Henkel Ag & Co Kgaa S/Adr

Good morning, ladies and gentlemen, and welcome to the Henkel Conference Call. For the duration of the call, you will be on a listen-only mode. If you would like to ask a question during the Q&A session, please press star, followed by one on your telephone keypad. If at any time you need assistance, please press star, followed by zero, and you will be connected to an operator. It's my pleasure, and I would now like to turn the conference over to Leslie Idgen, Head of Investor Relations.

Please go ahead. Thank you and good morning, everyone, and a warm welcome to Henkel's conference call on the first quarter of 2023. Here with me today are our CEO, Carsten Knobel, and our CFO, Marco Svoboda. Following the presentation, as always, Carsten and Marco are happy to take your questions. Before handing over, please let me remind you that this call will be recorded and a replay will be made available on the Investor Relations website shortly after this call. By asking a question during the Q&A session, you agree to both the live broadcasting as well as the recording of your question, including salutation to be published on our website. Also, please be reminded that this presentation contains the usual formal disclaimer in regard to forward-looking statements within the meaning of relevant U.S. legislation. It can also be accessed by our website at hankel.com. The presentation and discussion are conducted subject to this disclaimer. With this, It is my pleasure to hand over to our CEO, Carsten Knoebel. Carsten, please go ahead.

Thanks, Lesley, and a warm welcome also from my side to everyone joining today's call. After walking you through the key developments of the first quarter, we, Marco and myself, will take a closer look at our business performance, and afterwards, we are looking forward to talking and taking your questions So let's kick it off with the highlights and the major achievements in the first quarter. Our reporting for the first quarter already illustrates it. Henkel is stronger aligned to our customers and the markets, and we are operating with two strong pillars covering attractive industrial and also consumer markets. Our adhesive technology business is globally leading in adhesives, sealants, and functional coatings, and we are just in the process of further optimizing the underlying setup to further leverage our expertise and shape the relevant megatrends in the areas of mobility and electronics, packaging and consumer goods, and in craftsmen, construction, and professional. And in our newly established consumer brands business, we focus on the global categories laundry and home care, and hair. And also here, we hold leading positions in the market in which we play, and we have laid out a clear plan to further drive the integration of our consumer businesses to exploit their full potential. And with these two pillars, we have a strong portfolio at hand with successful brands and innovative technologies. Based on the strength of our businesses, we achieved a really good start to the year in an environment which continues to be highly challenging. Both adhesive technologies and consumer brands particular with its two global categories of laundry and home care and hair, delivered a very strong organic sales growth and this results in a plus of 6.6% on the group level. This growth was driven by double-digit pricing in both business units and here let me point out that we see first signs of a stabilization in input cost versus the Q4 levels of last year, yet still on high levels compared to Q1 of last year. Still, it is clear that especially in our consumer businesses, additional pricing is needed to further compensate for the pressures from the input cost side, not least also in light of wage inflation. However, we also see that the pricing measures we are taking also in Q1 are having a positive impact on our gross margins. And as indicated in our full year earnings call in March, the volume development in consumer brands improved significantly versus the level witnessed in Q4 of last year. And in adhesive technologies, volumes overall showed a stable development compared to the fourth quarter. So all in all, in adhesive technologies, a very strong performance in quarter one, which is also at the top end of what competitors reported, clearly reflecting the strength of our portfolio in the segments in which we're in. Today, we confirmed our full year guidance, but of course, given the strong top line momentum in the first quarter, we also have a higher confidence today to reach the upper half of the organic sales growth guidance range. And at the same time, we pushed ahead with the implementation of our strategic growth agenda, which also includes the successful launch of relevant innovations. And let me highlight, based on that statement, just a few examples in the first quarter for both pillars. In adhesive technologies, our innovative technologies provide added value to customers and consumers while shaping relevant megatrends. For example, we launched a new solution which helps to further shape the future of mobility. Our new adhesives used for camera module assembly in advanced driver assistance systems enables superior camera focus and high resolution image production. Precision and reliability are key for autonomous driving systems and hence for driving safety. And in addition, Our solution allows fast and robust camera production, which is becoming increasingly important for the manufacturers. We also further developed our adhesives used for food packaging solutions. The enhanced product allows manufacturers to switch from solvent-based to solvent-free adhesives while maintaining proven quality with superior appearance. Yet another step to enable more sustainable packaging. In our consumer brand business, we are leveraging our innovation capabilities in the hair professional business in the highly dynamic region of Asia. At our new J-Beauty Innovation Hub based in Tokyo, we are combining the long-standing expertise of Schwarzkopf with the unique patent and technology base of Shiseido Professional, which we acquired last year. Together, we will be taking hair innovation and trends for Asian salon partners and consumers to the next level. We built this hub in Japan as it is the world's second largest hair professional market and together with our existing Schwarzkopf professional hubs, we now have a global ecosystem across North America, Europe and Asia for our hair professional business. And also in the consumer space, we launched strong innovations. Our dishwashing brand SOMAD comes with a new formula with improved bio-based content and by offering excellent cleaning in low temperature eco-cycles, consumers can save up to 20% of energy. And we relaunched our got-to-be styling portfolio. Our products come with a new packaging design and further sustainability advancements. They are also the result of close collaboration with our got-to-be co-creation community, which comprises of a diverse group of Gen Z consumers from across Europe. Beyond innovations, we delivered on our strategic priorities and also on our commitments. And let me highlight some further achievements. Our new consumer brands business unit was established ahead of the original schedule and in March, we provided further details on the measures and expected synergies. In addition to the 250 million euro net savings in phase one, we want to realize at least 150 million euros of net savings in the second integration phase with full impact on earnings in 2026. And the teams are doing a tremendous job and the integration is well on track. We also further shaped our consumer brands portfolio. The divestment of our North American air care business marked the final step to exit this category globally, and at the same time, we strengthened our core business also via an M&A. We acquired the leading sustainable laundry and home care brand Earthwise in New Zealand with further rollout potential in the region. We are also shaping our operating model in adhesive technologies. As mentioned, we announced to further optimize the business unit organizational structure. With the new setup with the three business areas, we will use scale and competence benefits even more efficiently while at the same time ensuring close customer and market proximity. And when it comes to capital allocation, we successfully completed Henkel's first share buyback program. By the end of March, we bought back shares amounting in total of around 1 billion euros. And last but not least, we exited our business activities in Russia. In April 2022, we had announced this step in light of the war in Ukraine. Two weeks ago, we announced that we signed an agreement on the sale of our business activities in Russia. Meanwhile, we completed the sale to a consortium of local financial investors The purchase price amounts to 54 billion rubles, which corresponds to around 600 million euros. And with that, we concluded our exit from Russia. It was a highly complex process, also due to the frequently changing regulatory environment, and in light of the ongoing war and its far-reaching effects, we are convinced that we have taken the right decision, which we executed stringently. So before handing over to Marco, let me briefly summarize. I think it's, I believe it's fairly to say we had a good start to the year in both of our businesses and we are continuously delivering on our priorities and also on our commitments. And with that, I'm handing over to Marco. Marco.