Puig Brands, S.A.

Good evening, and thank you for joining us this evening as we discuss our sales update for the ninth month and third quarter that ended on September 30th, 2024. Today, we have with us our chairman and CEO, Mark Butch, and our CFO, Joan Albiol. Mark will share some brief remarks, and then we will open up the line for Q&A. You will find this presentation and the press release on our website, and you will be able to access a replay of these comments shortly on our website. Thank you.

Good evening everyone. Before we dive into the latest results, let me quickly run through the strength of our portfolio of love brands. We are driven by a focus on premium beauty. We have 3 brands in the top 10 fragrance rankings worldwide, and we are building a niche portfolio and striving to diversify further into makeup and skincare. We are brand owners and curators. Today, our own brand represents 96% of the net revenues from our love brands. With that, let's turn to the update. We are pleased to report an acceleration in Q3 versus first half with 11.6% like-for-like growth in net revenue and 11.1% on a reported basis. In this third quarter, Puts delivered record sales of 1.3 billion euros and we continued to outperform the premium beauty market. This resulted in a robust performance in the first nine months of 2024, with net revenue of 3.4 billion, which represents 9.6% like-for-like growth and a 10.1% increase on a reported basis. well in line with our medium-term guidance provided at IPO and well ahead of the premium beauty market. In addition to the strong performance that we have seen this quarter, we are further encouraged by the performance of Butch in recent weeks. Turning to the drivers of this performance, the 3.4 billion of net revenues were a result of 9.6% like-for-like growth 1.4% from the acquisition of Dr. Barber's term and a negative 0.8% impact from foreign exchange. The key driver was the very strong performance from our core business, fragrance and fashion in both EMEA and the Americas. With a double digit growth in this segment, we continue to reinforce our competitive position and capture incremental value market share. This was further complemented by a much improved performance in makeup this quarter as a gap between sell-in and sell-out, which we spoke about in the first half, continues to narrow. Further, we saw incremental organic growth from our skincare segment in addition to the contribution from Dr. Barbastor. As a reminder, given the categories we are most exposed to, We tend to generate more sales in the second half of the year due to the importance of the holiday season. If we have a look at the evolution of growth of this year, we saw a clear acceleration in Q3 versus the first half of 2024. This last quarter we delivered 11.6% like-for-like growth. The change of perimeter contributed an additional 1.3% increase, partially offset by a negative foreign exchange impact of minus 1.7%, resulting in reported growth of 11.1%. Let me share some more color on the performance of each of our business segments. We are a leader in the thriving fragrance market, which benefits from very strong underlying trends and robust customer demand. Fragrance and fashion continued its strong momentum in the third quarter, with revenues up 11.1%, driven by EMEA and the Americas. In the first nine months of 2024, this segment generated net revenues of $2.5 billion, an increase of 10.9% on both the reported and constant perimeter basis compared to 2023. This segment contributed 73% of putsch net revenue in the period. During Q3 we delivered the noteworthy launch of Million Gold by Rabanne, and we also launched Venus by Ninarici, the first new fragrance from the esteemed brand in 10 years. We saw continued strength in our prestige brands in this quarter. According to our estimates, Good Girl by Carolina Herrera maintained its number two position among female fragrances and Le Mal by Jean-Paul Gaultier secured the number three position among masculine lines, further solidifying their market leading positions within the top 10 brands globally. We now have three brands on the top 10 prestige fragrance ranking worldwide. We also saw increasing momentum in niche which delivered double digit growth. Makeup grew plus 7.3% in Q3 as the gap between sell-in and sell-out narrowed as anticipated. The segment saw strong growth in EMEA and improving performance in the Americas while APAC continued to show softness. For the nine-month period of 2024, this segment recorded a net revenue of $535 million, an increase of 1.4% on a reverted and constant perimeter basis against 2023. This segment contributed 16% of put-net revenue in the period. Q3 2024 marked the return of the make-up segment into positive growth territory. The sell-out for the largest brand within makeup, Charlotte Tilbury, remains strong with double-digit growth in its largest markets, EMEA and Americas. The recently launched Exager Ice Mascara is off to a good start. Further to the comment that we made on dupes during the first half, we are responding to this situation with creativity and innovation in a way that is very authentic to the brand. As a reminder for Q4, growth in the segment will face a tougher comparison due to the pipeline selling related to the entry of Charlotilurine to Ulta at the end of 2023. Skincare showed double digit sales growth of 18.6% on a reported basis and 5.2% at constant perimeter in Q3. The dermocosmetics brands in this segment continued to perform strongly with double-digit growth, while this segment faced a tougher comparative phase primarily due to the impact of meaningful launches, including Magic Water Cream in the second half of 2023. For the nine-month period of 2024, skincare delivered $381 million in revenue. This is an increase of 22.9% on a reported basis and 9.4% at constant perimeter against the same period of 2023. This segment represented 11% of putsch net revenues in the period. The integration of Dr. Barber's term is on track and the brand continues to perform in line with expectations having contributed 1.4% for nine months 2024. EMEA remained putsch's largest and fastest growing region, with an acceleration of sales in Q3 up 12.6% at constant perimeter, reinforcing putsch's leading position across categories. For the nine-month period of 2024, EMEA achieved net revenue of $1.8 billion, up 11.3% at constant perimeter, compared to the first nine months of 2023. The Americas also delivered a standout performance in Q3, with robust growth of 8.3% at constant perimeter, fueled by the continued strong momentum in fragrance and the performance of make-up. For the nine-month period of 2024, the region achieved 1.3 billion in net revenue, up 7.5% at constant perimeter compared to the same period in 2023. Without the negative impact of LATAM currencies, our constant perimeter growth for the Americas would have been well into the double digits. We wanted to know that in Q4 2023, putsch accounted for a negative hyperinflation adjustment for Argentina, which will allow for an easier comparison for Q4 2024. This impact primarily affected our fragrance and fashion segment. In APAC, a region where putsch is underexposed, sales increased by 1% in Q3 amid continued market challenges. This region contributed 8% of our sales for the quarter. This translated to $308 million in net revenue for the first nine months of 2024, up 0.8% year-on-year basis, both on a reported and constant perimeter basis. The company continues to invest at a measured pace in the region for the long term, including China, where we have a limited presence, and in India, Japan, and South Korea, where we have recently established subsidiaries. Our business has delivered a strong performance in the first nine months of 2024, and we are encouraged by the business performance in the last few weeks. we remain very confident in our ability to deliver for fiscal year 2024 in line with our midterm guidance. We manage a diversified and curated portfolio of brands and continue to feel encouraged by our consolidated performance across our complimentary brands and segments which balance different and evolving market dynamics.

Thanks, Marc. With that, we come to the end of our prepared remarks and we will begin Q&A.

The next question comes from Olivier Nicolet from GS. Please go ahead.

Hi, good evening, Marc, Joanne, and Michel. Got three questions, please. First of all, in fragrance, how do we think about inventory level as we enter the key to four period, and what has been the feedback from the key retailers into this season coming up? Related to that, actually, Million Gold appears to be a major launch and quite a successful one. Would you be able to quantify the impact it had on the quarter, and will it benefit Q4 as well? And just lastly, if I may, are you able to give a bit more details on the sell-out trends in makeup in the U.S., and how do we think about Q4, considering that you are lapping the launch in Ulta? Thank you very much.

Thank you Olivier. First question regarding the inventory levels and retailer feedback so far for Christmas season. Well what I can say is that retailers are being quite bullish on the fragrance category. Now we've seen a little bit of consumer tough or tougher situation in general but it's not the case with the fragrance category so retailers are bullish and they have been building up inventory for their expectations for the Christmas season. So at this point we think that we are ready for the Christmas season and we just have to wait to see how Christmas goes which we will not know until next beginning of next year. Regarding the million gold it's been a significant launch for Rabanne and that was one of the initiatives we had for this brand which was mainly in the second half as we mentioned in our first half results and as you say the first indications are quite positive and we're encouraged by the feedback we've had but there's no more we can say at this point. These brands are, there's a dynamic behind the innovation of these brands and it is important that we keep being relevant to consumers and so far clearly we have somehow again gotten the interest from consumers so looks very promising. And regarding the sellout Celine in Q4 for the US what we can say is that in the case of Makeup you know the largest brand is Charlotte Tilbury. and we continue seeing double digit growth in sellout and what we said in the first half is that there was evidently a gap between selling and sellout which is being narrowed. We still will see some impact on the on the last quarter particularly because As we mentioned last year, we opened Alta, and so the comparison would be TAF versus last year. But the gap between selling and sell-out has been progressively narrowed, and we think that by the end of the year, we'll be finished.

Thank you very much.

The next question comes from Celine Panutti from JPM. Please go ahead.

Thank you. Good morning. Good evening, everyone. My first question, Mark, in your prepared or your commentary, you said it's a complex environment. talk about what the beauty market is looking like in developed markets, if I think about Europe and US. One of your competitors in the US has been talking about a slowdown in the market, including in makeup. Are you also seeing that even if you are recording good sellouts from Charlotte Tilbury? My second question is on the make-up division. You just mentioned that the sell-in, sell-out is narrowing in the US. Can you talk about what you've seen in terms of sell-in issues that you had in the Middle East and about China as well, with regard to make-up? And then coming back into fragrances, you mentioned that the market remains quite bullish about the category. Are you seeing this both in Europe and in the US? And how is the market looking like as you look into 2025 in a context where other categories are also seeing some slowdown? Thank you.

Thank you Celine. Regarding the complex environment we mentioned this because among other things we are expecting an important election year in the US among others and we don't know what's going to happen and what will be the outcome of that and what consequences you will have and that's why we say well you know we are in a complex environment waiting for certain scenarios to clarify and it's true that we've seen you know certain you know peers mentioning a slowdown in the US but we're not seeing that at least for the territory where we compete which is premium beauty particularly in makeup we see double digit growth and sell out with some of challenges between selling and sell out as you know. And in terms of fragrance, we've seen a strong Jean Paul Gaultier, a strong Good Girl for Carolina Herrera. And the fact that we still have in the US market share that is below our worldwide market share, we believe that we still have room to continue growing faster than the market. So we're not seeing that, at least in our own business. Regarding make up, sell in, sell out it is true that we had mentioned certain gaps in the Middle East. We think that in this fourth quarter that will be finished and in some countries in APAC we still have some gaps that will be finished we plan by next year. So Middle East fourth quarter is already the gap is closed. and for the rest of APAC will be next year. And regarding next year for 2025 how do we see the market? Clearly particularly for fragrances and you mentioned you're asking Europe and US given that others are mentioning certain slowdown it is very important to see the because it's a little early for us to comment on 2025 given the significant role that Christmas play for this category so we'll be able to better assess the 2025 expectations or a scenario once you know in the first quarter of next year once we have the results of Christmas. Having said this, in our internal work that we're doing does not give us any reason to deviate from our thoughts on market growth that we provided at IPO, which was that the market we believe will still grow at 6-7%. and this is a different number that we've heard from our peers but you know remember that we compete in the premium sector a strong position in fragrance and makeup in case of skincare the largest player in our case is Derma Europe so when we look at our you know a specific perimeter and we have as we mentioned we're less exposed to others than on APAC that means that our overall growth scenario at this point continues being what we had expressed during our IPO. I hope that this answers your question, Celine.

Thank you. The next question comes from Jeff Stent from BNP Paribas Exane. Please go ahead.

Good evening. I was wondering if you would be able to tell us what proportion of your U.S. sales are manufactured outside the U.S., i.e. the products are imported into the U.S.? Thank you.

Yes, Jeff. Basically, in our case, Most if you know maybe this you know I would say more than 95% at least of our manufacturing happens in Europe. So we have no manufacturing plan or we don't buy from any US based manufacturing facility. We're basically Europe based cost company. Does this answer your question?

That's very, very clear. Thank you. Absolutely. Thank you.

The next question comes from Mariano Sackmann from Santander. Please go ahead.

Yes, good evening. Thanks for taking my question. So the first one is on the performance within the third quarter, have you seen a change in trends between July and September or early October within the three categories? That's my first one. And the second question is on the progress division. I mean, within the average growth you've been highlighting, Jean-Paul Gaultier, but any other comment, any other color that you could provide on the performance of Carolina Herrera or Rabanne the division above or below the average would be very helpful. Thank you.

Yeah regarding Q3 trend not a major comment to make but you know in the different you know as we have seen the performance evolving through the different months the only thing we can say is that given the feedback from retailers and expectation for Christmas and we had recently the duty free show in Cannes that also gives you a sense of what's happening in that channel of distribution. We see optimism for this Christmas. Evidently we'll have to see after the fact how things go. But overall we have seen this trend continued in the last month. So we are optimistic about the rest of the year. In terms of fragrance overall what we can say is we did mention Jean Paul Gaultier because that was a brand that during the first half and continuous has seen a significant momentum more than others. maybe I can highlight a couple of things number one you know Ravan The biggest initiative this year was this million goal for her and for him with Gigi Haddock as main character in the advertising campaign so we knew that was an important moment for our largest brand. We see momentum for Karina Herrera with Good Girl overall. and we have seen the first half we mentioned that niche fragrances had seen a certain slowdown and particularly well you know particularly because of Vairedo which is the largest brand we have in the niche because since we took over a hundred percent of the company We bought the minority shareholder before the IPO. We used that opportunity to finish the integration of the whole company into our own organization and that had a certain distraction for the team. We've seen that integration mostly done. and we are now seeing in the third quarter and the second half a reacceleration of niche and has been growing as we mentioned in our notes a double digit and we believe that this territory that has been growing faster in the past few years and we believe in our hypothesis that will continue growing going forward and we are going to benefit also from that momentum. So maybe that's yes I think that's the highlights. We also launched Venus in Arechi which is First time we launch a brand or a line within a brand in the last 10 years, but it has been limited to France in this first phase because we want to check the results there before thinking of an expansion. But so far has been very well received too, but that will not change the needle in this year. I think Mariano that answers hopefully your questions.

Yes, super. Very helpful. Thank you very much, Mark.

The next question comes from Jose Rito from CaixaBank BPI. Please go ahead.

Yes, I agree with you all. I have three quick questions. This one in Maytox. Just to confirm, you mentioned that you saw double-digit cell growth. Just to confirm, we can see the trends were longer than in 8.1, but it was broadly stable. The second question on the more difficult comparison in RACAS due to the sales last year, If you can quantify percentile points, how much more difficult would that be? Finally, given your comments regarding a comparison due to Argentina last year, should we assume even a stronger growth in flagrances in Q4 versus what it was in Q3? Thank you.

Yeah. Um, uh, Jose, I think the second question, I didn't get that question very clear. Can you repeat it?

Yes, so the second question was on ILTA effect last year. So because of this, the comparison between more difficult PNC-4, as you mentioned in the release, you can quantify in percentile points how much more difficult is the comparison between

Yeah the first question in terms of make up whether the double digit growth in for the make up division particularly with Charo Tilbury that we saw in the first half where it has continued in the third quarter higher or slower I think is a similar we've seen a similar double digit growth, sell out in that sense that we saw in the first half. So no change at this point. In terms of whether we can quantify the impact in Q4 of the Ulta launch we will not go too much in that detail if you allow us because there will be too much but it has an impact so it's not insignificant particularly for the makeup and skin care in Q4 we'll see we have a tough comparison versus the last quarter last year. And then in terms of Argentina if we can quantify last year in December when the peso argentino devaluated I think was like 50% and we had to redo all the accounts with the exchange rate of the last day of the year. in spite of Argentina being a very small country for us because it's less than two percent the impact was 36 million exactly in euros. So evidently the Q4 2024 will not have that unless things change for the last two months but peso argentino seems to be holding quite Well, so far, then we'll have, you know, it would be an easier comparison for the frequency and fashion category for Q4. Answers to your question, Jose?

The next question comes from Fernando Abril Martorell from Elantra. Please go ahead.

Hello, good evening. Thank you for taking my question. I've already been answered, so only one. It's just on your plus seven points. Like all I say, self-growth. I would like, if possible, you could break down this growth into like-for-liking prices and volumes just to get an idea of the growth drivers behind this. Thank you.

Hello, it's Juan. I think the continuation of price increase to growth doesn't deviate materially from what we discussed in the first half. So we see 5% average price increase, but we don't calculate that more than once a year and it's difficult for us to quantify between price and volume and mix because all is related. So at year end we will have an analysis on that, but you can take the 5% as we mentioned in the first half of price increase. Okay. Okay.

Thank you very much.

Very well. I hope that answers all your questions. Thank you very much. And we'll keep working for the fourth quarter because that's the most important for us and we'll be focused to deliver on our promises. Thank you.