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 Oaken, Head of Investor Relations. Please go ahead.

Thank you and good morning to everyone here on the call. A warm welcome. on Henkel's Q3 performance call. I'm Leslie Oetkin, Head of Henkel's Investor Relations. Also today, I'm joined by our CEO, Carsten Knoebel, and our CFO, Marcos Foboda. Carsten will begin with an overview of the key developments and highlights in the third quarter. Marco will follow with a more detailed review of the financial performance. As always, following the presentation, Carsten and Marco will be happy to take your questions. Before handing over to Carson, 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 questions, 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. 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.

Thanks, Leslie. And a warm welcome also from my side to everyone joining our conference call today. And as always, we do appreciate your interest in our company and we look forward to answering for sure also your questions. After walking you through the key developments of the third quarter, we will elaborate on Henkel's business performance and full year outlook in more detail. So let me move straight forward to the key topics and the highlights of the third quarter. While the business environment in some of our markets remains challenging, we delivered strong organic sales growth of 3.3% on the group level, to which both businesses contributed. Adhesive technologies achieved the growth of 3.7% and consumer brands grew by 2.7%. Pricing also continued to contribute positively. While pricing proved to be resilient in adhesive technologies, the still very strong pricing in our consumer business reflects the ongoing valorization of our portfolio. Volumes. They showed an overall positive development on a group level. Here, the strong volume expansion in adhesives is a clear proof for the strength of our portfolio with which we are serving a wide range of industries. In consumer brands, volumes remained below the prior year quarter, but we are well on track with the implementation of our portfolio measures. When adjusting for the impact from discontinuations, which we expect to conclude this year, volume development would have been flat. We are confident that 2024 will be another successful year for Henkel and that we will reach our sales and earnings guidance for the full year. The strong performance year-to-date, which also includes continued strong growth and EBIT margin in Q3, also allowed us to continue to invest at increased levels in our brands and our businesses. And backed by this strong business performance year-to-date, we see a clear chance to even reach the upper half of the guidance ranges for both the adjusted EBIT margin and the adjusted EPS growth. A clear proof that we are driving profitable growth across our businesses. And with that, I would like to turn to some of the highlights in our two business units, starting with adhesive technologies, where we are outperforming our markets by offering customer-centric innovations and pioneering sustainability-focused innovations. Our mobility and electronics business yet again showed a continued strong top-line performance. Here, the strong development of the electronics business again boosted our growth dynamics. And what's even more impressive is the fact that we recorded a broad-based volume expansion across a wide range of markets in our adhesive business. In consumer brands, as mentioned before, we are pushing ahead with our measures to shape a focused and powerful portfolio. On the one hand, we are valorizing our brands based on tech-driven innovations and supported by strong marketing campaigns. And on the other hand, we see that our portfolio optimization measures are bearing fruit, as evident in the performance of our hair business, where those measures have been implemented earlier already. For the fifth consecutive quarter, hair has been delivering a high single-digit organic sales increase. This is backed by clear volume growth and by continued global market share gains in styling. So again, a truly encouraging development of our hair business. And all in all, we are well on track and delivering on our priorities and commitments. On the next few charts, I'd like to discuss some of these highlights a little bit more in detail. Starting with our adhesive technology business, which continues to outperform its relevant markets. With organic sales growth of 3.7% in the third quarter, we clearly surpassed the IPX, which showed an increase of 1.1% over the same period. A strong achievement and a clear proof of our unique solution portfolios. I'd like to highlight three areas which make our business particularly successful and which set us apart from peers. Number one, we work closely with our customers and partners to innovate in high growth markets along key trends. In consumer electronics, for example, we are enabling high performance technologies and changes in design requirements. In the automotive industry, we are at the forefront in newly emerging fields. We develop solutions that drive the future of mobility electronics, like solutions for advanced driver assistance systems and electronic control units, with high benefits for cars, irrespective of the powertrain. Number two, as leader in the sustainability transformation, we are leveraging our unique value chain position to create lasting impact across industries. We are not only developing sustainable solutions, but also enable our customers to reduce emissions in their use phases. And I'll get to one specific example in just a minute. And lastly, we strategically invest in the future growth segments. A good example here is our MRO business. Knowing that this is and will be a key market with high potential, we are strengthening our portfolio, building capacity and capabilities. With the acquisitions of Seal for Life and Critica Infrastructure, we also made a clear move towards an even more powerful and well-positioned business. Also going forward, the team is dedicated to continuously evolve our solution portfolio and offer innovations that shape the markets of today and beyond. Moving on to the next two slides, I would like to share some specific examples as to how we outperform our markets based on our unique portfolio in adhesive technologies. In the aerospace business, the commercial airline fleet is expected to double in the next 20 years. As OEMs ramp up aircraft production, we are actively supporting them in meeting safety, reliability, and sustainability requirements. Our portfolio in aviation ranges from structural adhesives to surface film solutions, pointing out one specific example within the area of surface film solutions, which generated double-digit OSG in the first nine months of this year, our innovative lightning strike protection films. Lightning strike protection is essential for the safety of every aircraft and on top of that enables composite lightweight design. And in addition, we are leveraging our expertise strategically to serve emerging fields in the aerospace market where we see great growth opportunities. And for example here in space, durability and reliability requirements are even higher than in aviation. Here, our innovative space solutions advance multiple areas of satellite structure and design. Turning to another example, this time within the consumer goods part of our adhesive technologies business. In the sports and fashion industry, sustainability is an important topic as the industry makes up around 4% of global emissions. Thus, saving energy and reduction CO2 emissions in manufacturing is critical for our customers to reach their emission targets. We also enable emission reduction in the use phase of our solutions. In sports footwear, for example, most bonding steps require drying and activation temperatures of over 55°C. We innovated to change that with our new CoolX solution. CoolX reduces the required driving temperature to 35°C. This enables our customers to save up to 45% energy in the adhesive drying process. And beyond that, With lower temperature requirements, a greater range of materials can be used, which again enables emission and cost reduction. And we see that our innovations are paying off. Year-to-date, our sports footwear business delivered double-digit organic sales growth. With that, let us move on to our consumer brands business. Our ambition is clear. We are driving the valorization of our consumer brands portfolio with relevant innovations. and by significantly investing behind our strong brands. We want to strengthen our technology leadership to offer consumers superior products. Our innovations address clear consumer demands and offer a strong added value. For example, in laundry care, consumers are willing to pay more for fabric care benefits. We provide superior fabric care solutions that allow closers to look newer for longer. Our newly launched Percil formula in North America includes fabric care ingredients that fight impurities such as chlorine in the water that cause colors to dull and fade. Our fabric care brand Pervol with its Renew formula renews the color of the fabric. We highlighted this innovation which we recently rolled out also to the UK under the Dylon brand already in more detail in one of our previous calls. And in hair, Schwarzkopf Professional introduced the next level of bonding under the Fiber Clinics line. The Bondfinity method, a new holistic hair bonding technology, offers consumer permanent hair repair in salon for long-lasting results that keep reactivating at home. In line with our strategy, our innovations for sure also benefit from the increased and more focused marketing support. And here, as already indicated in August, that we are stepping up our marketing spend in the second half of this year compared to H1. The performance proves that we are on the right track. Our top 10 consumer brands continue their dynamic growth momentum with high single-digit organic sales growth, including a positive volume contribution year-to-date. This is also the way we will move forward. Let me show you how exactly we are driving the valorization process. Take our automatic dishwashing brand SOMAD, for example, which is the number one or number two in more than 70% of our active markets. And with SOMAD, we have established a clear focus on consumer needs and innovation, reaching more than 50 million consumers in around 20 countries. Just recently, we introduced the innovative and cutting-edge formula of the SOMAD Excellence Premium 5-in-1 caps. This innovation provides an extra boost in dishwashing, It even removes stains which were dried on by up to 72 hours effortlessly. The formula not only cleans dishes but also gives them a new shine and supports the daily care of the dishwashing machine even at low washing temperatures. This launch is backed by a strong marketing campaign driving growth in our automatic dishwashing category with success. Our leading premium brand Somat delivered double-digit organic sales growth year-to-date and gained 90 basis points in market shares. And in hair, our North American professional business is an excellent example of how we shape the market with relevant innovations. As a reminder, Henkel is the number two player in this important market. North America accounts for a major part of our global hair professional business, and we have been strengthening it throughout the last year, both organically and with value-adding acquisitions. And we are also continuously investing in our North American professional business to strengthen our unique portfolio that includes key brands such as Joico, which is one of our top American salon brands and which is used by around 800,000 hairstylists in the region. Just recently, we reinforced the brand positioning of Joico around healthy hair and bond building by extending its DeFi damage subline with a new detox shampoo for deep hair cleansing. The DeFi damage hair care system protects all hair types from the effects of daily heat styling, UV exposure, and environmental pollution. This line is the number one sub-line in the Joico care portfolio, driving the brand's strong performance. Joico achieved very strong organic sales growth in the first nine months of this year. This is an excellent blueprint of how we want to expand our strong brands with leading innovations and fueling the growth in the North American hair professional business. Besides driving relevant innovations for our customers and consumers, we have been pushing ahead with our sustainability agenda. When we presented our 2030 plus sustainability ambition framework, a key item was to develop a net zero pathway. And just a few days ago, we published our new net zero targets, which are validated by the science-based targets initiative. With those new targets, we are extending our climate commitments. We want to achieve net zero greenhouse gas emissions by 2045. Compared to our previous climate targets, the new net zero targets cover a broader part of the value chain. The targets of scope one and two emissions now encompass all operations. Beyond production processes, they include office buildings, warehousing, R&D, and the vehicle fleet. The emissions reduction targets for scope three cover all emission categories occurring both up and downstream in the value chain, except for indirect use phase emissions. Specifically, by 2030, we aim to reduce our absolute scope 1 and 2 emissions by 42% and scope 3 emissions by 30%. Underpinning our net zero commitment by 2045, we want to reduce our scope 1, 2 and 3 emissions by 90% compared to the base year of 2021 and will permanently neutralize any residual emissions. And for sure, we will take concrete actions along the entire value chain to reach these ambitious targets. And for those who want to deep dive into our climate strategy, targets and specific activities, I would like to point you to Henkel's comprehensive climate transition plan, which is available on our website. Wrapping it up, we continued Henkel's growth trajectory in the third quarter with a strong top-line performance fueled by both business units. We made further progress in shaping a winning portfolio and we are well on track to conclude the discontinuations in the consumer brands by the end of this year. We keep fueling growth with relevant innovations under our strong brands, shaping relevant industry trends and catering to our consumer needs. We are taking our sustainability agenda to the next level by having launched our ambitious net zero roadmap and climate transition plan. And last but not least, we reiterated our full year guidance today. And when it comes to the bottom line, let me highlight that we saw strong gross margins also in the third quarter, which allowed us to continue with our increased investments behind our brands and businesses. And hence, backed by this strong performance year to date, we see a clear chance to reach the upper half of the guidance regions for both, the adjusted EBIT margin and the adjusted EPS growth. So overall, we are well on track and we keep on further pushing. With that, let me hand over to Marco for some more details on our financial performance in the third quarter. Marco.