Henkel Ag & Co Kgaa S/Adr

Good morning and welcome to Henkel Conference Call. For the duration of the call, you will be in listen only. If you would like to ask a question during the Q&A session, please press star and one on your telephone keypad. If at any time you need assistance, please press star and zero 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. Good morning and a warm welcome to everyone joining Henkel's Q3 2025 results conference call today. I'm Leslie Iltgen, head of Henkel's Investor Relations. Today, I'm joined by our CEO, Carsten Knobel, and our CFO, Marco Svoboda. Carsten will begin with an overview of the key developments and highlights in the third quarter. Marco will then follow with a more detailed review of the company's financial performance. 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 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 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 via our website at hankl.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, Carson Knobel. Carson, please go ahead. Thank you.

Thank you Leslie and good morning to everybody. Warm welcome also from my side joining our conference call today. As always, we do appreciate your interest in our company and we look forward to answering your questions. After walking you through the key developments in the third quarter, we will elaborate on Henkel's business performance and the full year outlook in more detail. So let me move straight to the key topics and the highlights of the third quarter. In Q3, we saw a clear acceleration in our top-line development. Both business units recorded positive organic sales growth in the quarter. Starting with adhesive technologies, they showed a positive price and volume development, the latter being supported by a partial reversal of the negative working day impact we had seen in the first half, as well as by a continued strong performance in electronics and industrials. Consumer brands show the positive volume development in the third quarter, which is encouraging to see. Also, the merger is in its final stages and we will have successfully concluded the transformation of this business unit by the end of this year and with that clearly one year ahead of plan compared to what we had originally expected when we started this journey. From a regional perspective, North America stood out with good organic sales growth supported by both business units. Further, I can also confirm that we continue to see a strong gross margin and the bottom line development. In regards to our share buyback, we are well on track, having executed around 700 million euros as of end of October. And finally, when it comes to our full year guidance, the ranges remain unchanged. Let's now take a deeper look into our adhesive technologies business, where global megatrends like sustainability, mobility, connectivity, digitalization, and urbanization create ample opportunities for further growth and allow us to drive customer-driven innovations across many different industries and applications. And more specifically, I would like to do a deep dive into the field of electronics today and showcase how these global megatrends translate into attractive growth opportunities with the solutions we offer. Driven by key industry trends such as the rise of AI, new ways to construct devices and components or even regulatory changes such as the introduction of the right to repair, The different markets and industries where our electronic solutions came into play are undergoing a significant transformation. We can clearly observe how the scope and the value of material-based innovation is expanding. The rapid advancements of artificial intelligence, where we enable cutting-edge solutions for globally leading industry players. The evolution of component and device design, which leverages our materials expertise. or the increasing regulatory focus on sustainability, which we facilitate through debonding technologies. These are only a couple of examples. Overall, electronic solutions are expected to show a high single-digit market growth potential in the coming years. We are strategically well positioned to capitalize on this momentum through our comprehensive and diversified portfolio in electronic solutions across industries. A prime example is our semiconductor packaging business, which is forecasted for long-term exponential growth. To illustrate the breadth and the impact of our offerings, I will now highlight one representative solution from three of our four key segments, semiconductor packaging, consumer devices and industrials. The immense rise of generative AI is reshaping the data center as well as the semiconductor landscape. As AI becomes more compute intense, there is a sharp rise in demand for advanced packaging, interconnects and thermal solutions that can support high-performance systems. Our portfolio addresses these needs with cutting-edge materials for thermal dissipation, electrical protection and high-reliability bonding. critical for next generations GPUs, CPUs and memory modules, especially optical transceivers. These solutions are already being deployed by globally leading semiconductor and data center players, helping them scale computing power, reduce cooling costs and enhance system reliability. These positions, or this positions us, for double-digit growth through 2030 aligned with industry forecasts for AI-driven data center expansion. Looking at consumer electronics, the push towards frameless immersive displays is driving demand for innovative materials that support flexible and edge-to-edge designs. Our proprietary potting solution for flexible display protection directly addresses this trend. It enables manufacturers to reduce bezel size, unlocking more active display areas, which is a significant gain in user experience and device aesthetics. Furthermore, it does not only improve design capabilities, but also increases device protection, enables a faster and simplified manufacturing process, and even contributes to environmental responsibility by reducing the amount of conventional molded plastics and reducing CO2 emissions in manufacturing. This solution has rapidly gained traction, scaling to a double-digit million euro business within two years, outperforming market expectations and reinforcing our leadership in display material innovation. And coming to our last example with an adhesive technology, the evolution of camera modules. The camera module market is experiencing rapid growth across several industries. This surge is driven by the rising demand for advanced imaging, especially in consumer devices and automotive applications. Adhesive Technologies is well positioned to support this evolution with the most robust total solution portfolio in the market. Our offerings cover all critical aspects of camera module and sensor assembly, from lens bonding, active alignment and underfill to lens barrel attachment. These solutions don't only enhance functionality, but also significantly improve reliability. In automotive, for example, our one-step UV curve lens bonding technology enables our customers to reduce CO2 emissions and decrease manufacturing time, whereas traditional processes need two steps in manufacturing. Ultimately, this is leading to a double-digit growth for consumer devices and automotive camera solutions following the market projections through 2030. And now, moving to our consumer brands. I would like to highlight that by the year and we will have successfully concluded the merger and with that the transformation of this business. We fundamentally reshaped our business, streamlined our organizational setup, actively shaped our portfolio, optimized our supply chain and enhanced operational excellence globally. All of this was achieved one year earlier than originally anticipated at the time we announced the merger. And accordingly, we are well underway to reach the targeted net savings of at least 525 million euros by end of this year. Overall, we significantly improved the quality of the business across multiple dimensions, while at the same time investing clearly more behind our brand. We have successfully built a strong multi-category platform with enhanced efficiency and competitiveness. For example, we materially improved our rankings in FMCG relevance in terms of size in Europe. In addition, the retailer perception rating in the US significantly improved, which shows that we clearly strengthened our retailer partnerships. Overall, this demonstrates that we developed towards a more stronger and more relevant player in the industry. We have thus laid the foundation for solid, sustainable and profitable growth in the years to come. In laundry and home care, we are a strong global player with leading brands. In laundry, we are ranked number two globally in our active markets. We are shaping the future of laundry by focusing on selective strategic growth opportunities in key categories and also iconic brands. We are also leveraging our technology leadership to drive differentiation and value. In home care, we are ranked number one globally in our active markets. We are driving market leadership by combining our investments with advanced technologies and setting new standards in dishwashing and toilet care. Two good examples of how we leverage the growth opportunities with our top brands in laundry care are Persil and Pervol. Purseal delivered positive growth driven by strong volume contribution. With the new Purseal giant discs, which of course also include the trusted Purseal quality in combination with its innovative triple action deep clean formula, we address the need to meet modern laundry demands with heavy loads, tougher stains, Malador control and brightness boost of vibrant clothes. Each disc delivers two times the cleaning power of regular detergent and enables efficient laundry care with fewer discs. In the first step, the Percil giant discs were introduced in selected markets in Europe, including countries such as our home market in Germany and Belgium. More countries will follow in the coming months. Beyond value-adding innovations, Percil also stands out for its pioneering brand communication. Just recently, we launched our first generative AI-powered TV commercial in Germany, reimagining Persil's iconic Lady in White for a new era. This makes us a frontrunner and underlines our leading position in the laundry market. So, let's take a look at the spot.