Beiersdorf AG Q1 2010 Earnings Call Transcript

Beiersdorf AG Q1 2010 Earnings Call Transcript
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Beiersdorf AG (BDRFF.PK)

Q1 2010 Earnings Call Transcript

May 6, 2010 10:00 am ET


Jens Geissler – Corporate Treasurer and Head of IR

Thomas Quaas – CEO

Bernhard Duttmann – CFO


Susanne Seibel – Barclays Capital

Mark Christensen – Morgan Stanley

Marco Gulpers – ING Financial Markets

Philipp Frey – MM Warburg

Eamonn Ferry – Exane BNP Paribas

Harold Thompson – Deutsche Bank

Matthias Eifert – MainFirst

Rosie Edwards – Goldman Sachs

Dirk Van Vlaanderen – Jefferies

Alex Molloy – Credit Suisse

Ian Simpson – RBS

Chas Manso – Evolution Securities



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Good day, ladies and gentlemen, and welcome to today's presentation of Beiersdorf’s results for the first quarter of 2010. At this time, I would like to turn the conference over to your host today, Mr. Jens Geissler. Please go ahead, sir.

Jens Geissler

Good morning. I would like to welcome you to Beiersdorf and to our conference call about the first three months of 2010. This is Jens Geissler together with Beiersdorf’s CEO, Thomas Quaas; and our CFO, Bernhard Duttmann. We will start with a brief presentation by Thomas Quaas, and after that, we will be prepared to take your questions. You can follow the presentation on the Internet. You can use the link that we have sent in the invitation or you can download the file from Beiersdorf's IR Website.

I would now like to hand over to Thomas Quaas and the results of the first three months.

Thomas Quaas

Thank you Jens. Good morning and welcome all from my side. I hope you all are well. Let me start with a very general statement when we talk about the results of first quarter in 2010. From a Beiersdorf’s perspective, after three months into 2010, the picture from our point of view, as you can see the numbers here is much brighter that it has been for the last couple of quarters.

So, this is of course good news, and you can see the related improved numbers on this key figures chart here on page number 3. Sales growth has returned to our business and this is true for both the segments, consumer and tesa. Especially in tesa, we have seen a strong increase in sales compared to last year. Yes, the basis in 2009 was soft, but the significant rebound in tesa sales is very convincing proof of what actually I have said repeatedly during the last year. As soon as there is an improvement in the underlying tesa business, which is the underlying area where tesa is supplying the business, we will see a gradual return to the revenue levels we used to have before the crisis.

This is what we really said in several occasions last year. I am happy to actually see the proof coming in the first quarter of 2010 exactly on the argumentation base. On top, there is an important effect on our profit levels. During 2009, tesa took considerable efforts to adjust its structures to the slow environment in 2010. This is now leaner and even more efficient structure now clearly helps tesa’s bottom line results. 12.1% EBIT margin is stated on page number 3. It’s strongly supported by tesa’s contribution of 25 million Euros of EBIT, taking the individual margin of the tesa business to 11.9%. As we see there, a remarkable figure and certainly a very, very good start at the end of the year.

On the consumer side, Beiersdorf business also accelerated in the first three months compared to last year. Consumer sales grew by plus 4% on a like-for-like basis, and we will look at the regional split of this number in the mix. Also in consumer, the bottom line improved significantly over last year’s first quarter. The consumer EBIT margin went up by 80 basis points now to 12.1% of sales, the same number as for the whole group. Here we have seen important contributions coming from Germany and Western Europe as well as from both North and Latin America. This is a good trend. It concerns the primary role of Europe as the profit-generating regions, and we are happy to see also the Americas grow into stable contribution positions regarding our overall operating costs. Profit after tax was 122 million Euros corresponding to 7.9% of Group sales. This brings up our earnings per dividend carrying share to $0.53, an increase of $0.10 per share compared to one year ago.

Now, let’s move to the next page, and let’s have a look at the regional split of our consumer business sales product. Worldwide growth in our consumer business was as stated 4%, which means a solid increase over last year. Sales in Germany remained on track with Eucerin contributing nicely in the double-digit range. Western Europe growing again, but performance differs from country-to-country. Some countries like the UK, for example, and France are back on the growth pattern, but certain places in the southern Europe are still lagging behind.

Moving to Eastern Europe, we are, I agree are certainly not happy with the current picture there. We are seeing satisfying growth in Russia and Poland, given the market conditions. However, some minor countries in the region remain a source of concern but we see some positive signs going forward, in particular in the deodorant in men’s business specially dedicated to that region. The share of total sales for the European region by the way currently is at now only 64% of consumer sales. This is lower than for the same period last year, and we recorded something close to 66%. And this again indicates that geographical shift of our business away from the historical costs into other global regions with different and typically better growth profiles.

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