Beiersdorf Ag

Good morning to all of you. I would like to welcome you to Biasdorf's full year analyst meeting here in Hamburg. With me this morning is Biasdorf CEO Vincent Warnery and our CFO Astrid Herrmann. We would like to share with you a review of last year as well as the outlook featuring our growth drivers to win and the guidance for the year 2024. Before we begin just some technical comments. If you have come to this website via the link without registration, you will remain in listen-only mode. If you have registered for the Q&A, you can participate via video chat if you wish. Okay, so we will start now and hand over to Vincent for the review of 2023.

Thank you, Jens, and good morning from our Biosof campus in Hamburg. Welcome to our 2023 full year results conference call. Astrid and I now have the pleasure to not only guide you through our financial figures, but also to share an update on our strategic plans for 2024 and beyond. Before we look into the future, let's talk about our results in the fiscal year 2023. In short, they were outstanding. Yes, 2023 was challenging. It was intense and macroeconomic volatility remained high throughout the year. But 2023 was also exciting. We were proactive and ultimately successful from start to finish. It was a proud year for our company and we achieved a truly remarkable performance in 2023. We were the fastest growing beauty company worldwide. We achieved a record high in sales for the group and especially our iconic Nivea brand as well as our derma business performed at an unprecedented level. We delivered on our promises and drove profitability. We reached a new all-time high with our share price. Our teams showed exceptional unity in light of the tough market conditions and together pushed our brands to new heights thereby highlighting our robust and crisis resistant business model fueled by this success we at the same time invested significantly in the future viability of our company all in all 2023 was the best year in bios of history I want to sincerely thank our teams for their passionate and remarkable commitment to Biosoft. The display level of adaptability, creativity and dedication was truly outstanding in the past year and was the foundation for these fantastic results. Now in more detail, the financial figures for 2023. For the second full year in a row, we achieved powerful double digit growth at group level with an organic sales increase of 10.8% in 2023, leading to record sales of 9.5 billion euros in nominal terms. Moreover, we kept our promise of profitable growth and increased our EBIT margin for the group. The key driver for this growth was the consumer business segment, with a formidable organic increase of 12.5%. we achieved a strong expansion of our EBIT margin by 60 basis points year on year, which surpassed the expectation we had set at the beginning of 2023. The TESA business segment grew slightly despite the demanding market environment by 3.2% in organic terms. All in all, a year of growth. Now to a more in-depth analysis of our performance at brand level, and the reasons why we outperform the market and were the fastest growing beauty company in 2023. Nivea and our derma business with Eucerin and Aquaphor are leading the way with outstanding results. Nivea grew organically by 16.2%, a level of growth which our icon had not yet achieved this century. The derma business continued its remarkable success story with organic sales growth of 24%, thereby marking the third year in a row with growth of 20% or more. This best-in-class performance was driven by both strong pricing and volume growth. Another important contributor to this positive development was the continued success of the e-commerce business, which outperformed the market for the third consecutive year in 2023. and grew by 19%. The healthcare business reported continuous growth of 4.2%, while our luxury business with La Prairie, as previously mentioned, faced difficult market circumstances in the travel retail business and in mainland China, which caused a decline in sales for the brand by 15.4%. Now to a few more details on the success of Nivea. The success of our icon and our overall positive development as a company are intertwined, of course. But 23 was not just a good year for Nivea. It was the brand's best this century. Double-digit growth in every region and every category, a well-balanced mix in price and volume, and outperformance of the competition led to outstanding organic growth of 16.2%. It means Nivea, including Labello, surpassed the 5 billion euro threshold for the first time in history. This broad-based success was fueled by fewer but better and bigger innovations and a successful shift to a more globalized approach in Nivea's operating model. The e-commerce business also contributed to this stellar performance, driving market share gains and the highest growth rate in the industry in 2023. I can underline with confidence that the sky is the limit for iconic Nivea brands, and I will share later on how we intend to continue this growth. But first, let's take a closer look at one of the reasons for these great results in 2023, our performance in the face care category. The face care category was a significant growth driver for Nivea in all regions around the globe. In the second half of the year, it was our strongest category overall for Nivea. For the full year, we achieved organic growth of 18%. This great performance is the result of tremendous growth in our core product ranges and our innovation series, such as the Q10 anti-wrinkle filler. These popular innovations enabled a strong mix of pricing and volume within the face category. Our patented ingredient, Luminous 630, is a powerful engine behind the success in the face care category, all under the new and competitive claim, the most effective anti-spot ingredient in the world. With our Luminous product range, we achieved stellar organic growth across all regions in 2023. For example, by plus 60% in emerging markets and by plus 32% in our already established markets in Europe. In China, our sales more than doubled, which is particularly impressive as we are currently only selling their cross-border e-commerce activities. On a global level, this translates to an organic increase of 51%. This is all fueled by an extremely successful expansion into new categories with a luminous ingredient in the pasture and high-performing launches such as the Luminous Anti-Age Serum. Now leaving the world of Nivea, let's talk about Derma. Our Derma business really is a blueprint for profitable growth. Our brands, Eucerin and Aquaphor, continue their remarkable success story with fantastic organic sales growth of 24%, thereby continuing the years of strong double-digit growth for our dermatological brands. Similarly to Nivea, we are growing in all regions and all categories. In addition to continued growth of our online business by 28%, innovation has also been a key driver of this success globally, which is underlined by the popularity of our products containing our breakthrough ingredient, Tiamidol. We grew again in this segment by 49% year on year, and we are still expanding our product ranges and categories. Another reason for the Derma success is the Sun category. or innovations like oil control under Yusrin Sun led to organic growth of 58%. This showcases our commitment to staying ahead in the market and meeting diverse consumer needs. The overall demand for our products remains high in regions such as Latin America, the Middle East, and Africa, where market share and net sales have seen significant acceleration in 2023. Without dermatological brand Aquaphor, we achieved the best year to date in the brand's history in the United States. In terms of organic sales, Aquaphor reported outstanding growth of 36% in 2023. This level of growth also means Aquaphor was the fastest growing brand in the body market. A crucial success factor for this growth was an effective social commerce strategy with a focus on leveraging TikTok, which also enables us to significantly drive the success of our Aquaphor Leap range in the highly important Gen Z target group. Further proof of our strong Derma business and its versatility is our performance in Korea. In a Korean market, we are not yet allowed to use our patented ingredient, tiamidol, due to Korean formula regulations. However, with the right setup, with country-specific expertise, local innovations, and a valued made-in-Germany connotation, we achieved outstanding results, 40% organic growth in the full year 2023. For our luxury and selective brands, La Prairie and Chantecaille, we look back on 2023 as a challenging year with a decline in organic sales for both brands, respectively down 15.4 for La Prairie and 18.4 for Chantecaille. As previously stated, we face difficult market circumstances in the travel retail business and in mainland China, which is why we made the decision to utilize 2023 as a transition year to clean up stocks and normalize inventory levels. We are now looking positively at 2024, with mostly healthy stock levels for both brands and travel retail stocks in Hainan will also be healthy at the end of Q1. In the case of La Prairie, Q4 sell-out returned to double-digit growth, allowing us to look more optimistically at the future. Throughout 2023, we prepared a stronger strategic e-commerce setup for the luxury brand, with a special focus on the utilization of TikTok, while also investing in future innovations. As for Chantecaille, we'll also enhance our social commerce setup for the brand in 2023, and moreover, expect improved performance due to the expansion of the travel retail business. The first numbers for Q1 2024 for Shantakai already look promising. We expect a return to growth for both brands in 2024. And 2023 was also a year marked by substantial investments aimed at ensuring the long-term success of our company. Let me highlight four impactful topics on 2023. Biosof invested heavily in its global supply chain and digital infrastructure in the past year. The new site in Leipzig, Germany is at almost 300 million euros, the largest investment Biosof has ever made in a production site. And with a capacity of up to 450 million products per year, started producing in September 2023. The expanded and modernized plants in Poznań, Poland and Sillao, Mexico are going live in 2024 and are also adhering to the highest environmental and technological standards. An important milestone in our global digital infrastructure was the seamless switch to the latest SAP technology, S4ANA, for all global affiliates at the end of the year, thereby enhancing the efficient digital transformation and further automation of Biosof's global business processes. Following an investment of 250 million, Biosdorf opened its new global headquarters in 2023, the Biosdorf Campus, on an area of 51,000 square meters in its founding city of Hamburg. The employees significantly shaped this new global heart of the organization and influenced the creation of a modern and sustainable work environment which embraces the future of work, well-being, of the employees and the exchange of ideas. In line with creating the right physical surroundings for its employees, Pyosoft also continuously improved the cultural working environment in 2023. In 2021, the company committed to achieving a 50-50 gender balance leadership across all management levels worldwide by 2025. By September 2023, the representation of women in management positions had already increased to 50.3%, achieving the gender parity ambition 18 months ahead of schedule. Now to a topic which we have been talking about and working on tirelessly in the background in the last few years of dividend increase. Following the exceptional business performance of Biosof in recent years, the executive and supervisory boards I've decided to propose an increase of the dividend for fiscal year 2023 for the first time since 2007. With a significant increase of 43%, a dividend of one euro per dividend-bearing share will be proposed to the Annual General Meeting on April 18, 2024, and thus enable our shareholders to participate in buyers of profitable growth. At the same time, Biasoft will also start a share buyback program equivalent to up to €500 million. And with that, I will now hand over to our CFO, Astrid Herrmann, to take you through our detailed FooYear financials, also including the performance of TESA.

Thank you so much Vincent. And good morning from me as well. I'm happy to guide you through our full year 2023 results in more detail. Let's start with the figures at group level. we can report double-digit organic sales growth of plus 10.8%, which represents sales growth of plus 7.4% in nominal terms, mainly due to an unfavorable exchange rate effect. At the same time, we increased our EBIT, excluding special factors significantly, improving our EBIT margin as well as our earnings per share. The EBIT margin increased by 20 basis points to 13.4%, and our earnings per share increased from €3.56 to €3.80. Our profit after tax margin slightly decreased due to a higher tax rate driven by one-time taxes charged for prior years and one-time adjustments related to the new, more centralized operating model, which will benefit our tax rate mid-term. Let's continue with our development at segment levels. In the full year 2023, Beiersdorf consumer business grew organically by plus 12.5%. Adverse foreign exchange effects led to a nominal growth of plus 9.1%. We also increased our profitability with an EBIT margin increase of 60 basis points driven by strong top line as well as gross margin growth and strict cost control while further increasing our marketing budget. Our TESA business finished the same period with organic growth of plus 3.2%. Structural and foreign exchange effects led to a nominal flat development. Our EBIT margin decreased by 70 basis points due to continued strategic investments in innovation, sustainability, digitalization, as well as increased R&D investments. On top of the great performance of the previous year with plus 10.5% organic sales growth, our consumer business division delivered high growth in all four quarters, leading to double digit growth again in the full year. This growth was well balanced in terms of volume and pricing and especially impressive in Q4 where our growth was predominantly driven by strong volume growth with pricing moderating from previous high levels. Let's take a look at the performance of our brands in the consumer business segment. Vincent has already shared details about the performance in the full year, so I will just briefly comment on the performance by brand for the fourth quarter. Nivea continued to outperform the market with broad base growth of plus 12.1%. All main regions grew significantly, as did both personal care and skin care in almost all categories. The split between pricing and volume is getting closer to a balanced ratio quarter after quarter with a higher contribution of volume compared to price in Q4 for the first time in 2023. The success story of Derma continued in Q4 with plus 21.2% sales growth. Userin and Aquaphor remain amongst the market leaders both in net sales as well as market share terms. The performance in the fourth quarter was driven by both Europe and America's growing above plus 20%. As mentioned previously, our innovation power, led by our hero ingredient, Tiamidul, is a key success for the business, as is our strong e-commerce performance. Based on a successful previous year with double-digit growth and significant market share gains, healthcare grew by plus 3.7% in the fourth quarter and further expanded its leading market position. Main drivers of the success were Australia with significant double-digit growth and good performances in our key markets in the UK and India. Coming to La Prairie, as expected, the quarter was negatively impacted once again by the challenges in travel retail and our decision to clean our stocks for a fresh start into 2024. Despite these challenging factors around the Chinese ecosystem, we saw encouraging Q4 results in the rest of travel retail and in local markets, particularly in APAC with Japan growing plus 41% and Hong Kong plus 30%. In addition, we see encouraging sales growth acceleration in the US in the course of 2023. Looking at sales growth at regional level, you can clearly see the well-balanced geographical growth within the consumer business. Apart from Western Europe, which was negatively affected by the disruptions in the travel retail business, all regions grew double digit in 2023. In Western Europe, sales were driven by healthy growth in Spain, Italy, UK and France and the great performance of the Nevea and Derma businesses. In Eastern Europe, the excellent plus 22% sales growth was mainly driven by Poland and Romania. From a category perspective, both Western and Eastern Europe, the excellent performances of Nevea, Deo, Lip and Sun as well as our user and face, sun and body businesses are standing out. America's finished a year with plus 19.1% sales growth. Key drivers of our double digit growth in North America were our brands Nivea, Aquaphor and Eucerin. Strong growth in Brazil, Mexico and Colombia, especially with Nivea and Eucerin, made Latin America our top region in terms of relative growth. The Africa-Asia-Australia region reports plus 11.1% sales growth, with very positive trends especially in Australia, Nigeria, Thailand and South Africa, driven by both Nivea and Derma. The strong performance of both brands could compensate for the difficulties in the luxury market segment. Let's now have a look at our consumer gross margin development. With our consistent global pricing policy, we were able to offset most of the cost increases. A positive mixed contribution driven by the strong performance of Nivea Skincare and Derma led to a gross margin improvement of plus 40 basis points despite the well-known challenges in the luxury segment. If we exclude the luxury segment, our mixed impact would have been up triple-digit basis points. As expected, our working capital increased slightly to 5.8% of consumer sales. This was mainly driven by an increase of inventories to ensure service levels throughout the S4HANA transition. Higher trade receivables driven by the successful year of our Sun business were another reason for the increased working capital as we have longer payment terms in the Sun category. Further optimizations in the trade payables partly compensated for this. Let's now move to the TESA business in more detail. Driven by a strong last quarter, TESA grew by plus 3.2% in the full year 2023. Both segments, the consumer segment as well as the industry segment, are growing and contributing positively to the overall performance. Particularly worth mentioning are the automotive and electronic divisions. Strong innovations in the e-mobility sector led to double-digit growth in automotive for all regions in an environment marked by positive market development. For the electronics division, we can report a positive trend with strong double-digit growth in Q4, driven by new projects and innovations, as well as a slightly recovering Chinese market in the second half of the year. The TESA EBIT decreased from 16.7% in the previous year to 60% in line with our ambitions to invest in our main strategic pillars. These investments will help us to continue to seize business opportunities, for example, in the electric vehicle business. Additionally, 2023 was a year of capacity expansions for TESA. With the opening of the new production site in Haiphong in Vietnam and the expanded site in Sparta in the United States, we are following our strategy of expanding our regional capacity in growing markets and at the same time are optimizing our supply chain. That's it for the year 2023. And I will now hand over to Vincent, who will focus on the upcoming year and the future.