Beiersdorf Aktiengesellschaft (BDRFF) Q1 2024 Earnings Call Transcript

Beiersdorf Aktiengesellschaft (OTCPK:BDRFF) Q1 2024 Results Conference Call April 16, 2024 3:00 AM ET

Company Participants

Jens Geissler – Head of Investor Relations & Corporate Treasurer
Vincent Warnery – CEO & Chairman of the Executive Board
Astrid Hermann – CFO & Member of Executive Board

Conference Call Participants

Jean-Olivier Nicolai – Goldman Sachs
Celine Pannuti – JPMorgan
Guillaume Delmas – UBS
Bruno Monteyne – Sanford
Rashad Kawan – Morgan Stanley
Jeremy Fialko – HSBC
Emma Letheren – RBC
Iain Simpson – Barclays
Thomas Sykes – Deutsche Bank
Victoria Petrova – BofA
Rogerio Fujimori – Stifel
Molly Wylenzek – Jefferies
Karel Zoete – Kepler
Mikheil Omanadze – BNP

Jens Geissler

Welcome, everyone, to Beiersdorf’s Q1 conference call. Our CEO, Vincent Warnery; and CFO, Astrid Hermann, are here with me this morning, and we would like to share Beiersdorf’s business results of the first quarter ’24. We will start with the presentation and the business review. Just some technical remarks before we get going. [Operator Instructions]

And with that, I will now hand over to Vincent.

Vincent Warnery

Thank you, Jens, and good morning to all of you. Welcome to today’s conference call regarding our business performance in the first quarter of 2024. Astrid and I have the pleasure of presenting our strong financial figures for the first 3 months of the year.

Beiersdorf is off to a truly great start in 2024. We were able to keep up the positive momentum from our record year in 2023 and achieved sales growth across the brand portfolio in the Consumer Business segment in the first quarter of 2024. This performance led to impressive double-digit growth of 10% for the Consumer Business.

NIVEA and our Derma brands were the main driving forces here, both with double-digit growth figures in the first 3 months. As indicated earlier, our luxury business has returned to growth and is gaining speed towards the expected full turnaround after a tough year in 2023. At tesa, we saw a decline in sales in the first quarter, mainly due to a slow start in the electronics and electrical systems divisions.

Together, these results translate to strong growth of 7.3% at group level. Based on this promising start to the year, we are upgrading our full year guidance for the group and the Consumer Business today. More details on that will follow later.

So let us take a closer look at our NIVEA business. Our iconic brand is a global powerhouse and continued its remarkable growth trajectory in the first quarter of 2024. Once again, we grew in all regions, leading to an overall organic sales increase of 12.6%. This outstanding figure is also the result of our strong pricing and volume growth with NIVEA. The figures in Europe and in the emerging markets regions were impressive as both key regions delivered stellar double-digit growth.

A particular highlight is our sales in Germany, which increased by 20% in the first quarter. I’m truly proud of the fact that we achieved this both in an already established market environment in Europe and in the expanding emerging markets. This underlines the global appeal of our icon and showcases once more the immense potential of NIVEA.

In this first quarter, we were partially successful in the Sun and Face Care categories. In Sun, we grew by 23% in Q1 and in Face Care by 12%. One of the reasons for our continued success in the Face Care category is our patented ingredient LUMINOUS 630, the most effective anti-spot ingredient in the world.

Fueled by the ongoing expansion into new categories with products containing this ingredient, we doubled the business in the first quarter. The potential for this product range remains very high, and we are planning several additional launches throughout 2024. Based on these results and with the full innovation and launch pipeline for 2024 in mind, we are confident that NIVEA will continue its strong performance in the coming quarters.

Now coming to our Derma brands. We grew our Derma brands, Eucerin and Aquaphor, 10.2% in the first quarter of 2024. This growth rate was significantly impacted by the high comparison base of the very strong first quarter in 2023, weakening U.S. market and extreme inflation in Argentina.

Nevertheless, this is still a strong result with double-digit growth that makes us confident in a successful future of our Derma brands. Let me explain why. In the first quarter, one of the key drivers for Eucerin continued to excel, the Eucerin Sun business reported remarkable global growth of 36%. Especially in European countries, the summer preseason was well underway and led to strong sales numbers.

We are also currently rolling out the Face Care category in the U.S. market. As the year progresses, we are getting closer to the launch of our first product containing our breakthrough innovation in the field of epigenetics. It will be introduced to the market in late summer 2024. As a first mover in epigenetic skin care, we are ready to turn back the skin’s age clock, and we’ll share more with you on our Capital Markets Day in June.

Regarding our luxury business, I mentioned in the full year results call in February that we expect a return to growth for La Prairie in 2024. This expected turnaround is now taking shape and gaining momentum. Following the minus 15 degrees year-on-year for La Prairie in 2023, we have now achieved slight growth for the first quarter of 2024.

And if you look at the key market of domestic China in this context, we achieved strong growth of 14%. We also fully completed the cleanup of our stocks to normalize inventory levels for La Prairie in travel retail at the end of the first quarter. The brand also saw the first promising results for its new line extensions. All of these, combined with our stronger strategic e-commerce setup for luxury brand, it’s fueling optimism about the further acceleration of this positive momentum for La Prairie in the second half of 2024.

Astrid will now take you through our detailed financials.

Astrid Hermann

Thank you, Vincent, and good morning, everyone. I’m pleased to present our performance for the first quarter. Let’s begin with an overview of our sales figures. During the first 3 months, our Consumer Business reported double-digit organic sales growth of plus 10.0%, as Vincent mentioned earlier.

Due to unfavorable foreign exchange effects, our nominal growth was lower at plus 7.3%. Conversely, our tesa division declined by minus 5.4% organically with nominal sales slightly lower than that. Overall, the group achieved around €2.6 billion in revenue for the first quarter, growing plus 7.3% organically and plus 5.0% nominally.

Our Consumer Business continued its positive development, building upon the strong performance of the previous year. This was driven by the impressive start to the year of our mass market brand, NIVEA, the robust first results of Derma and the recovery of our luxury business. The first quarter showcased well balanced growth in both volume and pricing.

Now shifting focus to the regional breakdown within our Consumer Business. In the first 3 months of the year, all but one sub-region achieved double-digit growth. Europe reported like-for-like growth of plus 10.7%, driven notably by a successful start to the sun season, which benefited our NIVEA and Derma brands.

Within this region, Western and Eastern Europe both achieved double-digit organic sales growth with plus 10.3% in the West and plus 12.4% in the East. In the Africa/Asia/Australia region, we delivered strong growth of plus 12.4%, achieving a double-digit increase for both NIVEA and Derma. On top of that, our luxury business in China is finally recovering with double-digit growth for La Prairie in the first quarter.

In the Americas region, LatAm maintained its successful trajectory with organic sales growth of plus 10.6%, mainly driven by Brazil and Mexico, while Argentina’s high inflation and unfavorable foreign exchange dampened the growth. In North America, we saw a slowdown in our sales in a challenging first quarter. The growth in the region was impacted by a tough comparison versus prior year with a strongly growing market. This year, we are growing market shares in a declining market. That said, we are set up for success in this region with our strong brands, impactful innovation and new category entries, such as our Eucerin Face Care launch in the U.S. this year.

Our tesa business had a challenging first quarter with organic sales growth of minus 5.4%. The decline in sales was particularly evident in Asia and North America. However, a softer start had been expected, so we are confident to reach our full year guidance. Our automotive business continues its positive trend and record slight growth. We enable reliable and efficient production processes for next-generation human machine interfaces. This includes a variety of adhesive tape solutions for large curve displays, head-up displays and smart surfaces.

As expected, sales in the electronics segment in Asia declined after a strong Q4 2023, but tesa expects to expand its business with innovative adhesive solutions for the electronics sector going forward. Our tesa Consumer segment is slightly declining. However, in a tough environment, we are outperforming the market and winning market share.

I now hand back to Vincent for an update on our guidance.

Vincent Warnery

Thank you, Astrid. For the group and for the Consumer Business, we are upgrading our sales guidance for the full year and expect organic sales growth between 6% and 8%. That said, we need to see NIVEA’s momentum continuing, luxury accelerating in the second half of the year and North America returning to stronger growth. At the same time, we confirm our ambition to exceed the EBIT margin of the Consumer Business by plus 50 basis points in comparison to the previous year, whilst the EBIT margin at group level is expected to be slightly above previous year’s level. At tesa, we anticipate sales growth between 2% and 5% in fiscal year 2024. The EBIT margin is expected to be at previous year’s level.

And with that, thank you very much for your attention and interest in our financial results in the first quarter of 2024. Astrid and I are now looking forward to your questions. And I will hand back to Jens, who will kick off the Q&A session.

Question-and-Answer Session

A – Jens Geissler

Thank you. At this time, we will begin the question-and-answer session. [Operator Instructions] On the queue, first caller I see is Olivier at Goldman.

Jean-Olivier Nicolai

I’ll speak to 2 questions, please. Just on La Prairie, first of all, returning to growth in Q1. Could you give us a bit of an idea of the sellout trends for the brand? And what gives you confidence that the growth will accelerate in the second part of the year?

And related to La Prairie, you have announced also the arrival of Estelle Létang, I think, recently to lead the brand. So could you give us perhaps a quick insight on the brand strategy and what Estelle will bring to the brand?

And then secondly, for the consumer still, U.S. — well, North America, sorry, only grew 1.4% organically in Q1. Do you see a structural slowdown in consumer demand for skin care and beauty in general in the U.S. as some retailers said, I think, a couple of weeks ago?

Vincent Warnery

On your first question, on the Q1, the sellout is pretty positive. I gave the figures for China, plus 14%. We are also growing in the U.S., benefiting also from the fact that we opened some new stores with Nordstrom that we’re also being more active in the online.

So all in all, we are growing strongly, and this is why it makes us pretty optimistic for the second half of the year. Q2, as you know, we still have the historical stock building of last year, so we still are accounting on a slightly increasing quarter. But Q3, Q4 will be very strong.

On Estelle, I mean, we are extremely happy to welcome her. And I was with her last week for the opening of a new headquarter in Zurich. She’s coming with 21 years of experience with a great luxury company. She has been working in all continents and particularly also in China, North America and Middle East.

She will drive — perhaps make the brand more modern in its digital expression, more appetite also to work on digital, refreshing the brand image. So we are — I’m extremely optimistic, and I think she will bring the brand to new heights.

On the North American market, as you rightly said, the beginning of the year, the markets are pretty slow. We used to have a nice double-digit last year. We are more into the low-single digits and even negative in volume. When we look at the last, last weeks of the month — of the year and talking April, it’s getting better. So we are not pessimistic. We are also very happy with what we are doing ourselves. We are increasing market share with all our brands; Aquaphor, Eucerin and NIVEA.

We are launching right now the Eucerin Face in the face market. That is 60% of the skin care market. So obviously, a huge gain for us. We are flying in Sun with Eucerin. So we are optimistic, and I think you will see already some positive momentum in the second quarter.

Jens Geissler

We move on. Next on line is Celine at JPMorgan.

Celine Pannuti

Maybe I wanted to follow up on the U.S. market. So I just wanted to understand the launches that you have made with some of these already had some impact in the first quarter, already the selling of that would be throughout the coming quarters, and then, the benefits on the market share that you expect given that, yes. I was a bit surprised to see that deceleration of Eucerin in the first quarter.

And then my second question is on the European markets, have done quite well. Can you talk about 2 things; one, has there been any phasing in terms of the early Easter and how that impacted the phasing of Sun Q1 versus Q2 or if any quantification you can give there? And as well on the pricing in Europe, how — what kind of pricing have you achieved? And was there may be a rollout — a benefit from ’23 that was there in Q1 and that will spread in Q3 — I’m sorry, from Q2.

Vincent Warnery

I will take your first question, Celine, and Astrid will take your second one. On the U.S. market, so as you know, on Eucerin, there are 2 new categories. So Sun, this is a category we have launched last year. We are doing extremely well, and we are growing in Eucerin Sun by 35% despite the fact that the market is negative. We are impacted by the very bad weather in Florida. And Florida in the first quarter is a main area for Sun. So we are happy with that.

Regarding Eucerin Face, we are right now listing the brand, so you are — the most of the selling is starting in April, and so we are hoping to get some good momentum in the second quarter. What is important to say that despite those slow markets, we are gaining market share from each and every brand. This is what is making us optimistic.

And we are even over-performing some of our key competitors. So this is why, as I said, Q2 will be already a very good quarter. And hopefully with the success of Eucerin Face and Eucerin Sun, plus Eucerin body, we’ll be back to a strong growth in the year to go.

On the second question, Astrid?

Astrid Hermann

Celine, so your question in terms of phasing and Easter and so on, we don’t think it has any impact. We have had a good start, particularly to the Sun season across our brands. So that certainly is in our numbers. But we don’t know that it’s tied to an early Easter in that sense. We’ve made good plans. We’ve executed well already the early season in store. But we don’t think it’s tied to that. And again, we see really good performance of our business even beyond our Sun business in Europe.

Celine Pannuti

Can you comment on the pricing, please?

Astrid Hermann

So we’ve mentioned that pricing is about balanced with volume, which is very nice to see obviously, that we’re getting strong volume. And we still have some positive pricing. Obviously, pricing through the remainder of the year will become a bit weaker as we are lapping, obviously, pricing from prior year. But we continue to also take pricing in this year. Emerging Markets, obviously, to make sure we compensate for foreign exchange, but then also in Europe, we are as well.

Jens Geissler

Next in our line would be Guillaume at UBS.

Guillaume Delmas

Two questions for me, please. The first one is on NIVEA Face Care. I think you said Face Care for NIVEA grew by 12% in the first quarter. Now if I remember well, Face Care for NIVEA was growing by 24% in the second half of last year. So still a very good performance in Q1, but a bit of a sequential slowdown. Any particular reason for this? Or any regions you would single out to explain this deceleration? So any color on this would be helpful.

And then the second question is on tesa, because you’ve got a guidance of 2% to 5% organic sales growth for the year. Based on what was reported in Q1, I mean, this implies 4% to 9% organic sales growth for the next 3 quarters despite having some pretty challenging comps in the fourth quarter. So just wondering here what underpins your confidence in such a material acceleration? And would it be some additional pricing, some new projects kicking in? So again, any comments on this would be great.

Vincent Warnery

I will take the first question on Face Care, and Astrid will answer on tesa. We are doing extremely well on Face Care. I think the — what you have to remember that in Q3 and Q4 last year, we benefited from the fact that we had been delisted in the beginning of the year due to some customer’s conflicts when we wanted to increase prices. So we had refilled all the shelves, which of course obviously helped us.

The fact that we are growing double-digit on Face Care and even better in value, in market share is making us very optimistic because we gained market share in each and every country of Europe. We have LUMINOUS, which is, as we said, doubling, and this is clearly the biggest growth driver. It’s even making 90% of the growth in sell-out.

We have also a lot of big launches coming, some renovation also. So we feel pretty happy with what is happening on Face Care. We — this is the #1 priority, as you know, for the brand, and this is becoming the growth driver that we were expecting. So all fine on Face Care, and some nice things to come in the months to come. Astrid?

Astrid Hermann

And then your question on tesa. So as mentioned, we expect it to be down at the beginning of this year, particularly in Asia in electronics, given also the very strong performance in Q4. So that was according to plan. We were a bit surprised about electrical systems in North America, but our plans are very solid.

We are gaining — in both automotive and electronics, we’re gaining projects, new contracts with customers. We have really good plans to go in the year, so we still very much believe in getting to the plan we’ve made for the full year.

Vincent Warnery

Interestingly, I was looking at my files, in Q1 ’23, we grew 12% or so, so exactly the same growth. So we are pretty consistent on that.

Jens Geissler

Well, we move on. Our next caller will be Bruno at Bernstein.

Bruno Monteyne

For me, the first question is again on the U.S., in the weaker area. I wonder if you can sort of help us is to do with the bifurcation, also of the U.S. consumer. So is your weakness sort of weaker on the mass market end, on the premium end of beauty? Or is it also the Derma, Cosmetic that’s particularly weak in the U.S.? Trying to figure out if it’s uniformly across all those 3 or one more impacted than the other one.

The second one, you mentioned the impact of inflation in Argentina. And if I’m not mistaken, you’re the only company that I think records the growth for the sales in — the organic growth in hyperinflation countries in euros, is sort of basically report euro growth. which I think is a very clean way of doing it. But the base, you mean, when the currency depreciates more than the inflation, you have a negative growth in the country. Can you just confirm that’s correct? And how big was the impact of basically your Argentina unique style accounting on the overall organic group impact?

Vincent Warnery

I will take the first question, and Astrid will answer the question on Argentina. In fact, it’s difficult to separate the market in the U.S., Bruno, between mass market and Derma because both categories are solely the same stores. And you will find Eucerin, NIVEA and our competitors in Walmart, Walgreens, Target and all the same retailers. This said, they are not on the same shelf in many of those stores.

If you look at the market, this is a market which is slowing down for everybody. The good news is that we are gaining market share, so we are growing faster than the market. And it’s partially true for Aquaphor, which is the most premium of our Derma brands, but still in the mass market environment. So we are going faster with Aquaphor. We’re also gaining market share with the other part of the business, Eucerin body and NIVEA body. So no real difference between both categories.

What is interesting also to complement my answer, that we are growing on La Prairie in the U.S., which is something that we had not experienced in the beginning of 2023 until the fourth quarter. So we see also some momentum, not so much in the department store, more into this cosmetic store, I was mentioning Nordstrom. I could mention Space NK, of course, Sephora. This is where the growth in premium skin care is coming from. And we are benefiting from the fact that we have more appetite entering those stores with La Prairie, and of course, with Chantecaille.

Astrid?

Astrid Hermann

And Bruno, your question on Argentina, let me clarify. While we’re not accounting for hyperinflationary accounting on our entire balance sheet and so on, we are converting organic sales for Argentina at the real effects of the year, not the prior year.

So we are, in fact, showing organic sales and nominal sales exactly the same for Argentina in our numbers. So it is already reflected there’s significant decline — or the decline in devaluation is in our numbers, what you’re seeing organic sales, and it is having obviously a material impact on LatAm with Argentina being down nearly 1/3. That said, our overall exposure to Argentina is still small. We’re at less than 1.5% of our sales that are coming from Argentina.

Bruno Monteyne

Well, it sounds like, therefore, it is 1.5% still and has been declining at 1/3. We probably have a 50-basis-point-plus impact on organic growth.

Astrid Hermann

Very close to that, yes.

Jens Geissler

Well, we move on. Next, we have Rashad at Morgan Stanley.

Rashad Kawan

Just a couple for me, please. The first, on NIVEA. You talked, Vincent, I think about a full innovation pipeline that gives you confidence about the year ahead. Can you talk a bit more about the pipeline, how you think it compares with prior years?

And then the second question, just to go back to the pricing point, I think at the full year, you said you expect to take somewhere around 3% pricing in Europe, so significantly more moderate than years past. Can you update us on how those negotiations with retailers have or are going?

Vincent Warnery

Thank you, Rashad, for the question. We have a particularly strong innovation plan, and in fact, not only innovation but also renovation. No, we will have in fact 1/3 of the portfolio of NIVEA, which will be either new or renewed. And that’s particularly important because we are renovating big franchises in the other ones. For example, you might know the Black & White range. The body mean culture of NIVEA is renovated with sustainable formula. That will be a big, big part of the plan in the second semester.

What we are also doing, I mentioned that, is to the extend the power of our LUMINOUS 630 ingredients. As I said, this is the best performing anti-spot ingredient in the world. We are launching these ingredients not only on additional ranges in the face market but also in the body market, also in the men market. So clearly, continuing to extend this ingredient and delivering this added value to consumers. So all of that is making, in fact, the plan of 2024 the best — clearly the best since I became CEO.

On the pricing, as I said, we are — of course, the price increase is there. It’s much more moderate than it used to be in the ’22 and ’23. We are in line with the market. And so far, so good. We have not had any big issue with any big retailer. We have the necessary and the usual irritations, but no delisting, no loss of promotion. And we are particularly optimistic on our ability to close each and every conversation with retailers in the coming weeks.

Jens Geissler

We have a lot of callers here today. So next in line, I can see Jeremy at HSBC.

Jeremy Fialko

Just 1 question from me. Could you talk a bit about the underlying demand in China? Obviously, you mentioned that La Prairie was up 14% in the domestic business in terms of sell-out, I think. But just more kind of broader — more broadly how you’re seeing the consumer there, any signs of a pickup, any worsening? And also how NIVEA is doing in China as well?

Vincent Warnery

The good news that we are growing double digit with each of our brand in China, so we mentioned the 14% of La Prairie in Mainland, which is obviously very strong figures after some difficult quarter. But we are also growing double-digit on NIVEA benefiting from the launch of LUMINOUS that we did 2 years ago, which is only cross-border e-commerce. But even being in cross-border e-commerce, LUMINOUS China is our #1 LUMINOUS market.

And we’re also growing 13% on Derma, which is only online. So all in all, we are happy with our performance in China. We are — one of the big reasons why we are accelerating is TikTok. We were a bit late, I would say, embracing the potential of doing of TikTok in China. We are clearly betting on TikTok on each and every brand, and this is providing us the growth at the time when Tmall is declining.

We also — on the La Prairie opening stores, we have an extremely reduced distribution, which obviously is something we are working on with a lot of — yes, extremely demanding and the size of the counter, the service we can provide. So we are very positive about the development of China, especially now that we are totally healthy in terms of stocks. And we hope to see some good news in the months to come, particularly on the La Prairie, but also on NIVEA. And we have, as you might remember, the launch of Chantecaille in the second semester, which is also a very good — very important news for us and for the brand.

Jens Geissler

Move on to Emma at RBC.

Emma Letheren

Given your guidance upgrade on sales and margins and the really strong momentum going in the business, I just wanted to come back to that share buyback you announced earlier this year and how you think about the scope for increasing the amount that you’re buying back or looking to introduce further share buyback longer term if this performance continues.

Astrid Hermann

Emma, we’re obviously very happy to have made some progress here on our capital allocation strategy in terms of raising dividends significantly and now doing our first buyback in over 20 years with 500 million. Let’s see what comes after that. Certainly, the plan is not to end here, but we will take it step by step.

Jens Geissler

I can see Iain Simpson is next online.

Iain Simpson

A couple of questions for me, if I could. So could we dig into that La Prairie performance a little bit? So 14% growth in Mainland China, you’ve said the U.S. is growing, but you’ve only grown 1% overall. So is the swing factor there just that your Asia travel retail business, which I think you book in Europe, is still down, and we’re kind of waiting for that to swing? So if you could give us sort of bit more regional color on what’s not growing in La Prairie that would be great.

And then secondly, if we can just dig into NIVEA volume growth, which I’m sure is at least — which looks to at least mid-single digit, what regions are driving that, please? I’m just trying to get a sense of how much of that Nivea volume growth is emerging market rollout versus how much is share gain in developed markets?

Vincent Warnery

Thank you. And I will take the first question, and Astrid will take the second one. The difference between these good sellout figures I was giving, which is into the direction of high single digit, double digit depending on the regions, is just compensating a reduce by the fact that we are destocking. We have the destocking that was still remaining in Hainan, which is costing us 5 points of growth.

We have the fact that last year also, at the same time, we had the buildup of travel retail Korea stock. So that obviously is not happening again. We have 5 points. And then you have 3 points which are due to the FX impact, the fact that we are invoicing in the low side of Switzerland. So all in that, makes a difference between the plus high single digit, double digit, I was mentioning in terms of sellout and the 1% we are announcing this quarter. Second question?

Astrid Hermann

Yes. So on NIVEA, the nice thing about NIVEA is that it is really broad-based growth, double digit in all regions except for in North America, where it’s low single-digit growth. But everywhere growth for Nivea in all the regions, so not just Europe or emerging markets driven, but really, really broad-based growth everywhere. And again, success across all of our key categories as well, which is great to see both on the skincare side, very good performance as well as on our very important deo business.

Iain Simpson

And specifically for volumes within NIVEA?

Astrid Hermann

Yes. And what we mentioned is that we’re seeing a very nice balance of volume and pricing. And again, also, that is very broad-based what we’re seeing in the business.

Jens Geissler

We move on. I can see Tom at Deutsche Bank.

Thomas Sykes

Firstly, just on a sales call, but on the margin, can you say anything about the cadence of margin improvement first half versus second half given that your margins were obviously up quite a lot in the first half of last year. Will the 50 basis points be skewed towards H2? And will you still see margin improvement in consumer in H1?

And then just on Sun pricing, or perhaps pricing on less frequently bought products, is that stronger year-on-year than other products, which people may use more often? I mean, is NIVEA pricing at all skewed towards Sun please?

Astrid Hermann

Tom, I will take both those questions. So we are not giving half year guidance, sorry to disappoint you. But we feel very strongly about our plus 50 basis points for this year which we will deliver, obviously making sure that we always give ourselves the room to react to the market and drive our business appropriately. In terms of Sun pricing, we are not taking more pricing in Sun than we are in other categories, so no concern there.

Jens Geissler

Next in our line is Vica at Bank of America.

Victoria Petrova

Congratulations on the results. I have 2 clarification questions. You are talking about 50-50 split between price and volume and that’s already very helpful. Could you quantify or qualify the mix impact, which should be obviously a very important contribution to your group dynamics as well as within NIVEA itself? And maybe directionally, if — when is it kind of fading given that your comps are becoming much higher?

And my second question is on tesa. Your competitors are talking about the trading day impact, invoicing the impact in the first quarter. Has it also been material for you? And should it basically translate into additional positive impact in the second half of the year?

Astrid Hermann

So I will take those 2 questions, but you might have to repeat what you mean with tesa because I didn’t quite understand. And maybe briefly on your first question, so yes, we have positive impact from a mix perspective, driving our growth and our margin, net margin quite nicely. We’re seeing that on top of a year, as you remember, last year, we mentioned this as well where we were driving that as well despite the fact that La Prairie obviously had a damper on there last year.

And you know the La Prairie, obviously, growth is still to come. So we feel quite good about how we’ve started the year with very positive impact from a mix perspective. And it makes sense also in terms of what’s growing, skin care. Our deo business does really drive our gross margin.

And then in terms of tesa, do you mind just repeating? I didn’t quite understand what you were saying.

Victoria Petrova

Of course. My question was about trading day or invoicing day in your tesa business. Did it have a material impact on first quarter? And in the second half of the year, there should be 1 or even 2 more invoicing days theoretically, at least. This is what some of your competitors are commenting on. Does your guidance include it? Was it material for you as well or it’s a bit different?

Astrid Hermann

It’s not that material in terms of our business, so no, it shouldn’t.

Jens Geissler

We move on. I have Rogerio at Stifel.

Rogerio Fujimori

I have a follow-up question on La Prairie. I was just wondering if you could share your thoughts on growth rates in sellout trends for other Asian markets like Japan and Hong Kong. Recent Global Blue data looks pretty encouraging. So I was wondering how La Prairie is benefiting in Asia, ex-China ecosystem, and also in the airports in Europe.

And then a follow-up question on the U.S. Have you seen any material changes in the level of promotional intensity at the end of Q1 given the slowing volume momentum for the beauty industry overall?

Vincent Warnery

On your first question, Rogerio, obviously we are benefiting from the good momentum on La Prairie in most of the Asian countries. We are indeed growing. If you look at the region, we are growing double digit in each of the country you’re mentioning; Japan, Singapore, Korea, Taiwan.

Korea also, because now we are also totally healthy in terms of stock. So this is one of the main drivers. And if you look at the total region, we are growing at 20%. On the U.S. market, we don’t see any change in the promotional tactics. Again, as I said, we have the slowdown of the market. We have the very bad weather in Q1 in Florida, which explain 90% of the difficulties of the market in Q1. But no big change that is making us review our promotional strategy.

Jens Geissler

We go on. I have Molly at Jefferies.

Molly Wylenzek

I just want to come back on margin. Astrid, you laid out very nicely some of the gross margin drivers you’ve got from mix. And I think you also mentioned at the full year results some of the deflationary raw mats as well. In that context and in the context of medium-term operating margin that is at least 50 basis points, why is 2024 not in at least 50 basis points a year for the Consumer Business?

Vincent Warnery

As we always said, we can do much more than 50 basis points. If you look at, what I call the, double-mix effect, the mix within NIVEA moving into Face Care and much less on personal care. The fact that our premium skin care brands are growing faster, Derma, La Prairie, Chantecaille. We could do more than the 50 basis points.

But clearly, we want to invest. We want to invest not only in the businesses, in the countries we are in, and that’s something which is absolutely essential, but also in all, what we call, white spaces. When we launched Eucerin Face in the U.S., it costs money. When we launched the second year Eucerin Sun Care in the U.S., it costs money.

The plan we have also to launch NIVEA Face in other countries in Asia, cost money, and that’s really something which is absolutely paramount. And this is why we promise at least 50 basis points. You might remember that last year, we came with 60 basis points, because clearly, the business was allowing us both to invest and to deliver more profit. But we want to have this — we want to manage this EBIT in a very, very serious way because we still have so much to do with NIVEA and Eucerin across the world.

Jens Geissler

Final caller today is Karel at Kepler.

Karel Zoete

I have a follow-up question on the U.S. slowdown of the category. You already alluded to bad weather in Florida impacting the Sun category. But in general, what does your consumer insights tell you why interest in beauty is now slowing after many strong quarters.

Vincent Warnery

Obviously, Karel, we don’t know. We don’t know. We don’t have any consumer insight which is telling us that there is a big difference — big change in the way consumers are buying. We know that there are some customer changes. You have some customers, for example, who have decided to have all the new products hitting shelves in April. It used to be more in March. We have a few issues with some customers. You might know that Rite Aid, for example, is bankrupt, so — but there is no consumer feeling.

Again, when I look at the first week of April, I feel more positive looking at the market dynamics, which is important for us, is that we are growing in market share, that we are also overperforming our main competitors. So that makes us pretty optimistic, not only for the Q2, but for the months to come, so nothing to worry. And again, as I said, we have this huge launch of Eucerin Face, which for us is a game changer, not only for the U.S. market, as you might know, we are mostly skewed towards [indiscernible], but also for the global dynamics of Eucerin.

Jens Geissler

Sorry, we have one last caller. Mikheil at BNP.

Mikheil Omanadze

Two quick questions from me, please. Can you please quantify the growth of Chantecaille in Q1, whether it managed to grow or not? And then on the Thiamidol approval in China, what’s the latest update on the regulatory process?

Vincent Warnery

Mikheil, I’m happy to tell you that we grew 4% in the first quarter. We suffered for the same historical issue that we had on La Prairie. So we are very happy to be positive, and I’m expecting an extremely good second quarter. We are growing in the U.S. We are growing extremely strongly in Korea, 19%; Taiwan, 46%. And we have the launch of China around the corner. So I think we are ready for a very good year on Chantecaille. I’m very happy with the job which has been done by the team to turn around the brand.

On Thiamidol, it’s a long journey. The last time such an ingredient was registered in China was 2013. We are on the journey. We’re submitting officially for the approval beginning of March. We’ll have the necessary conversations with them, but we hope to have a decision in the second semester. And then we have between 12 to 15 months of registration for the products, but it’s more easy.

As soon as the ingredient is registered, the registration of the products is easier. So this is why we have always thought that we could be in a position to launch our first Thiamidol-based products on the domestic channel end of ’25, beginning of ’26. And — but so far so good. And the conversations we’re having with the Chinese FDA are very promising, and there was no showstopper. So we are on the journey, and we hope to make it successful.

Jens Geissler

Well, thank you. This concludes our Q&A. Thank you very much. Thanks for having joined our conference call. Of course, we appreciate your interest in Beiersdorf. So thank you, and goodbye.