Beiersdorf AG Q2 2010 Earnings Call Transcript

Beiersdorf AG Q2 2010 Earnings Call Transcript
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Beiersdorf AG (BDRFF.PK)

Q2 2010 Earnings Call

August 05, 2010 10:00 am ET

Executives

Jens Geissler - Corporate Treasurer and Head of IR

Thomas Quaas - CEO

Analysts

Rosie Edwards - Goldman Sachs

Matthias Eifert - MainFirst

Philipp Frey - MM Warburg

Iain Simpson - RBS

Jurgen Kolb - Cheuvreux

Alex Molloy - Credit Suisse

Ralf Stromeyer - Allianz Global Investors

Dan Dolev - Bernstein

Guillaume Delmas - Nomura

Hermine de Brem - Raymond James

Presentation

Jens

Geissler

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» Beiersdorf AG Q2 2010 Earnings Call Transcript

Yes, good morning. We would like to welcome you to Beiersdorf and to our conference call about the first six months of 2010. This is Jens Geissler together with Beiersdorf's CEO, Thomas Quaas.

We will start with a brief presentation as always by Thomas Quaas and after that also as always we will come to question-and-answer. You can follow the presentation on the internet. Please use the link that we have sent in invitation or you can download the file from Beiersdorf IR website. I would now like to handover to Thomas Quass and the results of the first six months.

Thomas

Quaas

Thank you, Jens, and good morning and also welcome to all of you from my side. As always let me start with our key figure slides which shows the overall group performance of Beiersdorf in the first half of 2010.

In the first six months we had an increase in sales of 7.8% on a nominal basis for the whole group. This number includes the effect from the weakening euro of course in the last half year. Excluding the foreign exchange effect, sales growth was 4.5% on a like-for-like basis. Now bringing this into our two business segments, tesa and consumer; we can see an outstanding, really outstanding performance of teas, which continued its excellent sales growth trends that they already had in the first quarter. Tesa sales increased now by 18.8% on a foreign exchange adjusted basis in the first half of 2010 taking them now to EUR429 million of nominal sales.

In our consumer business, the accumulated sales growth in the first six months was plus 2.6%. If we include the currency benefits, this number is at the level of 5.7%. This is a good result given the [feel], from our point of view sluggish, macro conditions in many countries, after the crisis and given the elevated competitive efforts we can see in several markets in the world, which is now the current result from the crisis and its subsequent lower demand during this period as well. I will talk about the details of the sales development about the region in a minute.

Regarding the profits, we can see the group EBIT now at a 12% margin for the January to June period on this slide. This is the clean number, meaning that we do not have any material special factors to report at this point in time. Same goes for the profit after-tax margin, which is at 7.8% of group sales.

The development of our consumer EBIT has been stable and much improved over last year of course. As you know there is a seasonality in our quarterly EBIT numbers, with the first quarters of each year typically being strong. The upswing of our tesa segment is also reflected in its EBIT development. We can see a clear acceleration in tesa compared to the first quarter. And we are very confident regarding teas, however, there are still uncertainties as to the further overall economic trend and this is why we remain cautious about the full year expectations. This cautious approach is reflected in our full year guidance which I will talk to you later.

Earnings per share, they increased from EUR1.08. It’s good to finally see also this number go up again after the crisis year 2009.

But now look at the regional distribution of our consumer sales on the next slide. Worldwide growth in our consumer business was plus 2.6%. As you can see, it was very pronounced; differences between different global regions. In Germany, you might remember the discussion and the presentation that I gave last year, at this point in time the slower growth this year has to be seen in the context of this last year’s so called big bang initiative, which means the strong basis of comparison of course for this year.

And one of the best categories in Germany in that environment was NIVEA for men. And you might have seen with the national soccer coach Jogi Löw being an important factor in our local advertising that is depicted on the cover page, also in our interim report again; and personally this is a very well done formation, so we are very happy with this kind of support and combination of sports, social responsibility and in the final have business results. So all in all that is a great, great exercise that we done here in Germany.

Europe in total remains a challenging region these days. Western Europe has some clear highlights now for us like the UK and Switzerland. You'll remember in last year we talked quite intensively about the development in UK. Now we see a solid turnaround in that wonderful country. But at the same time market are still slow in places like Italy and Spain. Spain we always had on the list, Italy has been new on that list, but here we see a very slow situation.

In Eastern Europe, Russia remains very strong as opposed to Poland where the markets were heavily impacted by the flood in the second quarter. This is more like Eastern European countries, more the Southern Eastern European countries. We kept our market share pretty stable in a competitive environment. Men’s care and deodorant were here important contributors in that region.

Let’s take a look at other region outside of Europe. North America, here we enjoyed a very good growth and clear market share gains based on our concept of focusing on just a few brand categories in NIVEA and in Eucerin. We talked about that strategic new direction. We started just more or less three years ago and accelerated now more and more based on the solid readjustment of our strategic approach in that important market.

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