Henkel Ag & Co Kgaa S/Adr

Good morning and welcome to the Henkel Conference Call. For the duration of the call, you will be on listen only. If you would like to ask a question during the Q&A session, please press star 1 on your telephone keypad. If at any time you need assistance, please press star 0 and you will be connected to an operator. I will now hand over to Leslie Ilken, Head of Investor Relations. Please go ahead.

Thank you and good morning to everyone. A warm welcome, everyone joining our call on Henkel's Q1 performance session. I'm Leslie Iltgen, head of Henkel's Investor Relations. And today I'm joined by our CEO, Carson Knobel, and our CFO, Marco Swoboda. Carson will begin with an overview of the key developments and highlights in the first quarter. Marco will then follow with a more detailed review of the financial performance and also discuss our updated 2024 full-year guidance. As always, following the presentation, we will open up the lines and Carson and Marco will be happy to take your questions. Before handing over to Carsten, please let me remind you that this call will be recorded and a replay will be made available on our 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 citation, 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 use legislation. It can also be accessed via our website at Henkel.com. As always, 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.

Thank you, Leslie. Warm welcome also from my side to everyone joining our today's conference call. As always, we do appreciate your interest in our company and we really look forward to answering your questions. After walking you through the key developments of the first quarter, we will elaborate on Henkel's business performance and full year outlook in more detail. So, let me move straight to the key topics and the highlights of this quarter. Our first quarter results demonstrate that we had a strong start to the year supported by both businesses. On group level, Henkel recorded 3% organic sales growth, with our consumer business clearly standing out, delivering 5.2%. Adhesive technologies achieved growth of 1.3%, which is ahead of our peers and fully in line with our expectations. Pricing also continued to contribute positively. Volumes again improved sequentially versus Q4 2023 in adhesives, Volume development remained in positive territory despite an overall demanding environment. In our consumer business, we also reached positive levels when considering the impact from portfolio measures. which accounted for roughly two percentage points and which reflects the fact that the impact from these measures will be more front-end loaded. In the meantime, we also succeeded in closing the Seal for Life and the Vidal Sassoon acquisitions earlier than initially anticipated. And backed by the very strong business performance in Q1 and our expectations for the remainder of the year, we clearly raised our guidance last week for both top and the bottom line, and important, also supported by a strong start into Q2 considering our April results. Let me share some more color on the drivers behind our guidance race. In adhesive technologies, we saw an overall more robust performance than initially expected in a still demanding environment. This includes a better mix, for example, resulting from the recovery of our electronics business and also very strong gross margins. Strong gross margins and an improved mix was also driving the performance in our consumer brands business. Our well-performing hair business showed a strong contribution, a clear proof point that the continued work on our portfolio is increasingly bearing fruit. We also saw benefits from the ongoing valorization of our consumer brand's portfolio, resulting in strong pricing while volumes further improved in particular when considering the impact from the portfolio measures. And we also continued with investments in marketing and R&D on elevated levels, fueling strong growth of innovations and core brands, or four core brands, such as Persil, Pervol, Priel, Schwarzkopf, and the American brand All. With the recent closing of the acquisition of Seal for Life in adhesives and Vidal Sassoon in China in consumer brands, we also benefited from the earlier-than-expected contribution to both top and bottom line. So in short, we deliver what we promised. Our strategy is working. Henkel is on a successful and a consistent profitable growth path. With that, let us take a closer look at some of the highlights in our two business units, starting with adhesive technologies. While our automotive business yet again was a growth engine, as just mentioned, we also benefited from the market-driven recovery of our electronics business Beyond driving our financial performance, we are strengthening our businesses and capabilities. The acquisition of Seal for Life, which forms an integral pillar in building a growth platform for the maintenance, repair, and overall business, was closed beginning of April. As a joint team, we now focus on developing this business further. We are also expanding our innovation capabilities backed by additional inspiration centers, which continue to drive customized innovations, outperforming the market, and I will come back to that, or better to say, more on that in a minute. Innovations also play a key role in consumer brands. We have put considerable resources when it comes to meaningful innovations adding value to our customers and consumers. In parallel, as you all know, we have considerably stepped up our marketing investments to strengthen brand equity and to support the valorization process. And we can see the results already materializing. Our largest market, Europe, showed strong growth momentum in Q1. And in parallel, we have been working stringently towards creating a winning portfolio. Particularly encouraging is the performance in our global key category, hair, where we are more advanced and recorded a positive volume in market share development, in particular with gains in our styling categories. And at the same time, we strengthened the hair business by acquiring Vidal Sassoon in China, which will allow us to further expand our portfolio in an attractive market going forward. When it comes to portfolio pruning, the focus at present is now more on the laundry and home care space. Please note that this will lead to some distortions in volume and market share numbers. But we do expect to have concluded the portfolio measures, particularly when it comes to discontinuations by the end of this year, 2024. While enhancing our consumer brand portfolio, we are also driving the second integration phase, which focuses on the optimization of the production and supply chain with full force. All in all, we are well on track. Turning to the next slide. I would like to highlight our efforts in expanding our network of unique, state-of-the-art innovation centers in adhesive technologies as they play a really key role. Firstly, they enable co-innovations with our customers and partners from more than 800 industrial segments. Moreover, they foster collaboration within our adhesive technology team of around 3,000 R&D experts and application engineers around the globe. And last but not least, they serve as a place to showcase our entire portfolio on site. To date, we have three innovation centers fully operational. Here in Düsseldorf, we talked about that quite a couple of times, in Mumbai, in India, as well as the most recent addition in New Jersey in the US. By the end of this year, our inspiration center in the Asia-Pacific region will also be opened. More than 400 R&D experts will be working in around 30 labs together with customers from across industries. And in February this year, we announced the construction of our first integrated innovation and tech center in Latin America, located in Sao Paulo. The new center aims to create a collaborative ecosystem for developing innovations and solutions, and additionally, it will serve as a hub for training, capacity building, and interaction with customers and partners in the region. Thus, we are investing into our businesses and expanding our capabilities to enhance strategic collaboration and to drive innovations along relevant megatrends globally. Moving to the next three slides, I would like to share some specific examples as to how we drive customer-related solutions. In the automotive business, for instance, we enable lighter, safer, and more sustainable vehicles with our solutions. Lightweight plays a key role, not only in the automotive space, by the way, and we see growing demand for respective solutions from leading OEMs. We are well positioned to cater to their requirement with specialized solutions and thus outperform the market. In the first quarter, we recorded double-digit sales growth in the area of structural solutions for automotive OEMs. Within the segment for structural solutions, I want to highlight our innovative foam solutions marketed under the TerraZone brand. What makes them special is that it only expands during the manufacturing process, the so-called baking process. Depending on the specific requirement and the respective solution, the structural foam expands by 200 to 300% in the heat, filling gaps and ensuring perfect fit to the car frames. You can see the difference before and after car manufacturing on the right-hand side of the slide. Our high-expansion foams deliver superior design flexibility, structural stiffness, and crash performance. And by reducing vehicle noise and vibration, they help improve the entire driving experience. Additionally, they offer substantial sustainability benefits and thus contribute to our customers' emission reduction targets. Our structural foam solutions reduce the weight of car components by up to 20% compared to conventional metal, which helps to lower the associated carbon footprint. Sustainability is also a key theme in the packaging industry. As demand for convenience and home delivery is increasing, sustainable packaging solutions become even ever more relevant. You might recall from previous calls that we are addressing the topic with a broad range of applications within our portfolio. One specific highlight is our EPIX technology platform. Our EPIX technology is a portfolio of materials designed to extend the functionality of paper. It allows paper products to support new features of barrier protection, thermal insulation, and impact resistance. Thus, our solutions can enhance the paper experience for a wide range of products including paper cups, containers, e-commerce packaging and beyond. So in short, with our solution, we can make paper a true plastic alternative for popular disposable materials like padded mailers or to-go cups. The development of this technology platform is something we are particularly proud of. EPIX is a business built from scratch. As we have been adding further innovations, we are continuously reinventing packaging with our portfolio designed for recyclability. For example, currently we are addressing the big trend of cold chain packaging required for fresh food delivery to the house. This is a logistical challenge for providers of, e.g., meal subscription boxes, bringing foods that spoil quickly in high quality to the consumer, while at the same time reduce waste and ensure packaging recyclability. With success. Within only four years of launch, EPICS has achieved a substantial sales base in a highly attractive and also growing market. Third example, sustainable and cost-effective innovations are also indispensable in the furniture market, which we are addressing with our consumer goods business. Here, we serve a range of solutions to industry-leading customers. Our adhesives can be used to bond a variety of wooden parts in many applications in the furniture industry, from edge bending and profile wrapping on to flat lamination on wood assembly. And of course, also here, innovations are crucial although not seen by the consumer when buying a table, a kitchen, or others in one of the large furniture stores, our products have significant impact on the quality and production efficiency of the furniture in all our homes. To give you a very specific example, we are currently scaling our highly efficient hot melts for high-speed lamination processes, which we launched end of last year. And besides energy consumption during production, key benefit to our customer is the reduction of maintenance cost and scrap by up to 70%. That is highly relevant as hot melt lamination processes are highly automated and even short outages or production stops can cause additional cost in millions. With this, let us move on to our consumer brands business. When it comes to innovation, our ambition is very clear. We want to strengthen our technology leadership to offer consumers superior products under our strong brand. Our robust global network consists of state-of-the-art innovation centers located around the world, stuffed with roughly 1,000 R&D experts, bringing together consumer insights and Henkel's strong technology expertise. We drive innovations along technology roadmaps, which define short-, mid-, and long-term innovation milestones centered around consumer needs. And just like in adhesive technologies, we are continuously investing in our capabilities. Earlier this year, we opened our innovation center in Shanghai, China, which supports research in both hair and laundry and home care, and also contributes consumer insights from key markets across Asia. Our innovations play a key role in shaping and valorizing our consumer brands portfolio also going forward. And also here, let me show you how exactly we are driving the valuation process. Take our brand Pervol for example, which is the number one in fabric care in our active market. Just recently, we introduced an innovative new formula which revives color and fibers after 10 washes. This innovation basically renews clothes with every wash and it is suitable for all colored clothes. The effect is really impressive. You can see it on the left-hand side of the chart. And we started the global rollout in February, even including countries like South Korea. And overall, we are present with Pavol in around 30 countries. The launch is backed by a strong marketing campaign and the results are strong. Pavol achieved double-digit organic sales growth in the first quarter and gained more than 150 basis points in market shares. So really a fantastic brand and a fantastic development. Also, the relaunch of all three clear is paying off. As a reminder, All is our biggest consumer brand in North America, and here the FreeClear variant, which is leading in the sensitive skin segment, is a key pillar of our portfolio. With the relaunch of the brand last year, we reinforced the brand's top recommendation from dermatologists and broadened the brand scope. And also here, we see a strong performance. We achieved double-digit organic sales growth and increased our market share. While the performance in other parts of the North American business remains to be diluted by the impact from portfolio measures, All Free Clear even expanded its share by 30 basis points. This is a good blueprint of how we want to build on strong brands and create a winning portfolio, delivering strong top-line growth, and that coming along with an attractive profitability profile. Staying with North America, but switching gears to our hair business. Kenra is the leading professional styling brand in the North American market. Building on this strong position, we launched an extended Kenra hair care line, which includes a complete range of shampoos and conditioners, including three completely new variants. For example, triple repair shampoo featuring our patented dual bond complex. You might recall that we highlighted it in the call in March. And thanks to this technology, our Canara Care products can reduce hair breakage by almost 90%. In terms of marketing, social media channels play a key role to strengthen our relationship and interaction with hairstylists and with Canara. We are the number one YouTube educator streaming more educational videos than any other hair professional brand. These are just a few examples of how we are pushing our products and solutions to the next level to shape a truly winning portfolio based on strong innovation capabilities, deep customer and consumer insights, and very strong marketing support, and for sure, passionate teams behind. So, wrapping it up, we continue to live on what we promise to you while continuously investing in our business. Backed by the strong performance year to date, we are looking ahead really with confidence. We are well on track to drive profitable growth, which is also reflected in the raised outlook for fiscal 2024. And with that, let me hand over to Marco for some more details on the financial performance in the first quarter. Marco, please.