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.

Thank you, Astrid. So we are on the right path, and our strategic choices are yielding the intended financial results. This success instills great confidence in our vision to become the best skincare company in the world, a goal that requires continuous effort and an unwillingness to rest on the laurels of past success. I said at the beginning of this call that we will also share an update on how we plan to enhance and extend this current level of growth moving forward. In order to do exactly that, we'll focus on these six growth drivers. I will now take you through each of them, starting with the first growth driver, global wide space opportunities. Let's break this down with regard to our leading brands. Despite the record figures Nivea is already achieving, we are not yet present with Nivea in 60% of the global face care market, and are also still absent from 50% of the third market. I said earlier that the sky is the limit for ICON EVA, and with the enhanced infrastructure and supply chain capabilities, we'll continue to exploit this potential, meet the growing demand, and focus on growth in these wide spaces. This translates to concrete ambitions in specific countries, for example, driving premiumization of our products in China and expanding our success in India to the face care category in 2025. Moreover, Nivea has not been very active in conquering new categories in our established markets, and we are now also aiming to change that. Moving to our derma business, with Eucerin, we are not yet present in half of the global derma market and are absent with our products from two-thirds of the worldwide face care market. We have already made great progress with several successful market entries for Eucerin since 2017. Brazil, China, Poland, Egypt, Kenya, Nigeria and Tunisia. There is still tremendous potential to not only further grow in these countries, but also to enter additional strategic markets. For example, the face care market in the United States, one of the largest market segments in skin care globally. We are also planning to introduce Eucerin to new countries such as Japan and India. Now moving to China. We've been active in China with our brands for several years now, and the huge potential of the Chinese market is also not secret, which is why we continuously enhance our efforts there, but we are not trying to grow at all costs in China. In the coming years, we aim to create more impact there with our world portfolio by utilizing our in-depth knowledge of the market and our existing infrastructure in the country. With our luxury brand, La Prairie, we admittedly went through a challenging time in the last few years with difficult market circumstances in travel retail around the Daegu business and the impact of COVID-19 in China. We feel confident with our optimized setup for the brand. The great balance of brick-and-mortar touchpoints, e-commerce and the travel retail business will enable us to accelerate La Prairie in China in the future, while not relying on promotions. Talking about travel retail, even though the Daegu business was a relevant part of our business, we are happy to see that unauthorized distribution contributed to price erosions is now regulated. We are also working on the launch of Chantecaille in this vibrant market. and on the extension and registration process of our hero ingredient W630 to allow us the market entry in mainland China with several product ranges across our whole brand portfolio. Our next growth driver is already creating a significant impact on our financial results today, our e-commerce business, and we will enhance the success of our online business for all our brands even further based on the proven global infrastructure. Let me share three building blocks for this. Firstly, we will fully leverage and further upskill the talents and the expertise we have developed and acquire to advance from already very good to best in class in digital commerce. At the same time, we will further enhance our strong presence with key retailers across the world. Secondly, we will continue to enhance our e-commerce operating model and resourcing for future growth. Here, we will especially focus on full-funnel media, data and insights, as well as on a strong omnichannel strategy. Lastly, we accelerate the expansion of our global e-commerce footprint For our luxury brands, La Prairie and Chantecaille, online access and the accompanying smart data analysis allows very precise targeting of future and current consumers. At the same time, we can also virtually create an exceptional shopping ambiance that respects the individual equities of our brands. We have already demonstrated this capability for La Prairie in China. Now to the next growth driver, which is part of our company's DNA, our pioneering spirit and curious mindset, paid with the goal of making people feel good in their skin. To develop and cascade impactful innovations is therefore naturally one of our key growth drivers for the future, and always will be. Looking ahead to the coming years, you could say the following regarding Our hero ingredient, W630, is our new W630. It means that we still have huge opportunities to leverage its impact across all of our brands, geographies, and categories. Moreover, our innovation pipeline is stacked with promising projects to further accelerate these breakthrough innovations, though that make a significant difference in the life of the consumers and cascade them across our portfolio We also created an early innovation team a few years back. That team played a crucial role in one of our most exciting innovations. We will be turning back the skin's age clock with a product launch in 2024 in the field of skin regeneration and epigenetics. Stay tuned for more info throughout the year. Success in R&D relies on data knowledge, data which we gather and analyze via our unrivaled skinless study that is one of the world's largest consumer skincare studies. To date, we have collected over 870 million data points from more than 18,000 participants, enriching our AI systems with a wealth of information. This not only provides insights into the effectiveness of consumer skincare routines, but also subsequently leads to the product innovations of tomorrow. Another focus field for R&D is skin microbiome science, ultimately leading to skincare products for the increasingly relevant field of acne treatment. For that purpose, we acquired SBU Medic in 2022 as one of the leading startups in this area, which is now fully integrated into our global infrastructure. At the same time, it contributes a valuable startup mentality and entrepreneurship to our company. More to come here as well. We aim to further accelerate our growth with intensified activities in the area of M&A while also pushing ahead with our acquired brands such as Coppertone and Chantecaille. The setup for both these brands and the full integration into our Biosoft organization is now complete. And we look positively forward to 2024 and beyond. We analyzed the market for potential additions to further strengthen our portfolio, especially in the field of premium skincare and with a focus on North America. Due to our stellar performance of recent years, we have the financial power and the backing of our supervisory board to follow this strategic path. I'm happy to share that yesterday, We signed an agreement to acquire the real estate assets of Clinique La Prairie, the prestigious medical and health clinic in Montreux, Switzerland. Through this acquisition, we'll strengthen La Prairie by reigniting it with its historical birthplace and intensifying the collaboration with Clinique La Prairie. The transaction is subject to a customary closing condition and is expected to be completed later this year. Becoming ready for the future and ready for growth also means putting tremendous effort into the realization of our Care Beyond Skin sustainability agenda. We are walking the talk as we have made and continue to make great progress in transforming our products. We successfully relaunched the formula of one of our best sellers, Nivea Soft. Nivea's bottles, caps, and trigger pumps are now made of recycled plastic. We launched an innovative refill jar for our hyaluron filler range of USRIN, reducing the plastic material used by 90%. We already achieved 100% microplastic free cosmetic products for Nivea in 2021 and now also for USRIN. Our revised formulas have a lower environmental footprint as well as our new packaging solutions. Our iconic Nivea cream will be relaunched in a more sustainable packaging in 2024. We are also modernizing our global supply chain to the highest environmental standards. A testament to the impact of our actions is that for the second year in a row, Biosdorf received the AAA rating from the renowned non-profit organization CDP and was recognized with its best-in-class score for its efforts in target setting, performance, and transparency in the three dimensions of climate change, forest and water security. This rank spires up as one of only 10 companies worldwide leading the sustainability transformation out of over 21,000 companies scored. And progressing with impactful actions and as a sustainability leader into the future, we are now free to share ambitious net zero targets that has recently been validated by the science-based targets initiatives to be in line with the 1.5 degree pathway. Biosdorf aims to reach net zero and reduce its emissions along the entire value chain by 90% by 2045. We are proud that our actions are already making an impact, although we are still just at the beginning of this crucial journey. Now summarizing these six growth drivers, what is the objective behind them? What is the overall goal? The goal is to win and to win with care. By conquering wide space opportunities across the globe and developing breakthrough innovations. By meeting our consumers where they are and proposing new booty aspirations to them. By driving sustained financial value and making a positive social and sustainable impact by leveraging the power of digitalization. We'll provide even more details on the overall strategic directions and these growth drivers during the upcoming Capital Markets Day which is scheduled for the 18th of June 2024. I'm convinced that we have everything in place for continued success in the years to come and I am personally very excited about the journey ahead of us. We are indeed ready for the future. And lastly, let's now turn to our guidance for 2024. While the volatility in the markets remains high due to a variety of macroeconomic and geopolitical reasons, we mentioned earlier that our business model has proven to be dependable, successful, and crisis-resistant in recent years. We are strong across various brands, categories, and regions. Hence, we look ahead with confidence and expect continued profitable growth above market and a further step in margin expansion in 2024. The consumer business segment is expected to generate mid-single-digit organic sales growth in an environment of normalized pricing levels. excluding special factors, is expected to be 50 basis points higher than the previous year's level, which is in line with the mid-term goal for profitable growth in the consumer business segment. For the Tesla business segment, BuyersOff expects organic sales growth to be in the low to mid single digit range in 2024, subject to uncertain market development. The EBIT margin, excluding special factors, is expected to remain at the previous year's level. Based on this forecast for the two business segments, organic growth sales growth is expected to be in the mid single-digit range, and the consolidated EBIT margin, excluding special factor, will be slightly above the previous year level. At this point, I would like to remind you that our consumer business did have a pretty good start to the year, and that we are optimistic about 2024. For this reason, I tend to assume that our consumer top line might even grow at least mid-single digits in a full year. This, of course, based on the recovery for luxury business as planned and also on the absence of major macroeconomic events, we would render any guidance useless. Following this journey, throughout our 2023 financial results and dedicated growth driver for the coming years, I'm now looking forward to your questions Therefore, I will hand back over to Jens, who will start the Q&A session.

Thank you. At this time, we will begin the question and answer session. If you have registered for the Q&A, you are now in our queue and will be connected. Kindly turn on your webcam so that we can see you. In case you are experiencing firewall challenges, please use your mobile phone to join our Q&A. Please remember, as always, that we have just two questions per caller. So we can now open the queue and I can see Guillaume is on the line. Hello, Guillaume.

Now we can see you. Could you hear me? Yes. No.

No.

Okay, so morning all. Two questions for me. First one on the outlook for both La Prairie and Chantecaille. I mean, you said you expect both brands to return to positive growth in 2024. Well, I think inventory reduction in the travel retail channel should be largely completed by the end of the first quarter of 2024. So my question is, should we anticipate a slow start to the year for the two prestige brands with a return to positive growth in the second quarter and then some subsequent exploration in the second half of the year. So is that the kind of phasing you would be anticipating? And then my second question for Astrid is if you could walk us through the key moving parts of the consumer division 2024 EBIT margin As in, would it be fair to assume further significant gross margin expansion in parts thanks to the recovery of La Prairie and against that a further marked step up in marketing spend. So any color you could provide on this key building blocks would be helpful. Thank you very much.

Thanks, Guillaume. I will take the first question. You're absolutely right. We are expecting some slight growth in Q1 and Q2 because Q1, we still have to finish cleaning the inventory in Hainan. We are absolutely clean everywhere else, but Hainan, we have still a few millions to absorb. And then in Q2, we have the historical of last year. We are all hoping that the market will reopen. So Q1, Q2 soft, but extremely optimistic about Q3 and Q4, where we'll see clearly the brand rebounding.

Very good. And now your question on the 2024 EBIT consumer margin. Indeed, we do expect our gross margin to continue to expand quite substantially, obviously in light also of the growth that we're seeing from the luxury business, but also in light of declining uh... input cost that will help as well as we look for continued very strong mix uh... impact to our business as well and we are looking to invest further in marketing budget both in absolute as well as percentage sales thank you very much okay thank you next on our queue i can see we have bank of america so vika good morning first question you've uh... you

talked about 40% volume contribution and 60% price contribution. Can you provide some color on the mix in 2023 as well as going forward when we think about 2024 both for Nivea and between the divisions? How should we think about that? Sure, I can take that. Sorry, Astrid, second is also probably to you. Could you maybe provide a bit more color on your America's profitability in 2023 with the impact of PESO and maybe how should we think about it into next year and how it would have looked without this impact? Thank you.

So in terms of the mix impact, it is positive. You saw our expression of mix in the end on our gross margin roll forward. And you saw even in a year 2023 where we had luxury, the luxury business obviously declining. We saw very positive mix impact without the luxury business triple digit up. So really significant impact from mix. And we can continue to see a very positive trend into the future. as the key parts of our business, Nivea Skincare and Derma, continue to grow strongly. And then in terms of America's profitability, yes, we have made progress there, actually quite substantial progress there. Key drivers there is the fantastic Aquaphor performance that you saw there with 36% growth. It's a highly profitable brand for us. The same, obviously, on Nevea and Usurane, growing double-digit and really helping that profitability. Absolutely. We have, at the same time, though, also invested in the business. As you know, we launched Usurane Sun. And we're also launching this year user and face. So we continue to also invest in the business to accelerate the growth in North America. Thank you.

Okay. Well, thank you. Next in our queue would be JP Morgan. Good morning, Celine.

All right. Good morning, everyone. You can hear me?

Yes.

Excellent. My first question is on pricing. So Astrid, you mentioned that cost of goods sold are declining for you this year. I don't know what should we assume, low single, mid single digit decline. Can you talk about the pricing environment, given that you had strong pricing in 23, what does that mean for the consumer business? Maybe if you can talk about this on the different regions. And then my second question is on Nivea. There's been a slowdown in the fourth quarter, which I presume is linked to maybe the impact of pricing. But can you talk about the Nivea performance in Europe and how you are doing in terms of market share performance as well?

two questions. On the first one, on the pricing, we are expecting a much favorable situation for cost of goods in 2024. So we are expecting a slight decline of the material price, but we are also expecting an increase of transportation cost and also the cost of labor. So all in all, we should have a good situation, which is also why we'll do a more reasonable price increase in both Europe and emerging markets, so more in the area of 3% in Europe, 4-5% in emerging markets, in order to finish offsetting the big ICP increase of 2022 and 2023, and be able to continue to grow our gross margin. So this is what we are negotiating right now with the retailers, with, like always, the necessary exchange and discussions with them. On your second point on EVR, Europe, you have to remember that what was a little bit a revolution for us is that we did a very strong price increase. As a matter of fact, the price increase we did in Europe in 2023 was even above market and by far above any kind of price increase we have done in the past, which resulted in some disruption with retailers, particularly in France and Germany, which is also why we lost also some market share in the beginning of the year. And also the fact that in terms of phasing, we ended up having a very strong Q4 in 2022 because this is a moment when we are benefiting from this big price increase, which obviously was difficult to compensate in Q4 2023, leading to a slight growth. Back to everywhere, we are back to shelf. We have absolutely zero issue with the retailers. We went back even to our discount in Germany. We are able to promote our products. We have been investing a lot. So we are regaining market share in Europe in the last quarter, which is making us pretty optimistic for Nivea in the quarters to come.

Thank you. Thank you, Céline. We move on to Barclays. I can see Ian on the line.

Good morning, everyone. A couple of questions for me, if I could. Firstly, I wondered if you could give some colour on the timing of the W630 launch and the Shantakai launch into China. and the anticipated timing on the various stages of regulatory approval that will be needed to get there. And then secondly, I wondered if I could just quickly go through Q4 in Western Europe again. So you've talked about tough comps in the Q4 22, which obviously we can see. In terms of the pricing dynamics, Is it that you had a final round of pricing just before the Q423 that had some volume disruption, or is it that you're lapping volume returning in the Q422 around that phase of pricing? I'm just trying to make sure that I've fully understood exactly what you're talking about.

Thank you, Ian. On your first question, you know, the journey of regulatory approval of W630 in China is a long journey. The last time China validated a brightening gradient was 10 years ago. I can tell you that we are progressing well. I was myself in January. meeting the local FDA, the NIFDC. We are also meeting last week also to finalize the submission of the file, and we will present the file officially to the NIFDC next week in Beijing. So we are optimistic. It means that if we get, and we hope to get it the regulatory approval on the ingredient we will then have you know to get the regulatory approval on the formula which is why we are still you know planning to have a launch of w630 on the various brands of the portfolio in 2020 and 25 beginning of 2026 depending on of course you know the questions the regulatory authorities can ask and the tests we have to submit on Chantekai we are almost ready we have already two-thirds of the portfolio which has been regulatory approved we are waiting for the last third and we are planning to start selling Chantekai in china in august 2024 so with a full launch in september 2024 with media with influencers with online offline so really a big hope and we have an extremely positive reaction from the from the field You want to take the second question?

Sure. So Q4 Western Europe. We have to remind you, Ian, that in our Western Europe number, you have the impact of the La Prairie travel retail business, which has a significant impact there. We had a much stronger Q4 in 2022, also in anticipation of a better market. holiday season and so on, double 11 in China then, and you know that unfortunately didn't happen as planned. So that's part of really the significant impact you're seeing there. In terms of the rest of the business, Nivea and Derma, we feel very strongly about our business. Europe continues to be a bright spot. We see a strong start to the year as well, so really no reason for concern there at all.

Thanks very much.

Okay. Well, thank you. We don't see any other callers here in our queue. So double checking. No, we don't have anyone. So, well, this concludes our Q&A session. And I can just say thank you for having joined our analyst meeting. We appreciate your interest in Beiersdorf. Thank you and goodbye. Thank you so much.

Thank you.