Beiersdorf Ag

Ladies and gentlemen, welcome to the Q1 2026 Results Conference Call. I'm Moritz, your Coruscall operator. I would like to remind you that all participants will be in a listen-only mode and the conference is being recorded. The presentation will be followed by a question and answer session. You can register for questions at any time by pressing star and 1 on your telephone. For operator assistance, please press star and 0. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Christopher Sheldon, Head of Investor Relations. Please go ahead, sir.

Good morning, everyone, and thank you for joining us for our first quarter 2026 conference call. I'm here with our CEO, Vincent Vanery, and our CFO, Astrid Herrmann. As always, we will start with a presentation of our sales performance of the quarter, followed by a Q&A session. And with that, I'd like to hand over to Vincent.

Thank you, Christopher, and good morning. Welcome to today's conference call. Astrid and I will walk you through our sales figures for the first three months of 2026 and a debut on the key strategic initiatives we are executing to strengthen our business. This includes an update on our ongoing and EVR rebalancing. Our Q1 sales were in line with expectations. As mentioned in our full-year 2025 call a few weeks ago, we anticipated a challenging start into 2026 with several factors impacting La Prairie's and Iberia Nelson's performance. Our derma business continued to demonstrate outstanding growth, fully delivering on its strategy. La Prairie faced headwinds through disruptions in the U.S. department channel and travel retail in China. Finally, Nivea's first quarter net sales development is challenged, but we are making progress on Nivea rebalancing. I will share more details on this a bit later. All that is translated into numbers. In Q1, we saw an organic net sales decline of 4.6% at group level. Our consumer business declined by 4.7% organically. Derma delivered an outstanding 8.2% organic sales growth. Healthcare was up plus 1.9% on top of a difficult prior year comparison base. Nivea and La Prairie faced headwinds, with net sales declining by 7% and 14.9% respectively. The underlying sell-out performance, however, showed an improving trend, making us more optimistic for the coming quarters. DESA ended the first quarter with an organic nest cell decline of 4.3%, mainly as a result of phasing-related double-digit growth in the first quarter of 2025. Our first difficult quarter performance was anticipated and reflected in our full-year guidance for 2026. We continue to believe in our ability to return to growth as the year progresses. Let's review the DERMA performance with our brands Eucerin and Aquaphor. With an outstanding 8.2% organic sales growth, we again significantly outperformed the derma market, which is growing at low single-digit rates. This underscores the strength of our portfolio and the successful execution of our growth strategy. Our success is driven by two pillars. First, our innovations. With our breakthrough ingredients, epicillin and tiamidol, endorsed by dermatologists, Eucerin continues to lead the way. consumers are increasingly seeking science-backed efficacious DERMA products. And second, a successful expansion into wide spaces. Three examples of these wide space expansions are North America, Brazil, and China. North America, DERMA's largest region, delivers strong 7% organic sales growth driven by a double-digit aquaphor performance and the continued momentum of use in space, including Tiamidol. Usurin in Brazil was able to more than double its net sales in Q1 and is close to taking the number three position on the market only five years after being number 15. A key driver of the recent success is Usurin Epicelin. Lastly, our thermal business in China is showing continued high double-digit growth, a clear testament to the successful rollout of Tiamidol on the domestic market. Let's continue with La Prairie. Q1 was impacted by disruptions in the U.S. department store Chanel as well as travel retail in China. Both had a significant negative effect on the Q1 selling performance with net sales declining by 14.9% organically. However, it was not an indication of the underlying sell-out demand. Retail sales, excluding disruptions, grew close to 10% in the first quarter. A key growth driver continued to be China, in the fourth consecutive quarter. We remain cautious on the outlook of La Prairie in a volatile of three skincare market environments, but continue to see green shoots from its reposition strategy. Now let's have a closer look at Nivea. In line with what we showed you at our full year call several weeks ago, the mass market environment remains challenging, which is negatively affecting Nivea performance. As we ended the year 2025, market volumes were flat and continued to be flat in the first months of 2026. In addition to the market environment, four main factors negatively impacted Nivea net sales in Q1. First, Nivea lapped two strong prior year first quarters, leading to a more difficult baseline. Second, certain trade negotiation conflicts in Europe have had a negative net sales effect. Per the sell-in of our major innovations, epicillin derma control lifted Nivea nest cells in the fourth quarter of 2025, while most of the corresponding sell-out was absorbed in Q1, and no new countries were launched in the new year. Lastly, Nivea's core portfolio has not returned to growth yet. However, the dynamics are improving as we are implementing a rebalancing strategy to restore Nivea growth. But before we deep dive into the rebalancing, I want to demonstrate that also global innovations remain a cornerstone of Nivea's strategy. Nivea epithelin continues to be on track. We have already been satisfied with the sell-in and sell-out performance and are pleased to confirm that also the repurchase rates look promising. In fact, the initial repurchase rates and intentions to repurchase figures of the Nivea epigenetic serum in Europe are comparable to the figures of Eucerin in 2025. Let me now take a few moments to remind you of our Nivea strategy recalibration, the rebalancing of the portfolio. What do we mean by rebalancing? It's a shift in how we allocate resources and drive growth at Nivea along three pillars. First, portfolio. We are broadening our focus across our key franchises, face care, body care, and deodorants. In practical terms, this means that we are shifting marketing and innovation efforts to strengthen all three categories. Second, accessible face care. We are rebalancing the focus also to popular face care products at a more accessible price range next to the premium face care lines like Luminous and Epicelin. And third, local relevance. Next to major global franchises, we will support important local product lines by giving key markets, for example, China, the US, India, Japan, and Brazil, greater flexibility in local execution. This is what we call localization within a frame. Empowering our regional teams to develop and activate products that resonate with local consumers while maintaining the integrity of the Nivea brand. Let me elaborate on three specific initiatives. First, body care in emerging markets. In our emerging market regions, we began to rebalance our marketing budget to body care in September last year. In addition, we focused our portfolio on the right franchises with the right assortment in the right countries and enriched our global advertising approach with local storytelling. We also stepped up our efforts with their influencers and further improved in store execution. As an initial research, we have seen Nivea Bodycare and also overall skincare market shares in emerging markets moving to positive territory this year in terms of both value and volume. Second example, deodorants in Europe. As part of the Dermacontrol launch in the fall of 2025, we shifted marketing budget towards deodorants. This did not only help to promote Dermacontrol, but had a positive halo effect on IVA-DO as a category. Together with assortment optimizations, it led to regain customer and consumer attention for IVA deodorants. As a result, The Nivea Deo market share situation in Europe improved and recorded market share gains in the first months of this year. And third example, Luminous Glow in emerging markets, a global innovation adapted to local needs. Nivea Luminous initially struggled to scale in emerging markets due to its premium positioning. To unlock the full growth potential, the product was locally adapted across assortment, packaging, pricing, and activation. This was implemented at the launch of the Luminous Glow line. Thailand was the most prominent proof point. The launch of a sachet format, stronger claim communication, and intensified influencer activation drove rapid consumer uptake. As a result, Luminous King Glow achieved a significant market share uplift and quickly became the number one serum in the market. As demonstrated by these examples, the rebalancing of DVA is underway. The measures will take some time to show their full impact but Nivea's current sellout dynamics already show substantially better performance than the net sales decline in Q1. In fact, Nivea's year-to-date sellout grew by 1.7%, following two quarters of negative growth. These early indications make us optimistic that we are on the right track and that our rebalancing strategy is working. Before I hand over to Astrid Forteza in a financial review, I would like to turn your attention to China, one of our key white space markets. At this time last year, I presented to you our ambitious plan in China to put our house in order. We implemented comprehensive restructuring measures, especially for Nivea, to lay the foundation for future success in this important white space market for buyers of. Our efforts are starting to pay off. and we saw impressive growth across all three major brands in the first quarter of 2026. Nivea increased net sales by one-third, and Usurin net sales grew in high double-digit territory. Also, La Prairie showed impressive 12% retail sales growth, which is not a reflection of the weaker net sales performance in the quarter. And with that, finally over to you, Astrid.

Thank you, Vincent, and good morning, everyone. Let's take a look at Teza's performance in the first quarter. Net sales declined by 4.3% organically in line with expectations and as reflected in the full year guidance. The decline can be attributed to a high prior year comparison base in the electronics business. This was related to shifts in some customers' production footprint as well as adjusted order patterns. The automotive sector remained challenging with Teza outperforming the market, especially in applications for new energy vehicles. The consumer segment was impacted by strong performance in e-commerce. Let me now take you through some further details of our Q1 performance. Biostrom consumer business net sales declined to 2.077 billion euros in the first quarter of 2026 at an organic growth rate of minus 4.7%. Adverse foreign exchange effects resulted in lower nominal growth of minus 7.7%. Our TESA business recorded an organic net sales decline of minus 4.3% in the same period, closing the quarter with net sales of 407 million euros. Due to unfavorable foreign exchange effects, nominal sales declined in line with the consumer business by minus 7.7%. As a result, the group generated net sales of 2.484 billion euros at organic and nominal growth rates of minus 4.6%, and minus 7.7% respectively. Looking at our consumer business across regions, the negative performance across regions is mostly attributable to the challenging net sales performance of Nivea and LaParis in the first quarter, while the underlining sellout performance is positive. North America, Western Europe, and the Africa, Asia, Australia regions were impacted by additional factors I would like to explain in more detail. North America was negatively impacted by the retail disruption affecting La Prairie as well as Coppertone. Coppertone weighed on the first quarter performance as we are streamlining the portfolio to focus on the sports segment as well as promotional facing shifts of net sales between quarters. Excluding these factors, the organic net sales growth of North America increases to plus 3.2%, mainly driven by the strong DERMA performance. Western Europe was adversely affected by the disruption of travel retail in China. As you will remember, we record La Paris travel retail business in Western Europe, which was 130 basis points headwind to growth in Q1. Lastly, the crisis in the Middle East weighed on the Africa-Asia-Australia region with 170 basis points headwind on growth. Excluding the Middle East, Africa-Asia-Australia would have grown by 1.1%. Back to you, Vincent.

Thank you, Astrid. To conclude, Q1 was a challenging start to the year, but in line with our expectations. Our derma business remains strong. Nivea and La Prairie showed an unfavorable net sales performance, but positive seller dynamics point to an improvement in the quarters to come. Based on this, we are confirming our 2026 guidance. For both our consumer and TESA business, we continue to expect net sales performance to be flat to slightly growing organically with an EBIT margin excluding special factors slightly below the previous year. At group level, it's translated to net sales flat to slightly growing organically with an EBIT margin excluding special factors slightly below 2025. With that, we're happy to answer your questions. Over to you, Christopher, for the Q&A.

Thank you, Vincent. Now we're ready to go to the Q&A. If you would like to ask a question, please press star 1 on your phone. And please note that we have a maximum of two questions per caller. And we will start with Jeremy Fialkow from HSBC this morning. Jeremy, please go ahead. Your line is open.

Hi, Bobby. Just one sort of short technical one to start with is whether you could give us the Nivea sort of full Q1 number, whether you have any data that goes to the end of March. I saw the slide. just took you to the end of February. And then secondly, perhaps you could just talk a little bit about the cost situation and what you'll see from that perspective, given some of the higher inputs and to what extent that puts greater risk on the margin side of your guidance. Thanks.

I will, Jeremy, I will take the first question, Astrid will take the second one. Your question about the Nivea, so the market share, the data we have is only until end of February. That's why we're looking at today, February. In fact, you have, if you, the bridge between the net sales and the sell-out, you have three factors which explain that. The first one, which is of use, I mentioned that already in the yearly call, we have an innovation fading. We did 1% of the sell-in of the two big launches, which are Epicilin and Dermacontrol, in the Q4 2025 and even more in November, December. So obviously all the countries that have been sold in, we have to absorb the sell-out in the first quarter. The second element, which is also important, is that we have a market dynamics which is flat. It's really zero percent growth, and it has an effect on the core business, which remains negative, and this is what we have to correct. Third element which we were not expecting, obviously, is the Middle East crisis, and I think Astrid mentioned that. It cost us, you know, 50 basis points of Nivea Gross. And the last element which took place partly in March, we had some retailer conflicts, you know, we had clearly some discussions with retailers, particularly in Germany and France, which are willing to decrease prices. We are not willing to do that, and we will not accept, you know, any pressure to go in this direction, especially at the time when we have this uncertainty with the Middle East crisis. So all of that makes a difference between a negative quarter in sales and a positive quarter in sell-out at plus 1.7%. On your second point?

Jeremy, so in the cost situation, so the immediate impact, given that the direct impact of oil and gas on us is relatively limited, primarily on the logistic side, has been manageable so far. We're obviously really watching the supply situation and ensuring that we are, you know, set there, really emphasizing that. We are working through, obviously, many different scenarios, as you can imagine, on what could come if this crisis is staying for longer. That clearly could trigger significant cost increases and we will then obviously look at all the tools we have to ensure that we can offset the impact from that pressure.

Okay, sorry, just a follow-up. Could you give us a bit more color on the retailer disputes and to what extent those are resolved or to what extent they'll carry on affecting the business into Q2?

So it's under negotiation right now, and hopefully we'll have some good results in the weeks to come. It's clearly focusing on, as I said, France and Germany. It's about a few retailers which are willing us to decrease prices, which is absolutely something we'll refuse. So we are discussing, we are exchanging. Hopefully we'll have a solution, because it's really limited to a few specific retailers in the coming days or weeks.

Okay, the next question is from Callum Elliott of Bernstein. Callum, please go ahead. Your line is open. Hi, good morning.

Thank you for the questions. Maybe I could just start with following on from Jeremy's theme, looking at your slide on sellout. If I look at the Q4, it shows sellout. basically flat and you reported kind of plus two-ish on Nivea. So let's call it two percentage points of inventory build on Nivea in Q4. Then you show positive 1.7 year to date versus the negative seven that you've reported. So there's sort of two percentage points of stock build in Q4 and negative nine percentage points of drag in Q1. Should I infer from that that the majority of the negative 9 percentage points gap between sell-in and sell-out is the retail dispute rather than destocking? Maybe you can just help us understand the discrepancy between the plus 2 percentage points in Q4 and the negative 9 in Q1.

I will give you the bridge. Just to get the figures right. You have a decline in Q1 of Nivea of minus 7%. And you have an increase of sell-out of plus 1.7%. If you try to separate the different elements, as you mentioned clearly, you have two points of growth, which is the sell-out of the selling we did in Q4. You're absolutely right. You have two points which are linked to the retailer conflict. You have... I would say 50 base points which are linked to Middle East, and the rest is the evolution of the core business, let's say 3%, which we have not yet been able to turn around, and this is what we are working on, with a good example I mentioned to you, and there in Europe, body in emerging market, and face in emerging market, this is what we are willing to improve through this rebalancing. But you got the math right. Okay, perfect.

Thank you. Maybe just a follow-up. on the other sales, Coppertone, Chantica, etc. I think by my calculation that that sort of division, if I can call it that, is down 25% in reported terms in Q1. And I don't think you talk about it at all in the press release. So could you just give us some colour on exactly what's happening in that division? Is it still just ongoing Coppertone weakness or is there something else going on there?

So Coparton, there was clearly a phasing change. The fact that the biggest US customer decided to order in December to the Easter, it was early in the plan, makes us make a very nice Q4, but a very low Q1. So it does not impact the sellout. The sellout is pretty good now that we are focusing on sport. We are growing, and we are even growing in sport at 7.6% in sellout, which is something we never had since we bought the brand. So that's more this phasing issue in terms of net sales. The rest of the brand, Chantecaille, is obviously hit by the same phenomenon as La Prairie. So we have the sexist avenue. that is not sold. We sold in, we are selling back to Sachs and Smarsh and you have the change of travel retail operators in China but the rest of the business is doing well and particularly we are pretty happy with the US, you know, if you exclude the Sachs issue because we are growing in the US and getting market share. That's the two main brands. You have other small local brands but not really relevant for the figures.

Thank you very much. And the next question is from Warren Ackerman with Barclays. Warren, please go ahead. Your line is open.

Yeah, morning, Vincent, Astrid, and Chris. Yeah, a couple from me as well. The first one is just on the organic growth guidance. Given the slow start, Vincent, the minus 4.6, how do you get confident on the full-year guide? I mean, you've obviously got a lot to do in the balance of the year. It doesn't look like you've got much wiggle room. Can you maybe sort of give us some of the building blocks to give us the confidence that the guide is realistic and maybe if you're able to say whether you think the Q2 organic growth might be positive given the sort of sell-in, sell-out dynamics you've talked about. And then the second one is maybe a little bit on emerging markets because we've still got Eastern Europe down I think 8.2% and VATAM down maybe a bit better than it's been trending. But can you maybe sort of outline... you know, the rebalancing of Nivea, you know, how confident you are that you can get some of these big emerging markets back into better territory. How long is it going to take to see that kind of negative swinging back? That would be helpful. Thank you.

So, we are maintaining the guidance for 2020, as I mentioned. We are, indeed, I would say what is pretty safe is DERMA. We are seeing a clearly a very nice growth thread of us. We have not only ambitions for Eucerin but also for Aquaphor and the fact that we have these extremely strong reserves in all our wide spaces, I also could have mentioned India, could have also mentioned Japan, we just went in Japan, makes us pretty optimistic, so DERMA will continue to be the growth driver of Biozoa for the quarters to come. We are also expecting now that we are out of the disruptions in luxury that now we are sailing back to Success Avenue. We have also the two new trial retail operators in Beijing and Shanghai. They are working. The app is working. So we are back to normal. And we see some pretty nice traction. We have also, as you might remember, a very interesting launch. with a more affordable line for La Prairie, which will also enlarge our distribution, not only to Amazon in the US, but also to other retailers in which we are not today, because of the price level of La Prairie. So, pretty positive about La Prairie. The question is Nivea, what is making us optimistic is that we are growing in sell-outs. You know, the first 1.7% I was mentioning, includes positive sell-out in all regions. And Europe, for example, which obviously is important for us, we are growing also in sell-out, plus 1.1%, which is the first time since a long time. So we see that the rebalancing is starting to pay off. Obviously, one of the questions for Q2 will be the sun season. We've been very successful in the last two years. So we are ready to... embrace a pretty nice season. So on this basis, we believe that Q2 will be flattish back to growth, slight growth, but we will clearly do better than Q1, and this is why we maintain the guidance. On your second question about Eastern Europe, Eastern Europe was not so much linked to the focus on premium face care because we are mostly selling personal care and the body product. It was more the strong development of local and Korean brands. And also some retailer issues that we have to tackle. So retailer issues, we are good. We have a good conversation with the retailers and we are also, I think we'll be more proactive in the way we embrace the strategy. We will develop some exclusive partnership with some retailers. And back to growth on the key categories. As I mentioned, we are positive on deodorants and this is essential for Europe, not only for the growth but also for the profit. and we are also preparing a pretty nice launch in body and face. So we are not yet positive on Eastern Europe, but I think we have a good plan, and we should see some progress starting in Q2. Thank you.

And the next one is Celine Panotti from J.P. Morgan. Celine, please go ahead. Your line is open.

Thank you very much. Good morning, everyone. So my first question is on... Middle East and the impact of the geopolitics. So from what you said, there was 170 big impact on AAA. And so at the group level, I think it's like 40 basis points only for a month. So could you explain what that is and whether there was as well extra impact on travel retail? And what have you baked in for the potential impact of that in the second quarter? And, you know, coming back on the COGS, I mean, clearly, we don't know. There's a lot of things we don't know, but we also see that the spot prices is higher, that there are potential shortages of some products. So at this stage, is it fair to assume that already in the second half of the year, you are going to see a higher co-organization than what you thought at the beginning? And if you could give us a bit of an idea on that, and what measures are you planning to take, whether pricing or cost savings, to affect that? My second question is regarding AAA. I understand that there was an impact from the Middle East, but nevertheless, growing 1.1 versus, I think, growing 9 in the fourth quarter, I was quite surprised because you should have had a positive impact of COMP from China, as well as the strong selling that you did in Tiamidol. So can you say how much China was growing in the quarter? what happened maybe in other regions if it was not the issue in China, and then how should we think about that region going forward? Thank you.

So, Celine, I will answer your question related to the impact on costing. So, as you might imagine, we are currently – protected at least in the current quarter, to some extent also in the next quarter through the contracts that we have, which is good. Immediate impacts, as I already mentioned, obviously on, you know, logistics clearly, and we are managing that. Yes, as we are looking into obviously contract negotiations for the back half, we will start to see some pressure there. We are looking at various scenarios. I cannot give you here numbers at the moment because it is very fluid. And, of course, we will need to then make plans on how to offset those. It will be looking at everything, including, to be honest, pricing that we will need to look at for the back half if this continues.

Your second question, Céline, as you know very well, China is not a big part of our business, at least on the Nivea industry in France, so the fact that we are going double-digit in China is obviously very important for us, but we have also a big part of the business which is done in Southeast Asia, where we are suffering from the same issue that we had in other parts of the world with Nivea being down on core, so the good news, as I mentioned, that we are back to growth, on face care with the launch of the sachet glow. We have also some local issues. Thailand is obviously impacted by the border conflicts with Cambodia. Thailand is a very big country for us. We don't sell in some big areas of Thailand. We have also big pressure from local brands in Indonesia. So I would say the good side, you have a very strong business in Northeast Asia and India, double digits. Low side, you have Thailand and you have Indonesia. This is why all in all you end up with a plus 1.1%. We also, as I mentioned, that we are also destocking further in China. We want to be extremely by the books in terms of stocking in the brick and mortar, La Prairie, China. So we have, you know, also managed to reduce our stock to the absolute maximum. the best situation possible in the first quarter in order to embrace also the coming launches in Q2 and Q3.

Sorry, just to follow up, can you give me what exactly the number is for China? Because like double digits seems to be for Eucerin. So what is China all-inclusive La Prairie, Eucerin and Nivea? And then can you explain the Middle East impact that you saw in Q1 for one month, and what should we expect for the coming quarter?

Very good. So in China, we're doing pretty well. We have a very strong Nivea growth. We are growing Nivea plus India. We are India. Plus 18%, plus 18% in excess, gaining market share on every category. You might remember that we launched Luminous, Luminous has got a very good start. We launched a specific Galenics with tubes in order to be accessible for the majority of consumers. So we are already a pretty good market share. We are also relaunching our core business. Nivea Soft, you know, India is the number one country in the world for Nivea Soft. We are gaining five points market share, which is great. which is pretty – so you're asking about China or India?

China. China.

My mistake. Sorry, sorry. My mistake. So China, we are growing on Nivea at plus 22%, and we're growing on Usuin at plus 87%. So if you look at China, Nivea, the biggest part of the growth is coming from face care. I know this is a category we have been launching with Tiamido. We are growing on Nivea face care at 71%. gaining more than two points market share, which is very big for us on Nivea. Usurin is flying. Usurin, we are going at 87%. So which means that we have already, after only six months on the market, our Euro product, which is the Tiamidol serum, is the number one derma anti-pigment serum on the market. So we are extremely, extremely happy with Usurin and very, very optimistic with Nivea. And the last information was La Prairie, the retail sales, we are plus 12%. And this is the fifth quarter in a row that we are growing double-digit in China. So this is a mix of both brick and mortar and also a very strong success online, and particularly with the wind, which is TikTok. Okay, and Middle East? Middle East, do we have the figures of Middle East evolution? We are... So Middle East is 3% of our sales. If you look at the total, and we are at minus 50% in Middle East. So we are not so much suffering 50, 5-0 in Middle East for Nivea and Nisuin. It's a small business for La Prairie. We are not suffering in sell-out. That's the good news because we've been able to find ways, you know, to stock the retailer in due time. We are suffering in net sales, which means that no issue on the consumption. on the sell-out, but we hope to be able to continue to find ways. You know, we are extremely creative using all the means you can imagine to drive our product to Middle East. So we are using the other routes, like everybody is using, Salala, Cor, Fagan, Yeda. We are rerouting as much as we can in order to be sure that we can serve our consumers. So, again, nobody can say what will happen, especially now today, but we have found ways, you know, to serve our consumers as much as we can.

Thank you.

Thank you, Celine. Then the next one is David Hayes from Jefferies. David, please go ahead. Your line is open.

Thanks, Chris. Good morning, all. Just to quickly follow up on that, just that minus 50% Middle East, I guess that's March you're talking about, is that right, rather than the quarter?

Yes.

Yeah. The two questions I have, just to get into sort of reconciliation, so the second of March, you reported four-year, you guided to low single-digit decline of this – in the quarter, just gone, first quarter. Obviously, you did mid-single-digit decline. You talked about the Middle East circa 50 basis points. So I'm still struggling to see what happened in the month of March that was not expected. I guess the SAC dynamic, the La Prairie travel retail dynamic, all of that would have been known. So just trying to still reconcile why there was that underperformance relative to what you expected five or so weeks ago. And then secondly, on the profitability and delivering on the margin, there's a very big contribution last year, $90 million in other income expenses that is within the underlying margin. I think a big chunk of that was a reversal of provisions. So I just wonder whether you can give us any visibility or guidance on what that number looks like this year in terms of delivering on the operating margin guide, whether that's going to be a similar number or even bigger potentially, which helps with the profit delivery. Thank you so much.

Take the first question and Astrid will answer the second one. Very simple, two news which we are not expecting. One, as you mentioned, the Middle East crisis. So we were not expecting to lose sales in this part of the emerging market. The second element, you know, we got tremendous pressure from some retailers to close the deal before the quarter according to their expectations. I didn't want to accept that, so I don't want to decrease our prices. So we refused that, which impacted obviously March.

In terms of profitability, David, obviously we manage our SOI overall. We are actively managing also that line of the SOI, and that is built into our guidance. Thank you.

Thank you. Then the next question is from Guillaume Desmas of UBS. Guillaume, good morning. Please go ahead.

Good morning. Thank you, Christopher. Good morning, Vincent and Astrid. A couple of questions for me, please, both on Nivea, actually. The first one is on the Nivea recalibration strategy. Vincent, can you maybe shed some light on the marketing support you are planning behind this initiative? Because I think your margin outlook seems to signal relatively flat ANP spend, both as a percentage of sales and in absolute terms. So just wondering how you will make sure you get the maximum traction on all these initiatives under Nivea recalibration. And then my second question, it's still on Nivea, but the brand declining by 7% in Q1. Could you maybe share by how much volumes contracted in the quarter and which key categories, regions you are seeing the most pronounced volume share losses And so on the volume point, I mean, what does it do to your capacity utilization and more broadly to your operational leverage? Thank you very much.

On your first question, you might remember that I explained also that the face care category is extremely expensive in terms of working media. So when you do a launch, you have to spend at least 1% of the net sales in marketing budget, which is what we did for Luminous and Epiceline. But overall, you are clearly above 40% of your net sales in working media, while the other categories are much cheaper. If you look at body care, if you look at DO, you are more into the high single digit or low double digit. So, in fact, rebalancing part of this extra investment on face care on DO and body is already making a huge difference on DO and body without impacting so strongly the investment you put on face care. This is what we've been doing. We started to do that in September on DO in Europe, and you saw already the results. We are doing that also in emerging markets since 2017. September on body, and it is also paying off. So we believe that, you know, with a pretty stable marketing budget, just by having this rebalancing, we can have a pretty nice effect on the sell-out. And, again, this is what we are seeing in both regions on the two major categories, which are deodorant and body. I think, Astrid, you take the second one.

Sure. So, Guillaume, on Nivea, it is primarily, the decline is primarily driven by volume. And we do see, as you would have seen also from the regional chart, an impact pretty much across all of the regions. We do have some bright spots in certain countries, but from a regional perspective, it's quite broad, kind of reflecting also what we have showed you, obviously, from a market development, which is quite global in terms of the development of our mass market.

Thank you. And the next question is from Olivier Nicolai from Goldman Sachs. Olivier, please go ahead. Your line is open.

Hi. Good morning, Vincent. Chris, just on Europe, competition has been intensifying, particularly in Germany. We talked about Mixar last quarter, but you also have now Korean brands entering the market aggressively. What are the risks to your market share in Germany specifically, but in Europe in general? And do you think that you can maintain a share with Nivea? And then, I guess it's a bit early, but do you see any sign of consumer weakness in Europe so far? Thank you.

On Europe, yes, Mixa and the Korean brands took market share away from us, and this is also why we reacted already in September by putting more investment into the core categories, which are body on one side and which are accessible face care on the other side. So we are expecting, we are not yet regaining market share in Germany. We have a strong plan on Nivea Soft. We have a strong plan on the Nivea Repair Care, which is also an answer to the brand you are mentioning. We are also coming with a much more ambitious plan on affordable face care, launching a new line soon. We expect also to be able to fight against these brands. And also we are coming with a very smart innovation. We just launched Nivea Sun Stick, coming from Korea, which is clearly one of the best sellers we have been putting on the market in Suncare. So also leveraging, we have also our own expertise in Korea, also leveraging what we know from Korea. The good news that we clearly see and we have some kind of long-term view on the market, we see that those Korean brands are not really sustainable. You know, they are not even strong in Korea. So they go up and down. So they take market share away from us, but, you know, after they disappear. So we just have to be smarter. And this is, for example, one of the things we are doing in Eastern Europe. We've been able to be much more visible on shelf. You know, we have also been extremely aggressive in terms of influencers. So we are learning from those brands. without, you know, trying to copy them. So we are not yet positive in Germany, but I'm pretty optimistic starting this quarter that we see some good results in those categories. Thank you.

Thank you, Olivier. Then the next one is Misha Omanadze from BNP Paribas, Exxon. Misha, please go ahead. Your line is open.

Morning. Thanks for taking my questions. I have two, please. First, you mentioned that you may be looking at pricing actions to offset input cost pressures in H2. Does your full year guidance of flat to slightly positive growth for consumer already embed an assumption of some pricing benefiting the second half? And the second question would be on growth by brands. I know you don't guide specifically, but if you could maybe just comment directionally what you expect for each of the brands for Q2 and the full year. Thank you.

Misha, I will take your first question. So we are currently working through various scenarios on the impact of our costings. We have not built those into our guidance, and we have also not built in, obviously, the countermeasures. It's an extremely fluid situation. We're obviously looking at what that could be for the second half. As you can imagine, it's really hard to pinpoint the exact impact, but we're managing that as much as we can, again, via scenarios. So neither the pricing, but neither the costs.

Your question, so I will not guide you, but I think I mentioned already that we are expecting a flat to slightly increasing Q2, mostly driven by the success of DERMA, but also some much better figures on La Prairie, on Chantecaille, and also on Nivea. So I would say on the year, if you look at the guidance, I'm expecting, again, strong growth with Therma. It should stay the same across the year. Recovery in the second semester and finishing the year with an EVR slightly positive, you know, a bit in line with the market, and that should give, you know, the guidance we gave you.

That's very clear. Thank you.

Thank you, Misha. And the next question is from Tom Sykes from Deutsche Bank. Tom, please go ahead.

Yeah, thanks. Morning, everybody. Firstly, just on the margin, could you give a view on the cadence of margin change in the years, so H1 movement versus H2? And just why doesn't consumer need a more significant margin reset? I mean, to cement the longer-term growth, you could invest more You're facing a lot of competition from smaller peers, indie brands. You pick out more competition in EM. Why doesn't it need a more significant margin reset? And then on the sun-season selling, you mentioned it's a very high-margin business for you. Could you just talk about the scope of that selling and, in particular, the move or the selling online to online distributors or retailers? and offline, and is that initial selling the same scope as it always has been, please? Thank you.

Tom, I will take your first question. So, we typically have a stronger margin, EBIT margin in the first half than we have in the second half, and we expect similar in this year with obviously a stronger first half versus the second half. Again, we will see what impacts we do see from the Middle East. Again, the attempt or the ambition is to offset those impacts. And in terms of your question around whether or not we need an even stronger margin reset, look, this is the plan we have made. We feel like we can, with this plan, deliver. on the guidance we have committed to. We are starting to see some green shoots, as we've mentioned also in our presentation, also seeing the sellout moving in the right direction. We're not yet happy completely about, obviously, how strong that is, but we do think we will see continued impact from all the changes we are making.

Second question, Max.

I was just going to say on the change year-on-year in margin rather than obviously the seasonality, but the year-on-year change in margin, how are you expecting that to progress?

Yeah, it will be a similar impact throughout the year. We don't see it.

Thank you. We are ready. We have done the selling, which is in line with last year. What is good news for us is that we are doing better in the emerging market. Last year the success was really more driven by Europe, so at this stage again selling We are good everywhere. So, again, what we are expecting is the sun, but we are ready. We have also a very strong plan with influencers. We have also, as I say, new products, which I think will be interesting also for Gen Z. It's something we are willing to seduce this year. So more to come. As you know, it's starting now, and the sellout will be clearly in Q2. And I hope to be able to share some good figures at the end of this quarter.

Okay, thank you.

Thank you, Tom. And then the next one is Fulvio Cazol from Bernberg. Fulvio, please go ahead. Your line is open.

Yes, good morning, and thank you for taking my question, which is on the investment rebalancing. Vincent, I remember when you became CEO a few years ago, you highlighted the strategy change away from the decentralized model that Buysville had previously. At the time, you highlighted the inconsistency across countries on product launches, on marketing practices, which basically resulted in low returns from investments in categories like body wash, sun, deodorant, Now, it sounds like you are taking the business back to that more decentralized model, investing in products with lower price points that generate lower margins. So what will be different in the next few years that gives you the confidence of a better return on investments versus, say, six, ten years ago? Thank you.

This is the right question, and thank you for asking. I think we clearly, the situation in 2021 was indeed that we were ultra-localized, so every country was doing what they wanted in terms of launches, in terms of advertising campaigns, in terms of support, you know, of key initiatives. I went into a kind of patchwork of different look and feel, different visualization of the brand and clearly no return on investment. So clearly, on top of the direction into premium face care, I went into a very strong globalization and I went too far. I was clearly, it's obvious when you look at the results, I went too far into the globalization because there are some local franchises which suffered from the fact that they were no longer invested. So are we back to what we were before? Not at all. What we are talking about is a delocalization in a frame. which means that clearly we are controlling everything from the center. So when, for example, I'm talking about the new support towards some local franchises in the emerging market, it is driven by Hamburg with our own R&D organization, our own marketing organization, and we don't give the right to everybody to do what they want. I mentioned five countries, and it's not just a coincidence. We consider that countries like Brazil, India, China, Japan, and the U.S. are different, and that they deserve a specific treatment, and we expect the neighboring countries to follow exactly the same logic. So what I do in Brazil, I was there last week in Brazil, Argentina, and Chile. I can tell you that what we are doing in Brazil will be followed by Argentina, Chile, Mexico, Colombia, and all the other countries. The second element also is important. We are leveraging the global franchises, but accepting local execution. I gave the example of the sachet, which seems to be clearly not rocket science, but the fact that we are able to have the exact same formula with the exact same concentration of thiamidol with different Galenics is something new. Yes, you have the product you know, the dispenser you know in Europe, which is pretty premium, but you have a tube in India, you have a sachet in Thailand, and you have something even more premium in China with Nivea Tiamidol. So we are much more, I would say, open in terms of Galenics, which are following, you know, which are using the same global platform. And last but not least, in terms of communication, Together with Publicis, which is our global agency on both Nivea, Usrin, and also Antaplas, we have created some specific hubs in specific countries, and those five countries that we're mentioning, where we have the global marketing team and the Publicis team working together. in order to be sure that what we are doing locally is also consistent with the global look and feel of the brand and the way we want to push forward our initiative. So it's clearly more freedom. It's also more ability to the country to test new ideas, but it is clearly controlled. We don't want to come back to the kind of food salad we had in the past with so many different looks and feels and different executions.

Very clear. Thank you.

Thanks, Julio. And the next one is Fon Udonzilpa from RBC. Fon, please go ahead. Your line is open.

Thank you. Good morning. Just a few questions on Nivea Body Care, please. So you gave color on regional performance for body care, but could you confirm the market share momentum for Nivea Body Care globally? And tying to that, with the early result you've seen on the rebalancing strategy, Momentum in the body care in many markets improving and with the lower media costs that you mentioned. Has your view towards investment in the body care category changed? Does improved momentum give you confidence in increasing investment for the rest of the year and how much flexibility to do so considering higher cost inflation in the second half?

I think I shared a few examples already in the call and they are very important for us. It's the emerging market body. This is also the emerging market face and the European deodorants category. There are categories where we started the rebalancing in September. It's, I would say, easier in emerging markets because we have a lot of local franchises that we just have to revamp, you know, and this is what we've been doing. And we see, and this is really important for us, we saw clearly that we are gaining market share in those regions. Globally, we have been gaining market share for the first time, if you look at the total Nivea brand in January, and it's for the first time we're gaining market share on Nivea global since end of 24, so pretty good news. We are slightly down in February, but it's really, I mean, just a few base points. So overall, we see clearly a dynamic which is positive, which is very positive for deodorants, as I mentioned, which is positive for body, which is not yet as positive as we expected on face care. So face care is clearly The category will push forward. There are some launches coming in affordable face care. As I mentioned, I was last week in Brazil. We have a fantastic line called Facial, which has a 25% market share. We are revamping this line with new initiatives, new ingredients also. not only the one coming from Basel, but also some very well-known ingredients. So all of that should materialize in the Q2, Q3. So hopefully I will also get the same kind of growth figures in the months to come.

Thank you. Thank you, Flan. Then the next one is Tilly from Morgan Stanley. Please go ahead. Your line is open.

Hi, good morning. Thanks for taking my questions. The first one was on the Nivea Epsilene launch. I'm just wondering if you're seeing any cannibalization in the Eucerin Epsilene product, because just looking at the last couple of months, there seems to have been a bit of a slowdown in Eucerin in Europe. And then on the second part, on the areas where you've seen improved sell-out in Nivea, could you just give any steer on the magnitude of the gross margin differential of the parts of Nivea that are starting to perform better with the rebalancing strategy? Thanks very much.

Well, your first question, absolutely zero cannibalization. That's a very good news. You know, it's particularly easy, I would say, in Europe because we are not sold in the same retail environment. You know, you find... Nivea-epicillin in mass markets, you find Usurin-epicillin in pharmacies. But even in regions, and partly the case for the UK, but also for emerging markets where we are sold in the same drugstores, we have absolutely zero effect on the sell-out. Epicillin is really doing extremely well on Usurin. We are also adding new SKUs. We are enlarging the routine. So coming with a day and night product, and Nivea Epsilin will benefit also from the same kind of addition. What is great, as I mentioned in the call, is that the repurchase rates are absolutely amazing for Nivea. We are reaching a level between 35% and 48%, depending on the countries, which is even above Usrin, which is also more expensive. So we feel pretty safe with both products. You have also to remember that we decided also not to launch Nivea Epsilin everywhere, So, for example, it's clearly a brand which is skewed towards Europe. We didn't launch Nivea HVCD in countries like Mexico and Brazil because it's too expensive. So, here, obviously, the field is totally open for Israel, and this is also where we are reaching a very high level of net sales, market share, and repurchase. On the second question, Asreen?

Yeah. So, gross margin, as you can imagine, across our various categories, is quite different, you know, subcategory by subcategory and tends to be obviously quite a bit lower on our personal categories than our skincare categories. That said, when we're looking at what we call margin two, so the margin including also our marketing spend, we see a much more even picture. And in fact, there are face care business has some of the lowest margin too. So, As we are rebalancing that, we can manage this margin to pool and thereby manage, you know, profitability.

Thank you. Thank you. Then we have two more questions. First, we have Anneli Palemann from Thomson Reuters. Anneli, please go ahead. Your line is open.

Hello, and good morning. I have some questions on what oil price is the forecast based? And have the companies taken any specific measures due to the higher government or tourism costs, for example, allowing more working from home, reducing business travel by plane? And last, do you have to pay any tariffs in the USA? And are you now claiming that then?

Thank you so much, Anneli, for your question. So we are in the midst of working on our forecast. And as I mentioned, we have various scenarios that we're looking at. Obviously, one scenario with a quite high oil price, then kind of a middle ground, and one where it doesn't quite return to the previous place pre this crisis, but significantly lower than what we're seeing this minute. And we're working towards what that means. than in terms of the actions. What I can tell you that we anyhow have very much watched T&E and so on, our travel costs over the last years. Absolutely, we continue to want to save there, and that's what also contributed to managing our overheads quite well over the last years and is a continued impact even in this year. In terms of your questions on tariffs, as we've mentioned in the previous calls, our impact from the U.S. tariffs has been quite limited. We are, in that sense, lucky, I'll call it, given our footprint of producing quite a bit of our sales in the U.S. itself or in Mexico. and thereby the impact was low, of course, we will still use what we can in terms of refunding and so on to offset the limited impact we have had. Okay. Thank you.

Thank you, Annalie. And then the next one is Ulrike Dawa from Dow Jones. Ulrike, please go ahead. Your line is open.

Yeah. Good morning. Thanks for taking my question. I hope you can hear me properly.

Yes.

Okay, thank you. I have one question related to the Middle East. What would be the maximum impact on margin that could you envisage in your worst-case scenarios for the full year? And also in terms of retail-related, so I better understand, what was the problem with the U.S. department stores? And you mentioned delays of innovations getting in stores. Is that related, could that threaten your innovation timing this year?

On the Middle East, Ulrike, we are not sharing a max impact because, to be honest, we really want to manage that impact. And, again, it can have a substantial impact on our cost, which we will try to find measures to obviously offset. Given the size of our business in the Middle East, the direct impact will be quite low, but we know obviously this could lead to a much more global impact and then obviously have a much larger impact on us.

Oh, department store. No, the issue on department store is sold. I mean, it's public knowledge that Saxis Avenue was in a difficult situation and we were not selling anything to Saksis Avenue until we had an agreement on the other dues. But they were still selling in store. They still had some product they could sell, but we were not selling to them. And there's no other. We have a deal with them, and we are back, absolutely back to normal. We are selling La Prairie and Chandecaille in each and every Saks store in the U.S. No issue on that.

Okay. And you mentioned the pricing discussions with your team retailers. And at the same time that some innovations were not getting in the store or there was a delay between delivery and getting into the stores. Is that threatening or could that threaten somehow your innovation timing this year?

No. No, no, the only, you know, what happens regularly when we have some customer conflicts, and again, it's mostly about Niva, it's mostly about France and Germany, there is this kind of blackmail that might delay some innovation, but that's normal business. Retailers are smart enough to bet on the right products, so we are not suffering from that. We are able to put the right products on shelf when we want them to be on shelf.

Okay, thank you very much.

Thank you, Ulrike, and thank you, everyone. That was our last question. This concludes our conference call. Bayazov's next investor relations event will be the release of our half-year results on August 5th, 2026. We appreciate your interest in Bayazov and look forward to seeing you back here again in the summer. Thank you very much.

Ladies and gentlemen, the conference is now concluded and you may disconnect. Thank you for joining and have a pleasant day. Goodbye.