most recent acquisition of Seal for Life. Over the past six months, we thus spent more than €1.5 billion to strengthen our businesses. The Consumer Brand integration is already well advanced and we now expect to achieve higher net savings than originally expected while we keep up with the elevated levels of investments into our brand equity and innovations to drive further growth. While the overall macroeconomic environment remains challenging, we are confident to see continued growth and the further uplift of margins versus the prior year, reflecting the progress deriving from the measures we implemented, as well as the strength of our portfolio and leading market positions globally. This confidence is also backed by the good start we saw when entering into January and February of 2024. To be more specific, for 2024, we expect organic sales growth of plus 2% to plus 4% and an adjusted EBIT margin of 12% to 13.5% on Group level. For Henkel’s adjusted earnings per preferred share, we expect an increase in the range of plus 5% to plus 20% at constant currency. And with this, let me hand over now to Marco. He will give you some more details on our financial performance of 2023. Marco?
Marco Swoboda: Yeah. Thanks, Carsten. Good morning to everybody also from my side. Let me share some more color on Henkel’s business development in fiscal 2023. We delivered very strong organic sales growth of 4.2% driven by both business units. Pricing was the main contributor, being up by more than 9% while volumes were below prior year level. M&A had a negative impact on sales, mainly due to the divestment of our business activities in Russia in April last year. Foreign exchange were a headwind too, mainly due to depreciation of the euro versus our basket of currencies, including some weakness in emerging market currencies. As a result, Group sales in nominal terms remained below prior year, reaching €21.5 billion in fiscal 2023. From a regional perspective, all regions contributed to growth except for Asia-Pacific. Our largest regions, Europe and North America showed organic growth of 2.2% and 2.4%, respectively. The Latin America and EMEA regions each recorded double-digit growth of 11.7% and 24.7%, respectively. Although showing positive organic growth in Q4, sales in full year 2023 in the Asia-Pacific region were slightly below the prior year, particularly reflecting the continued challenging market environment in China. Now turning to Adhesive Technologies in more detail. Organic sales growth was 3.2%, and as Carsten pointed out earlier, was clearly above what we could see with peers. Strong pricing was a key driver, but also necessary as we still faced elevated input cost levels throughout the year, as well as inflation, which had to be compensated for. Volumes remained below prior year levels mainly due to demand remaining muted in some key end markets. However, volume development showed a sequential improvement in the course of the year. Profitability also improved significantly versus prior year. The adjusted EBIT margin came in at 14.7% and is thus 110 basis points above what we had achieved in 2022, mainly driven by a significant step up in gross margin. Looking at the top and bottomline development in the Adhesives business in more detail, what you can see here on this slide is that volume development clearly improved over Q3 and Q4, closing the year, reaching slightly positive territory in the fourth quarter. With regard to pricing, keep in mind that particularly in the first half of the year, the pricing carryover impact was more pronounced and gradually decreased in the course of the year. Nevertheless, pricing remained strong and we didn’t have to make major price concessions so far. As already mentioned, a key driver for margin improvement both in fiscal 2023 and in particular in H2 was pricing. However, input cost remained at elevated levels and we also had to compensate for inflation, which is why pricing was crucial. This development also reflects the strength of our business with both the portfolio and strong leading market positions globally. Let me now turn to the performance in the individual business areas where we saw different dynamics. Mobility & Electronics again was the main growth driver with a plus of 8.5%. This increase was first and foremost driven by the Automotive and Industrial businesses, while the Electronics business continued to trend below prior year levels, reflecting the still subdued market environment, particularly in China. Packaging & Consumer Goods showed a decline of 2.4% on the back of overall softer demand, but also high prior year comparables, which had been driven by an inflated demand resulting from the COVID pandemic at the time. In addition, demand was subdued in 2023 due to lower consumer spend related to inflationary pressure, destocking at customers, less Industrial goods being packed and reduced e-commerce shipments. Craftsmen, Construction & Professional delivered growth of 3.4%, driven by all businesses, despite persisting soft demand in the respective end markets. Overall, a very robust performance of our Adhesive Technologies business in comparison to our relevant end markets and peers, and considering the overall still volatile and challenging macro environment, clearly reflecting the strength of our Adhesive business. Turning now to Consumer Brands. The business generated very strong organic sales growth of 6.1%, which was driven by double digit pricing of more than 12%. Volumes decreased by 6.3%. The volume development, however, showed a continued sequential improvement in both Q4 versus Q3 and Q3 versus Q2, which I would like to elaborate on in more detail on my next slide. Profitability also significantly improved by 220 basis points versus prior year level, reaching 10.6% in the full year. I already referred to the very strong organic sales growth we saw in the Consumer business, which was first and foremost driven by strong double digit pricing. Volumes were still negative, being down 6.3% when looking at full year 2023. However, as just mentioned, volume development showed a clear sequential improvement as we had anticipated in our last call. We reached flat levels in Q4 and even slightly positive levels towards year end when considering the continued impact from the still ongoing portfolio measures. Portfolio measures and trade negotiations together made up for around 3.5 percentage points of the total volume decline in 2023 and roughly 3 percentage points when considering Q4 standalone. In line with expectations, the negative impact from trade negotiations clearly decreased in Q4. And as you know, we are still in the process of shaping our portfolio, eliminating low growth and low margin business and refocusing on the faster and more profitable paths. We already see that these measures are bearing fruit, particularly when looking at the Hair category, where we are clearly more advanced compared to Laundry & Home Care and where volume development already clearly reached positive territory in Q3 and Q4 last year. This is a strong proof point that our strategy is paying off. Entering into 2024, you should continue to expect an impact on volumes clearly to a lesser degree, while we currently focus our activities more pronouncedly on the Laundry & Home Care category. At the same time, we will continue to price where needed to compensate for still elevated input costs and inflation. In addition, we are driving the valorization of our portfolio with strong brands we have. In parallel, we will keep up with the elevated levels of investments in marketing and advertisement to strengthen brand equity. The significant step up in our margin was driven by a full array of measures, enhancing our adjusted gross margin and EBIT margin, strong double-digit pricing, benefits from the already mentioned portfolio measures and cost of goods savings measures contributed to the positive development. In addition, the development was further supported by positive mixed impact as we saw significant growth in Hair and accelerated net savings deriving from the merger of the two Consumer businesses. Lastly, the significant step up was achieved despite increased investments in marketing and the fact that we exited Russia, where two-thirds of the business related to Consumer and which was over proportionally profitable. Now turning to the performance by business area with focus on Laundry & Home Care and Hair. Laundry & Home Care delivered very strong organic sales growth of 5.5% to which both Laundry Care & Home Care contributed with Fabric Care, Fabric Cleaning and Dish Washing clearly standing out. The Hair business area, which comprises both the Professional and Consumer business, grew by almost 9%. Within the Hair business area, the Consumer Hair business clearly stood out and recorded a double-digit increase, mainly backed by styling and coloration. Also, our professional business developed successfully, achieving very strong growth. Wrapping it up, Henkel delivered a very strong topline performance in both Adhesive Technologies and Consumer Brands in 2023. Turning back to the Group level, I would like to elaborate on the components of the adjusted income statement. We significantly improved our adjusted gross profit, which had been impacted by the severe input cost headwinds we faced in 2021 and 2022. Thanks to strong pricing, in order to further compensate for the still elevated input costs, ongoing measures to reduce costs and enhance production supply chain efficiency and the ongoing portfolio optimization measures, we now reach a level of 45.7%, which represents an increase of 340 basis points. Marketing, selling and distribution expenses increased as percentage of sales to a level of 26.3%. While we generated savings in SG&A, deriving from the Consumer Brands merger and benefited from more favorable logistics costs, we significantly stepped up marketing spend in the Consumer Brands business in order to strengthen brand equity. R&D and admin expenses are -- have increased slightly, with their relative impact amounting to 2.7% and 4.9%, respectively. Other operating income and expenses had a rather neutral impact as a percentage of sales. As a result, the adjusted EBIT margin showed a strong increase by 150 basis points, up to a level of 11.9%. Moving on to the bridge from reported to adjusted EBIT. At around €2 billion, reported EBIT was up by more than 11%, compared to the previous year level. One-time income of around €4 million resulted from smaller divestments. One-time expenses of around €280 million are mainly related to the divestment of the business in Russia, which we concluded in April. Restructuring charges amounted to around €270 million, with the majority related to the merger of our Consumer business, as well as to the further optimization of our production and distribution structures in both businesses. As a result, adjusted EBIT came in at around €2.6 billion and thus more than 10% above prior year level. Now taking a closer look at the bridge leading to the adjusted EPS. The adjusted financial result amounted to around minus €85 million and thus slightly below prior year level. Taxes on income amounted to €630 million, which equals to an adjusted tax rate of 25.5%. Non-controlling interest amounted to €22 million, leading to an adjusted net income attributable to shareholders of €1.8 billion. This translates into adjusted earnings per preferred share of €4.35. This represents a significant increase by 11.5% year-over-year or at constant exchange rates even a strong plus of 20%. On to our cash KPIs. Networking capital as a percentage of sales decreased by 190 basis points to a level of 2.6%, mainly due to low inventories driven by price and volume effects. We significantly improved our free cash flow to around €2.6 million, thus reaching a new all-time high, reflecting the strong increase in the operating cash flow from both better operating profits and better networking capital cash flow. As a result, our net financial position turned slightly positive. Overall, very solid financials that allow us to further invest in initiatives to accelerate growth. Since the beginning of the year, we have already invested more than €1 billion in attractive M&A targets. In addition, our strong financial position allows us to pay an attractive dividend. Looking at the macroeconomic environment, the global economy will continue to grow, although at a moderate pace. Global GDP is forecasted at around 2.5% for 2024. Industrial production is expected to expand by roughly 2%. Consumer spending is expected to increase by roughly 2.5%. We are also still facing elevated inflation rates and interest levels globally. When it comes to currencies, we expect markets to remain highly volatile. At the same time, we see the situation in global supply chains and commodity markets improving. Specifically, input costs are partly easing. For some raw materials, prices have come down. However, for some of the products we purchase, we still experience elevated price levels. Overall, we expect our input costs to remain on stable levels. Also, we continue to expect an impact from wage inflation and still elevated energy costs. Turning to the more specific performance drivers relevant for our businesses. Looking at overall Automotive production, build rates are stabilizing and expected to continue above pre-COVID levels of 2019, while staying below all-time high levels. In addition, key customer wins from 2023 will also fuel growth for Henkel going forward. When it comes to the Industrial segment, we expect mixed market dynamics while in Electronics we see signs of positive developments in stabilizing markets in APAC. In Packaging & Consumer Goods, it’s all about strengthening our market position in a competitive environment while expanding our sustainability-driven portfolio. Turning to our Consumer Brands business, growth is expected across the global active segments in Laundry & Home Care and Hair. We will continue to build on a strong brand portfolio with consumer-relevant innovations and keep up with strong media support at elevated levels to drive growth and gross margins. Furthermore, as elaborated earlier, we expect further savings from the Consumer Brands merger. In addition, we also expect to realize first contributions from our recent acquisitions in both businesses. For 2024, we expect further growth for both top and bottomline. For the Group, we expect organic sales growth of 2% to 4%. The same ranges apply to both business units respectively. Let me provide some more color on our price volume expectations in 2024. For Adhesive Technologies, we expect a more balanced split of price and volume growth. Pricing should remain positive despite a certain price pressure in our markets. When it comes to volume development, we expect a further sequential improvement in the course of 2024. For Consumer Brands, the focus on pricing remains and should be seen in the context of the ongoing valorization process of our portfolio. This is part of our strategy. When it comes to volume development in Consumer in 2024, we expect to reach flat to perhaps even slightly positive territories when excluding the negative impact from still ongoing portfolio measures. When it comes to the adjusted EBIT margin, we anticipate further contributions from the successful execution of our strategic and operational initiatives, while input costs are expected to remain stable. For the full year, we expect adjusted EBIT margins for the Group between 12% to 13.5%. For Adhesive Technologies, we expect the adjusted EBIT margin to be between 15% and 16.5%. And for Consumer Brands, between 11% and 12.5%. Please also bear in mind that in 2024 there will be no positive contribution from Russia as we exited the business in April 2023. Last year, Russia contributed roughly 40 basis points to Group margin with an even more pronounced impact on our Consumer Brands business. With regard to FX, we anticipate a mid-single-digit negative impact on sales from currencies. The impact on bottomline is expected to be slightly more pronounced and not as strong as last year. For the development of our adjusted EPS at constant exchange rates, we expect an increase in the range of 5% to 20%. So, overall, we are confident to generate further growth and to deliver a further improvement in earnings compared to the prior year. With that, I would like to hand over back to you, Carsten.
Carsten Knobel: Thank you, Marco. So, let me summarize today’s key takeaways. We sustained Henkel’s growth momentum with very strong organic topline performance which was supported by both business units. We were able to significantly recover our profitability, gross profit and EBIT margin significantly improved versus prior year levels. For sure, clear proof points that our measures are bearing fruit. And at the same time, we continue to invest in growth also by stepping up marketing activities in price-sensitive consumer markets, supporting the improved sequential volume development and investing in R&D and innovation. And while managing our business in a fast-evolving and challenging environment, we are successfully executing on our strategic priorities including in the Consumer Brands merger with clear proof that we are ahead of plan and now expect even more savings on going forward, particularly from the Phase 2. In addition, we are allocating more focus on attractive M&A opportunities. We are successfully expanding the attractive MRO platform in our Adhesives business and also strengthening the two global categories in our Consumer business, as well as our footprint in the APAC region. Over the past six months, we already invested more than €1.5 billion in attractive targets. And last but not least, we released our full year guidance for 2024 this morning, which reflects further growth expectations both for top and bottomline, and we are confident that we have the right strategy, the portfolio and the capabilities at Henkel to deliver on our targets, both short-term but also mid- to long-term. And with that, let us move to the Q&A. Marco and I are looking forward to take your questions.
Operator: Thank you, Mr. Knobel. [Operator Instructions] Our first question comes from the line of Guillaume Delmas, UBS. Please go ahead, Guillaume.
Guillaume Delmas: Thank you and good morning, Carsten, Marco and Leslie. One housekeeping question from you and then two questions. The point of clarification is on your foreign exchange guidance for mid-single-digit headwind. Is it for both sales and EPS or could it be, as things stand today, of course, a greater headwind on EPS? And then my two questions, so the first one is on your adjusted gross margin. It reached 46.8% in the second half of last year. My question is, based on your direct material outlook and your savings program, would it be fair to assume that you can still improve significantly your gross margin from this 46.8% level in 2024, and I guess bigger picture, if I look at the past decade, your best gross margin was in 2006, 48.5%. Do you think that given the mix of your business today, returning to this level or even overshooting this level, maybe not in 2024, but over time, would it be one of your objectives? And then finally, my second question on the pricing outlook for 2024, we’ve heard from some of your competitors, particularly in Adhesives, they were guiding for negative pricing. Yet, Marco, in the guidance, you seem confident about pricing remaining in positive territory in Adhesives in 2024. So wondering what underpins your confidence in limited pricing concession? Thank you very much.
Carsten Knobel: So good morning, Guillaume. I take the question two and three, and Marco, will then come back to the FX point. So the first point on the adjusted gross margins and the reference what you made, I can be very short. It’s a fair statement by yourself and for sure also integrated in our plans for the year 2024 that we have a clear point of further improving our gross margins and that’s part of our guidance, despite the fact that we’re not guiding explicitly on gross margins, but it will support also the 12% to 13.5 EBIT margin development. So, yes, that’s fair and that’s also fair for both businesses. That’s fair for our HCB business, but also for Henkel Adhesives business. And the most important point for me here is, the cycle in which we are getting in, which also this higher gross margins allows us to further invest in our company, and at the same time, improving the bottomline. So that’s on your question related to the gross profit. When it comes to pricing here, and I think, you were specifically on, the Adhesives business. So it’s very clear also here. Overall, we expect a more balanced split of price and volume for Adhesives Technologies. That means pricing should remain positive despite a certain price pressure in our markets, and when it comes to the volume development, we expect a further sequential improvement in the course of 2024. We already talked today about that -- we said in our Q3 call that we are striving in Q4 for a slight positive or flat development in volume for Adhesives Technologies and we delivered on that with the 0.2% what you see in price and the 2.6% in, sorry, in volume and the 2.6% in pricing and that’s a clear point. And the point is we attract, we are -- well, we have been attracting a lot of customer wins in -- at the end of 2023 with impact in 2024 and that is also one of the points why we are expecting a positive pricing and volume for both parts. And that’s not only valid for 2024, because part of the wins which we are making are related to industries where you have also a longer term impact, not only a year, because you have won certain pitches in that context. I hope that clarifies the gross profit and the pricing. And Marco, maybe you clarify, you already did it in your speech, but maybe it’s good to emphasize again on that topic of FX in terms of impact on top and bottomline.
Marco Swoboda: Yeah. Good morning, Guillaume also from my side. So your question on FX, so we basically said that we anticipate a mid-single-digit negative impact on sales, on topline and the impact on the bottomline is expected to be slightly more pronounced. So a bit higher, but not as strong as last year.
Guillaume Delmas: Thank you very much.
Carsten Knobel: Very thank you.
Operator: The next question comes from Christian Faitz with Kepler Cheuvreux. Please go ahead.
Christian Faitz: Yes. Thank you. Good morning, Carsten and Marco, Leslie and team. Two questions, please. First of all, why keep the dividend just, quote unquote, stable with such a comfortable cash flow and debt situation? And my second question is, the roughly €350 million of sales of letter performing products in Consumer Brands that still are to be divested as part of your €1 billion portfolio measure program. Can you give us a rough idea of what timeframe we are looking at when the remaining investments are announced? Thank you very much.
Carsten Knobel: Oh! Good morning, Christian. So maybe starting with the dividend part. So, and I start a little bit earlier now, earlier means going back, that we are one of the founding members of the DAX, before the DAX 30, now DAX 40. And there has been not one single year since 1985 since Henkel has ever decreased the dividend, means it has been always either stable or increasing. And also in the very difficult years in -- related to COVID or the Russian war or the supply chain disruptions, we have been always stable while you have seen why with a lot of other companies a quite volatile situation of the dividend proposal. By that we even went above our target range of the 30% to 40% range, which is a very attractive one. And we went above that because in order to give our shareholders a stable and sustainable solution related to that and that means that we are trying to get back into that corridor again. Therefore, you see still a very attractive dividend for this year being stable. And on top, I think it’s very clear we want to invest in our business as well, and when it comes to capital allocation, you have seen what we announced the last couple of months with the last three acquisitions over the last four months, spending more than €1.5 billion. Why? Because we want to foster growth of our company also related to the scale loss we had with the exit of Russia with €1 billion business in debt. And after this long answer, I hope that helps and clarifies. Marco, are you open to take the portfolio question of Christian?
Marco Swoboda: Sure, Christian. Good morning also to you from my side. So your question was on the remaining €350 million of sales that we put under review in Henkel Consumer Brands and your question was on which timeframe. So basically that comprises, as you know, two parts, the discontinuations but also divestments. On the discontinuations, we strive for completing that by end of 2024, i.e., end of this year, with a portfolio optimization, in particular focusing on Laundry & Home Care. On the divestment side, please understand we don’t guide on the specific timeline as we need to make sure that we can realize sufficient value i.e. sufficient selling prices. But for sure, be assured, from my point, I would like to finish that also rather sooner than later.
Christian Faitz: All right. Thank you very much, both Carsten and Marco.
Carsten Knobel: You’re welcome.
Operator: The next question comes from the line of Iain Simpson with Barclays. Please go ahead.
Iain Simpson: Thank you very much. Good morning, everyone. Firstly, just on volume, apologies if this has already been answered. Could you just remind us how we should be thinking about an all-in Consumer Goods volume number in 2024? Now, you’ve clearly said that it will be flat or positive before portfolio measures. You’ve said that you hope to complete that outstanding €350 million of portfolio measures by the end of this year. But depending on when in the year that happens will obviously kind of move the full year volume number. So I was just hoping if you could give us a little bit of help as to how we should think about that reported volume number in consumer for this year. And secondly, the cash conversion is incredibly impressive to deliver what’s basically sort of 130% cash conversion in terms of €2.6 billion free cash flow on €1.8 billion of adjusted net income. Wondered if I could just dig a little bit into the moving parts there. So it looks like your cash tax was quite a long way below your P&L tax. Just wondered if you could give any color on what’s going on there and how to think about that going forward, network and capital you’ve covered, but there also seems to be a €300 million plus inflow from changes in other liabilities provisions. Any color there would be welcome. I’m just trying to get a sense as to how much -- how we should think about cash conversion over the coming years and any commentary on free cash flow in 2024? Thank you.
Carsten Knobel: So, good morning, Iain. The good thing as a CEO is you can take the point who takes what question. Anyway, your second question is, I would say, a preferred question to Marco, so Marco will take the second one.
Iain Simpson: Exactly.
Carsten Knobel: Yeah. And I confirm that. And the first one I will take, the volume one. So, first of all, maybe and I start again in Q4. We told you what we want to do. We promised certain things and we delivered. That means for Adhesives, we said for Q4, we see a slight positive volume in Q4 and you see that in Q4. And in HCB we said we are going towards the end of the year into positive territories, taking into account the portfolio measures and we delivered on that. So I think I already answered for 2024, how the situation in Adhesive Technology is with a more balanced view between pricing and volume. So continuation of that positive volume trend, which we experienced in Q4 already and this is also something which we expect for the full year. Now, moving to your volume question in the HCB sector for 2024. You already saw in the Hair Care category that we started to see positive volume development in 2023. We also were hitting -- going to that point during the presentation and also market share gains in styling. While in Laundry & Home Care, the portfolio moves, we started a little bit later in terms of the optimization measures and thus in 2024 the ongoing portfolio optimization will be more pronounced in that category and it goes without saying that we will have an impact on volumes and on market shares here in 2024. Going back to the Hair part, the Hair, the volumes in Hair, we also foresee what we experienced in 2023 a positive territory for the volumes. So, at the same time, you have heard that we have been discontinuing and divesting businesses of around €650 million in sales, so the remaining €350 million are under review and the statement of Marco was predominantly meant on the discontinuation part that we want to close that until the end of 2024 as we are not making any confirmation on divestment because it’s as always difficult to say when a certain topic comes to the conclusion. So it is very clear that we are on that journey and this journey is by no means at the end. We will continue to work on shaping our portfolio, investing in the brand equity and in the innovations in the upcoming quarters and we are very confident that this will lead us to an even more profitable and faster growing business going forward, because the measures which we are taking are taking out portfolios which are either not growing or having as a second part not really a good profitability and I hope that clarifies the whole situation in that context and we are really positive that what we are promising, the plan what we are having is executed. And with this, handing over to Marco for the cash conversion question related to the free cash flow.
Marco Swoboda: So, Iain, let me try to answer that question on the cash flow. I mean, what is clear, the free cash flow is -- has been growing significantly and that is a strong increase coming from the operating cash flow and that is driven by better operating profits. Could also see that the EBITDA has moved considerably up, but the second component that was also pretty pronounced was a better networking capital cash flow. And in 2023, we recorded a cash flow from working capital that was very, very strong and that is a bit of a rebound compared to what we have seen in last year, driven by much better inventory levels that had a price component, as well as a volume component and the volume component was also influenced by a lot of measures driving also down volumes in regards to better efficiency. So during COVID, there was a lot of safety stocks built in. I think that has normalized also in the course of the year. So on working capital flows, clear rebound and then on the taxes we also saw lower cash outflow from taxes, for example, and that was also partly extraordinary. Some refunds received in 2024 and some inflows on other tax receivables that also helped us a bit and that other tax receivable that related to VAT that is included also in the networking capital and other components line of the cash flow statement. So, a couple of extraordinary impacts for sure on 2023 that won’t automatically repeat a bit of rebound of the rather low cash flow we had in 2022. Overall, we think that free cash flow will normalize. We don’t guide for a specific number, but it’s clear that 2023 was rather extraordinary due to the reasons mentioned.
Iain Simpson: Thank you very much.
Operator: The next question comes from the line of David Hayes with Jefferies. Please go ahead.
David Hayes: Good morning all. If I could be slightly cheeky and ask two follow-ups and two actual questions. Just on the follow-ups, on FX, you mentioned not as bad as last year. Can I just clarify that? Do you mean the leverage effect on FX is not as bad as last year? I think 4.3% at sales was about 7% operating profit impact. So, is it the absolute level loss or the leverage effect that’s less significant? And then, just following up on the SKU rationalizations, you say divestments and discontinued. I know the timing is obviously sensitive. You’ve made the point, but can you give us a sense of whether the divestments will be 50% and discontinued at 50%, just how it comes on the quantum of what you think that 3.50% is made up by? And then on the two questions, the Consumer volumes in the fourth quarter are down over 2%. Are there any areas of disappointment that you’d call out that are slower to recover in terms of either category end or region and where you expect most improvement, therefore, in 2024? And then my final question is on marketing spend. I know you don’t give that explicitly, but I don’t know if you can give us a bit of a sense of where marketing was up in 2023, what sort of percentage, maybe what that is versus 2019, roughly, as a base point. And then, similarly, whether the budget for 2024 is a similar increase as 2023 or whether that now fades a little bit because a lot of that marketing spend increase has been got to a more optimal level? Thank you so much.
Carsten Knobel: So, David, good morning. So I let Marco talk about the FX question and first -- I take first the volume part and then also the marketing spend. So, I already talked quite a lot about the volume development in line with the previously communication volumes further improved, as I mentioned that sequentially during the year and especially also Q4 versus Q3 in both businesses and we reached the flattish territory, taking the portfolio things into account for the HCB business. And we’re considering that this volume will be also, as we mentioned before, taking the portfolio effect into account also positive, slightly positive or flattish to slightly positive in 2024. And for sure it is related to the portfolio measures, and I hope you understand, I will not disclose now on a regional basis where we taking this portfolio measures at this point of time and therefore these measures, which are still quite significant in the Laundry & Home Care part for 2024, will have then the impact on the volume development. To your question, to the marketing spend, as you pointed out, we are not disclosing that until now, but you made the reference to 2019. And here I can tell you for 2023 in absolute, but also in relative terms, we have been significantly above the levels what we have seen between 2015 and 2019, 2020. You know that we made the first margin reset in 2020 where we also related that to more investments which we did. We have seen a double digit increase in 2023 versus 2022 for the marketing spend, and in your question of 2024 or to your question for 2024, while not disclosing the detailed numbers, but for sure our approach is that we will keep up with this level, what we have seen in 2023. And another part is also driven by the valorization of our HCB portfolio bringing more value and we supporting these for sure valorization activities also with more support on that. And with the portfolio measures, we have less brands, we have less activities, and by that we can spend the money what we’re having on these lesser or fewer brands and by that have more significant impact on that. I hope David that clarifies and with this handing over to Marco for the FX part.
Marco Swoboda: So, hi, David. So on the FX side, try to respond to that. So on the FX side, we actually said that we do expect roughly out of magnitude mid-single-digit effect on the topline and that part, as you can imagine, is actually quite hard to predict. That’s our assumption that we have made now also based on the high volatility we’ve seen also in the last years. So mid-single-digit roughly on the topline and a bit more pronounced on the bottomline. So, that’s what we can say to currencies. But again, I think, who’s able to really forecast currencies actually, well, is quite unique. So I think you need to take an assumption that is now ours based on the last year’s experiences.
David Hayes: Thank you.
Carsten Knobel: You’re welcome.
Operator: Today’s last question comes from the line of Victoria Petrova, Bank of America. Please go ahead.
Victoria Petrova: Thank you very much, Carsten, Marco, Leslie. I have two short questions. My first one is again on your organic growth guidance of 2% to 4% and my understanding is that volumes in Adhesives would be positive and the portfolio would be positive in Consumer Brands. You have talked about valorization about the mix. What was approximately the mix impact on organic growth in 2023 and should we expect an acceleration of mix contribution in Consumer Brands specifically and maybe if you could elaborate on Adhesives as well, that would be great. How we should think about it into 2024? My second question is again on free cash flow generation, flat dividend and over €1 billion investments already in 2024. How should we think about your M&A strategy? You obviously have Critica Infrastructure and Seal for Life Industries. You have Shiseido and Vidal Sassoon. My understanding is that a lot of Adhesive acquisitions are very welcome. On Consumer Brands it’s a little bit of subject of the brands you are acquiring and how fast and profitably you could integrate them. Could you maybe elaborate a little bit on your priorities in 2024? Should we expect more Adhesive acquisitions? And also how -- what is your main KPI for Vidal Sassoon acquisition in 2024?
Carsten Knobel: Good morning, Victoria. I take the two questions. So first one on OSG, the 2% to 4%. You have also seen that the midpoint of that is slightly or is ahead or above the current consensus. So I think we are very positive on organic sales growth going forward. Your question on the valorization or better to say on the mix part, I ask for your understanding that we are not disclosing the exact numbers. But what I can tell you is that, there is for sure a mix a positive impact because of our Hair contribution that the Hair part, as I mentioned before, is already driving or delivering better results also with positive volumes. What we just said for 2023 and for sure also, in general, the portfolio measures are paying off in the direction of heading more -- towards more and better mix in that context. When it comes to your second question on M&A, I think you said everything in terms of what is right. When it comes to 2024, you asked for priorities and while I was in the past or in the past, I mean in last year, in terms of first we need to do our homework in HCB in terms of executing the portfolio measures, bringing the strategy into execution, bringing everything into life. I think 2023 has shown that we have made significant steps forward in terms of executing synergies, bringing the organization into the right setup. So from that point of view, HCB is also well positioned to take also further M&A activities. Therefore, there is going forward to 2024 no big difference between HCB and Henkel Adhesives. In that context, it is now really the point of what are attractive targets and what is really on our list and the negotiations. So there is no prior in Henkel Adhesive Technology you have seen we are moving also a little bit more into adjacencies. A good example is the platform we have now created with MRO, maintenance repair overall taking our own business and adding to with Critica and Seal for Life two great examples on that. And it is for sure also important that we want to expand our regional footprint and this is something which is more valid for HCB and that is also why you see Shiseido and Vidal Sassoon both are in our two global categories and they are also in a highly attractive growing market of Asia and that is also the reason because you ask also for Vidal Sassoon. Vidal Sassoon I think is a great brand -- has a great brand equity, is absolutely fitting in the world between Professional and Retail. That is something where our strength is definitely existing with Schwarzkopf and all the other brands playing in both segments and that helps us and that supports us also here in the priorities for that. And I have to also say the acquisitions are margin accretive which we did in that context and by that -- that is our strategy, so no big differences in priorities between HAT and HCB for 2024 and going forward. I hope that clarifies, Victoria.
Victoria Petrova: Thank you very much. Thank you.
Carsten Knobel: You’re welcome.
Operator: Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Mr. Knobel for any closing remarks.
Carsten Knobel: Yes. Thank you for your questions and you know in a short summary, it’s not about the -- it’s not only about having great results achieved in 2023 and having also a guidance which, I would say, an ambitious guidance for 2024, it’s also related that we had a fantastic, a really good start in month of Jan and Feb for both businesses and by that for overall Henkel. So, with that, let me close and remind you of the upcoming financial reporting dates. We are looking forward to connecting with you again in May when we will comment on the business performance in the first quarter, and with this, I would like to thank you for joining our call today. Have a good day. Take care and good-bye.
Marco Swoboda: Good-bye.
Operator: You may now disconnect your lines. Good-bye.
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