Beiersdorf AG

Jens Geissler - Corporate Treasurer and Head of IR Thomas Quaas - CEO

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

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.

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. In the last thee segment, La Prairie enjoyed a strong half year in the region.

Close to Latin America, this remains a clear growth contributor as a like-for-like of rate of 18.2%. Our currently strongest brands, band groups in Latin America are continuing the order rents.

Nivea big dob growth in Latin America are continuing NIVEA deodorant, NIVEA Visage and NIVEA Body and in the pharmacy channel Eucerin is a more and more reliable growth engine in the region but also globally. AAA region that slightly increased speed during the last month, important contributions come here from the Middle East, from Thailand and from our hair care business in China.

I would now like to take you to next slide where we will still take a closer look at how Beiersdorf is going to put more emphasis on the region. This is about the new structure and of the new Executive Board introduced on July 1 and all this is of course is part of our new strategic alignments being absolutely sure if this is the right approach to tackle the future.

Slide no 5 so illustrates the changes recently implemented. We now have an Executive Board with a clear split and the spilt between responsibilities in regions on one side and clear responsibilities on functions on the other side.

This is very different from before when we have a market type of organization with functions in the lead and regions being the second category. The old structure was extremely helpful in the past during the year 2005 and to 2009 when we were on the road to really make sure that we can show our functional improvement that has highest quality.

I just remember the realignment of the supply chain which we have completed by actually the beginning of last year or mid last year, and on the basis of all this now, we can move forward with our initiatives going into the market and now focusing on the region and being absolutely sharp on doing our activities now with best support from an organizational point of view. All this is now successfully implemented so it’s now to reflect the shift in priorities induced by our upcoming new consumer business strategy.

By the way, I already kind of announced this, this is something which we put in place as we speak now and I would give you a detailed overview of what we are doing here in our next analyst meeting towards the end of the year when we can meet personally here in Hamburg. The new Board structure has already been implemented on the regional level.

We now have three Board members solely responsible for the respective regions. This will take us much closer to the consumers allowing for swift adjustment to consumer needs and marketing development needed and where we see that as appropriate.

On the functional level, we have merged the brands of supply chain responsibilities and we have condensed HR and finance into one single responsibility. The one way to that merged branded supply chain, you should see that this way that we now have all product related activities, decisions, plans and measures that moved on ones leadership.

If you want so in order to absolutely be sure that we are here, are fast and quick, have reduced complexity and are able to be much faster in our movement in the various parts of the work. Going forward now, all these changes will increase speed, efficiency and profitability as well.

Let's now turn on the next slide to product and innovations after we talk about strategic realignments and organization. Now back to products and innovations.

Page number six, now here is about NIVEA for Men which continued its strong track record also in the first six months in 2010. Our sales in this category grew by 14.8%, this was the highest increase amongst all of NIVEA's 12 product categories and really coming out strong.

And this is for a good reason and you have heard it from me before, men of course also want to look better and they are prepared to invest more and more in that. This is happening globally, so that's not a regional phenomenon, this is a global thing and this is for benefits of men's category in general.

Competitors have of course also embarked on this business during the last year, but it was Beiersdorf, let’s not forget that who invented the category, and it’s Beiersdorf has NIVEA who definitely keeps having the highest share in the market relevant for us. In the fourth addition to our men's line, you can see here on this slide, we globally introduced the so called Silver Protect deodorant line in spring 2009.

Its formula contains silver molecules which have the reason to eliminate bacteria and we have successfully tended this concept now to aftershave and shower gel in this year. These innovations are well received by consumers and they strongly contribute to the robust growth of the products category in the first half of the year, this year and will do so also in the near future.

I would now like to briefly talk about the other successful business fields before I talk about our Eucerin brands, since we don’t talk too often about this one. The Eucerin constitutes our presence again in the pharmacy channel, it has been our most resilient brand during the last year's crisis and it continues and this was even more important to deliver very good growth during the last six months as well and the increase was 9.5% and now given the macroeconomic circumstances, this is in line with the excellent trigger of 11% of the last five years and this is what I want to convey to you very clearly and today, next to NIVEA, we have with Eucerin a very clearly positioned brand in the pharmacy channel where on the basis of dermatological skin care, very clear and sharp positioning are performing well and this is not only one period, this is something we can now see as a very sustainable development over the last five years was a good care which really is something where we are very, very sure that this is the basis for good further rollout.

I would like to mention this aspect, with the present over the world for the future of course now with the high potential also in the emerging world, where often you would still today, not find Eucerin on the shelf. Yes, based on that what I said earlier, we are and I am personally very confident that this is a great, great future potential.

Let’s move to next slide, my last reference to part, today’s about the NIVEA PURE & NATURAL on slide number eight. You might remember that we introduced a PURE & NATURAL deodorant earlier this year.

The concept has been well received and the results are also very promising so far. This is why we will introduce further attractive products with formulations which are free off preservatives which is the main ingredient, on money registry in that respect.

In lip care, we are currently launching a PURE & NATURAL sublime in some countries, it will be part of the [Elo] assortment and in other countries it will be part of NIVEA Lipcare depending on the branding of our lip care business in the respective markets. Regarding our plans for PURE & NATURAL, I can tell you already that there are more product innovations to come still this year but also of course beyond.

With this, we come to the guidance for the full year 2010 which you can see now on page number nine. The guidance slide, we always use the same layout of this slide has only slightly changed compared to last quarter.

Message number one, we confirm our guidance for sales in both business segments to grow faster than the respective markets, like all our sales growth projections this is of course as on the like-for-like assumption. We are upgrading today our profit guidance which we now project, where we now project the tesa EBIT margin to be slightly above 9% and the consumer EBIT margin we expect to be clearly about 11% and for the Beiersdorf Group this results in an EBIT margin of above 11%.

Our guidance for the profit after tax margin is unchanged at about 8%. With this, I want to conclude my short presentation on the results of first half of 2010 and I hand over to Jens Geissler again.

Okay this concludes the presentation; well we are now ready to take your questions.

I was just wondering, if you could confirm for me the EBIT margin outlook for total Group? That's unchanged, isn't it?

So at Q1 you said it would be above 11%.

Well the group is unchanged, yes, well the group unchanged and seasonal we increased the outlook up one point down.

And then my other question is just on Europe and how you see these sales trends developing over the next -- over the remainder of 2010? Obviously it's a very uncertain sort of consumer environment.

But do you expect to see improvements in the organic growth in Germany or will we see a continuation of this -- the marketing campaign that was in the prior year? And would we see potentially any uplift in Eastern Europe, given the flood impact in Q2?

That’s the general question is really reflecting the European situation and we have an estimation for the global markets development this year something between 2% and 3% and we do not see any reason to change that view on the global market development. That is the global picture or where the number we start from and we manage against that benchmark.

In Europe especially we see a very, very still very heterogeneous picture. Let's start with the so called, in the last 18 months always to discuss the difficult markets with very, very difficult developments in UK, France, Spain and Italy.

Here we can say that we see a strong recovery in the UK market. Especially, we are happy to see a good result not just coming from blue skies, this was a turnaround measure that we put in place last year when we decided to really put new energy behind our basic products on the skin care categories to really make sure that the British consumers understand what NIVEA is all about and we see here more and more consumers moving into that kind of franchise and really being really supportive in sales so we see the positive results in the UK already.

In general, UK is still a market which is pretty turbulent initiatives on the price side in the market, but we decided to do this more on the product and on the equity side and convince consumers with serious advertising on product features and benefits for, especially the NIVEA brand and this is what works quite well: number one. So here, stronger developments in UK and also quite okay in overall market development; France from my point of view is now getting a little bite more stable, I always thought this was a candidate going a little up and down but fortunately didn’t not really know where, but here I see some solid base now.

This is also reflected by our business not really being overwhelming but being in that trend, okay. So yes, I see some trend back to stability, which is again very good, so that’s good basic to build on for the time ahead of us.

Spain remains for me a picture where everybody is doing different activities, so you see a lot of companies, a lot of market pressure on product pricing here something where we decided to definitely be not to (inaudible) in the bank to go on lowest price initiative since the market is not really honoring that. We continue to work on again the similar concept as to one in UK to react with product quality initiatives with brand equity driven initiatives and in good collaboration with all detailed partners but not necessarily on the lowest price there.

So those were the three critical candidates in Western Europe that we always had on the list. A new country here is really Italy and you can see that all over the place here I see also for the rest of the year, no upswing.

This country will go through a reduced consumer impact; this is what we have to see. Although we want to state that in that market even with consumer take off, we are absolutely able to improve our market share positions in the most relevant categories for us and [Visage] is always the number one target.

Whatever the market does, we can of course do what we want but we will not change the development of the market. But, with our view at least in a difficult market, we want to see market share improvement or at least stability then we have solid position.

Germany is as we always said, that was already the think to see how Germany behaved in their crisis peak. It did not go into a big consumer response on that and so therefore things are more or less on the same track as they were last year.

From a Beiersdorf perspective, we have last year in the first half, our huge big brand consumer promotion initiative which we did not happen the first half of 2010. And since I am not always precisely talk about our activities for the second half, still of course the German consumers can expect some surprise also in the second half in 2010.

I’m pretty sure that this will happen. Going East, I’m happy to see that especially Russia and you might be remember that we always said that Russia is one of our key and core and strategic important country.

This is going well both, the market in general and second, we, in that market, so that time similar Ukraine. Ukraine had an hick up in the beginning of last year but that’s over.

We are back on track here. So that’s good.

Poland, we talked about here. I don’t know what is really going to happen.

There is some consumer uncertainty that came after those two events that they unfortunately in our wonderful neighborhood country have to see coming from the flood and coming from the death of the President, so we will have to see how this is keeping up. I have no clear view on that.

Going to Southern, Eastern Europe, here we see more or less all the countries there in a difficult economic development and again here is the same truth what I said about Italy from the Beiersdorf perspective in that reduced market speed, we definitely are able to keep or even improve our market share positions there, So that’s the toward the (inaudible) in Europe, I belong not to those who see a complete offering here, absolutely not and still we have to see the development in the next six months to talk about sustainable developments. Okay Rosy, are you fine?

A question on tesa, you had a absolute strong second quarter and with your guidance then do EBIT slightly above 9%, you expect then a lot quite a difficult second half I presume, so could you explain a bit why the first half was so strong and why the second half should be then a lot weaker? And second question is when exactly did the big bang start in Germany last year, was that at the beginning of the second quarter or during the second quarter, and how long did it last that we can effect here a bit better?

I’ll start with your second question on these big bang thing, in Germany happens, the whole sell-in of this promotion happened to clearly only and only in the first quarter, there was no effects on the seven sides in the second half that was done in May and June in 2009, and of course these promotions in Germany was a huge impact, so really being, then they are for the consumers in July and August and we could see in those two months following this sell-in phase strong development of our market share and the categories that participated in the formation. So the whole sell-in effect for Europe was in the first half in 2009, first half clearly first half and not in the second.

Number two, your question on teas; number one answer first of all, we are really happy to see tesa strongly, really strongly bouncing back after the crises year 2009. We always said tesa did not have a tesa problem in 2009.

We said that was market problem and the market on the industrial consumer electronics and automotives et cetera, et cetera was as we all know heavily under pressure, and tesa did last year a lot of effort in order to still come along with that situation. They really did structural measures in order to be able to in the final and still even with the serious negative for sales development, still an acceptable property duration, and of course to those decisions, even very clear structural decisions that were taken and also implemented in 2009 of course are now supported in 2010 when it’s, we can now see new energy in the consumer electronics market, in the automotive, especially that one in the Asian world; and all this is the reason for this strong bouncing back of the profits of tesa coming along was a good sales development.

From a experience background, we know that quarter one and two in the tesa world usually the strongest and for the rest of the year it will always depend on the way of the economic environment and the economic development, but usually these quarters are structurally weaker and therefore we do not go into the highest level of guidance, but if that helps you a little bit, if you would see the body language, me sitting here and talking this is, if I may call it, again forgive me, you have to answer this question after this phone call. I would regard this one as a pretty defensive guidance that we gave to tesa.

And a quick follow-up on your organic growth in consumer division. If I am correct with my calculations, you had about 1.3% growth there in the second quarter and if you said markets are growing at 2% to 3%, then you had a quarter of underperformance that means, you need to accelerate very strongly over the next two quarters to get back to that?

What exactly will get you there?

The great quick answer to that it was a quick question. We have some one-time effects in Q2 this year, like this, what we talk about this "big bang" initiative really impacting Germany in Q2 last year.

And as I mentioned again, the week performance of Poland due to the plus our two major events that effected the second quarter especially the second quarter in 2010. But I’m absolutely confident that we have in the Q2 the results of the strategic realignment with our focus in skin care with the new setup of the Board, Beiersdorf is definitely able to accelerate growth in the second half of the year and this is then of course also reflected in our guidance in this structural organizational and strategic change of the companies, not something I’m talking here about is a plan.

This has been plan by the end of last year and it’s implemented in the first quarter of this year, so therefore we can expect the result from that still.

Well, tesa was certainly stunning so you’re really very much low balling here, anything special besides what you mentioned on the former question. Do you have another raw material cycle than your competitors and anything you want to mention here?

And on the consumer growth, well, if I have calculated it correctly you came out at 1.3% organic growth in the second quarter in consumer. And do you see a substantial negative mix effect in that number as well or could you evolve a bit on pricing volume trends here and what you’re actually want?

I guess your comment on being absolutely sure on accelerating growth, does it refer more or less to the H1 growth rate or do you referring there specifically on Q2 numbers?

With respect to your first question, teas, special things around that, raw material cycle. No, there is nothing really special I want to and have to mention here the special thing about tesa is if you really and I think we should also one day use of the personnel meetings that we have when we come together for financial analyst discussion to talk a little bit more about the solidity of the whole setup of tesa structure and company since its an exciting story which if we now would have more time, we really could go back into the structural change that tesa went into.

This company is doing business now in a category which is much more involved and integrated and networked into our global customers and not on the basis of commodity type of business where you are everyday in danger to be thrown out of a business. No, this is on substantial technological high end technology, really high end technology based innovations where tesa is also able to ask acceptable reasonable good margins when it comes to working together with our business partners.

And all this is of course in a phase like last year where there was no selling of cars or no mobile phones or whatever. This business of course was not to able to show super figures still the structural substance was perfect and here again from this structural subject basis we are benefiting in this year and this is why the story is so exciting but again we should do this maybe to have business, come and view what we are doing here So number two, again the second quarter consumer there were some special effects in this Q2 in 2010.

I talked about the situation that followed I talked about the mega impact of the promotion of the super promotion in Germany last year. I talked about the probability of that maybe coming somehow in the second half and the most important thing again for our consumer outlook is that we took the crisis 2009 as a substantial basis for a substantial change in our strategic setup for our company what we are supporting, what we are not supporting.

This might a little bit answer your question what might be the mix in the assortment activities that you can expect. You can expect that Beiersdorf will focus in that strategic layout on those characteristics where we are really sitting on the leading edge in technology which is the skin care world.

And when we are putting all our energy behind that and this is the reason why I am confident for the rest of the year because all the measures in order to support it are implemented, and one of the physically and seeable measures is the implemented board structure and I think we published that I can tell you that the new board member for the European region, one Board member sitting here together with me and then the other colleagues, one Board member only responsible for nothing else but the business development support of the European region Mr. Ferris is now in place.

He joined a month earlier. He is with us this week and all this together with the strategic setup will really support the development in the second half, and definitely I’m not talking about the second half now I am saying this.

This is part of our whole strategy going forward in to the next couple of years.

By the way do you see any effect is particularly in some of the relatively hot summer that we have currently?

This is one of the group of categories where we are this year definitely do not see the end of that yet because some are still going on but this is a wonderful weather that we have in most of the European countries really supporting that and we are delivering and seeing market share increase in all European countries for our Nivea Sun which is one of our strongest competing categories.

Congratulations on the results, those are really very good indeed. Just a few questions on the firstly I know that for this year, for the first time ever the margin target, sorry the margin in the consumer division is a factor in determining managements bonus in the annual report talks in terms of the specific target.

I was just wondering if you’d inform me what your margin target for 2010 in consumer is in terms of that. Secondly I just wanted to give us a bit more color in Germany because once you adjust for the disposals you carried out by my numbers in ‘09 you had about 7% organic growth in Germany in the first quarter and then in the second quarter ‘09, it was flat.

So your Germany comparison on my numbers is 7% easier in second quarter ‘10 then the first quarter ‘10. So wondered if you could just give a bit more color and those would be the main ones I think.

Thanks.

I am not very sure whether I understood your question on Germany. Let me start with the first one with what is the margin target 2010 for the consumer business.

Our target is to have a EBIT margin for our consumer business clearly and we say clearly about 11%. And if I want to call it, I simply comment that I definitely see this as a very healthy gross margin improvement for our consumer business which we can see in 2010.

So, that’s a great achievement after we went through the situation last year. And this goes along with a very good and sustainable fixed cost reduction as we have achieved that you can find in the numbers and all this is for us the substance to say that we now can have the margin outlook clearly and we said clearly about 11%

I think you misunderstood my question. In your annual report it says that in fiscal year 2010 executive board members will receive a variable bonus dependent upon the consumer business achieving a certain EBIT margin?

That’s why you are referring to the bonus targets of the board members?

Yes, the Board.

We have some kind of connection problem here. That is part of our long-term payment agreement that we have and there is a target and all the target for the so called qualitative target for the board members are related to certain individual positions and sometimes the sales, it is sometimes for [consumer] sales.

I know that but the…

And is a certain market share development and this is something which went back to the development of the years 2008, ‘09 and ‘10 and this is something which by the end of 2010 we will have to look at. And the certain element of that would be then measured against the achievement there.

I know, but you haven’t had a margin target for the bonus in previous years and you do this year it says in your annual report that there is a set amount of the variable bonus, depends upon the consumer segment as a whole achieving a certain EBIT margin. I just wondered what that EBIT margin was.

I’m not so really sure about that.

And perhaps you were referring to management remuneration in general not exactly the Board where we always have company targets, there are four targets and two of them are company targets and one of these is always the EBIT development. I think that’s what you might be referring to.

Yes, all of us, we do have the EBIT as part our incentivation definitely. Regarding the Board…

The same also for that and there is always individual Board member, a set of other qualitative targets that are related to the individual function, so when you are such a Board member you have certain targets on the [budget] side. When you are in a job Board member you have certain targets on the HR side.

This is something which is then part of the discussion between the Chairman of the Supervisory Board and the respective Board members. So there are some individual qualitative targets that then finally are part of one element of the payments for the Board members.

Just explain more.

There is no change actually in that versus the past.

Okay. I thought that all of you are having a consumer EBIT margin target, which is new?

Not new. Always are with that what it was before.

We kind of talked about it a bit earlier.

I’m sorry, just too much on my Germany questions. You had jumped into disposals.

Germany was significantly worse in second quarter '09 and the first quarter '09. You should have had an easier comp in second quarter ‘10 than in first quarter ‘10?

I’m just wondering if there was anything in particularly going on there.

Last year second quarter in Germany, we had last year where the strong development in the second half, you have that in your numbers. I don’t have a relevant number here in front of me so actually I cannot really substantially quote on that what you are asking.

You are referring to the ‘Big Bang’ impact in the second quarter probably? Which was sort of a more than offsetting any negative macro effect so I think that is what we can say on this perhaps and this year as we said before, we don’t have that, because we have a steady development not impacted by any ‘Big Bang’ activities in 2010 yet, so that’s probably the difference in structure between the two years.

Is that what you are aiming at?

No, Sorry, I might pursue this later. So first quarter '09, you had 7.2% sales growth organic in Germany ex-disposals.

And then for first half '09, you had 3.3% organic in Germany ex-disposals. So that means second quarter '09 must have been flat and first quarter '09 was up 7%, so second quarter you actually, on my numbers, have a much easier comparison within the first quarter.

Okay, so that’s the number situation, yes, you are right. So the big activity we had was included second quarter, as we have said here before last year and some of that repurchasing went to the third quarter, but in general this was offsetting the negative market trends last year, buts let’s not so much discuss about last year.

And it would have been negative, it would have definitely been negative without the ‘Big Bang’ activity in second quarter last year, but let’s stick to the share profit.

I guess I also know, you have your question right. But this ‘Big Bang’ was responsible for all first half and the second quarter was what it was and that was in light of a very difficult economic environment last year.

So with that ‘Big Bang’ we ended the whole thing with 3.3 and the whole first half was what was last year and therefore this year we are facing the situation that we didn’t have that ‘Big Bang’ thing and again as I said before this potential promotion might be on the agenda for the second half.

Yes gentlemen, thank you. Two quick questions, one follow-up and I think this question has not been answered.

I think there was still a question regarding volume trends that you are seeing specifically in markets like Germany, Russia but also China, if you may, just aside of the pricing environment there and how you see margins by items to develop further if you can see this positive trend that you apparently had, if you can, and with what you can drive that further on? And secondly one just understanding question.

The new setup, the consumer structure and the focus on skin care as to when have you set up this entirely? Is this already fully in place right now?

I mean not for much in terms of the Board structure but in terms of the focus on skin care and all around that, what I think you called earlier the direction on the new market reality.

Volume trends in Germany, but also globally actually; we see heavy pricing initiative activities more or less in our whole universe, number one, that’s a general statement. Number two, different activities from different partners, some with really extreme pressure into the prices, others with some kind of tactical initiative, vary individual by various companies but all going into lower prices.

And the third thing in Germany and some European market, so called private label brands being distributed for four to five retailers are of course also playing a major role for this very interesting price from the low end. So in our case, we do not really participate in the lowest end of this price jungle.

This is simply where I don’t want to be. We always try to combine promotions, activities, initiatives when it is for consumer something as a new and maybe additional feature.

We want to combine this with something like a quality initiative. So therefore, we do not participate so really in that pricing environment, so we also protect our margin from that point of view.

And that will be what we do here on this side. And similar to that and along with that actually goes the answer to your second question.

What is the setup of this new strategic direction? This is something which we decided in the flow of 2009 especially exactly on the basis of the environment of your question, pricing, consumer behavior and consumer demands, and all this was related to, came up to our table here, and we said okay, if the world is always changing in that direction, our strategic concept definitely should be on the road to clearly support our core technology, our core backgrounds for our brands which is skincare and not necessary I think to remember everybody that NIVEA and Beiersdorf is more than a 100 years on the road.

And then we decided for this focus on skincare. This is something which is now on the rollout and you have to the right in asking what is the timeframe for that.

This is something that you decide. This is something what you communicate.

This is what you would talk to with your colleagues all over the world and so I am traveling now all over the world together with my four colleagues, the Board members to implement that kind of strategic setup and this is a plan for the phase ahead of us, but it clearly started in these days as we speak and world effect already year but is of course designed to be the substance for substantial growth and substantial and sustainable growth in the future. So that’s a process which is ahead of us, but definitely is daunted and the implementation is on road.

Couple of questions. On the consumer business first, I am a bit confused and I would like to know what basis you guys think you are gaining market share.

If I look at the Q2 results from your major rivals, Procter & Gamble did 5% growth in the beauty business, L’Oreal 4% in consumer, Unilever 8% in personal care and Henkel 5% in cosmetics. And you guys did 1%.

So, it looks from those numbers that you’re actually losing a fare amount of share. And then that leads on to the guidance for the year, you aim to grow ahead of the markets.

And even by your own numbers, markets are growing at 2% to 3% and you guys are growing at 1%, so, I don’t know how you make all that add up.

Yes. That's this question towards the development this year on the consumer side, and again here we have for us defined the market growth scenario in 2010, which is between 2% and 3%, this is what we said actually already by the end of last year.

I repeated that in the first quarter and I do not see that really being different from today's point of view. There are some companies also using the three maybe going into a more optimistic number.

We said let's keep that because still the new increased market speed still has to be sustainable, I don't see that yet, number one. Number two we see Europe, we see Beiersdorf's exposure in Europe and we see the markets in that part of the world a little bit slower, of course, in other markets, we are at the same speed as we were in the US or in Latin America, a good market development.

We would put development but with the focus on Europe, we of course have to see the European market and here we talked about the effect from last year in Europe with again to quote it again because it was of major impact, the big bang initiative in Germany. And this year also the effect from the Polish business, which is also a substantial piece of our business and all this again in the light of the development of the implementation of our new strategic setup of our new Board support that we have to put in place, we are very confident that we are able to outperform the market share, the market development that I quoted earlier with this 2% to 3% market development and on that track we are actually pretty well on the road.

And the market that we talked about last comment, like Italy or the Southern Eastern European markets, here we see a very, very soft development, much pressure in those markets. But from the real reports in our categories and those markets, we see us improving with our market shares quite nicely.

Alex, you're quoting second quarter. Okay, that's what we are of course talking about.

This is one quarter and we have talked about reversing the trend. We have talked about getting the benefit from implementation of the new Board structure of the new strategy.

So that's still come, that's the reason for the guidance, that's the reason for the confidence regarding our performance of market growth.

Another quick follow-on question, on tesa, I think as someone pointed out earlier in the call, your guidance of 9% margins for the year implies margins of only about 5% for the second half, somewhere around there. I know you mentioned that the second half is not a strong for tesa as the first half.

Is there anything else and what are you seeing in terms of raw material prices, input costs in tesa? Were they a benefit in Q2?

And are they starting to be a headwind in the second half?

There might be some effect, but in general we know the condition for the second half of the raw material, this is something which is fixed since quite some months ago. Therefore we know what's going to happen here.

This is now really, as I said earlier, it's from today’s point of view a little bit defensive outlook, so having the experience from the last years. We do not yet see the opportunity to really be that more aggressive.

So that’s what we do.

I would like to know what was your organic sales growth in China in the first half and how has that compared to the market growth?

We are little hesitant regarding providing the individual increases in countries. We are very well on the road and this is driven and that's interesting, that’s driven by the hair care business which is in line with expectations there regarding the sales growth development.

And so, sorry, no individual market developments, but China is contributing, I would say, okay to the Asian growth, which overall, and I mean that’s the clear statement is not what we expect going forward, but that’s where we currently are, there are certain drags in Australia, China is not among them.

But do you think you are winning market share in China now given your substantial investments in marketing there?

We can say that we have according to our plans and to our activities all this balance we'll see much situation in the hair care business, especially with our brand flag we see a strong position for us and on the skincare side we see good development on the NIVEA for Men side, for the men's market, that’s fine. In the other categories there are quite a lot of room on activity in the market, so this is a little bit of giving and taking and that goes month-by-month.

So therefore, so Jens said, we don't want to go into this quarterly publishing individual numbers here.

We can give you one detail regarding China, qualitative detail is that we are improving our sales growth compared to first quarter. There is an improvement in the first half including first and second quarter.

Can you comment on the A&P development in Q2, either as a percentage of consumer or as percent of total business?

This is really a straightforward answer to your question. Our A&P in consumer is favorable versus the previous year.

And we also will keep it that way, and therefore some room for even lifting that up in the second half since again that is part of our strategic concept, really making sure that we get the efficiency out of fixed cost, et cetera, et cetera in order to really make sure that we can continue to keep the level of support for our brands on the level that we want to have.

Some small details regarding marketing selling expenses as stated on page 15 of the interim report. We have a number of 1.509 which is 47.6% sales.

I can give you the breakdown of this number which is A&P 32.1 and which is marketing and selling, fixed costs 15.5, the 32.1 is affected by the mix coming out of the increased share of tesa and overall sales consumer, as was quoted by Thomas Quaas stable. Regarding the smaller part, the marketing and selling fixed cost 15.5 that compares to a number of 16.0% one year ago.

So, message here the bad costs are on the way down as a percentage of sales which is in line with the other lines of fixed cost where you see research and development expenses, where we also take off some of the administrative cost which is in line with the general and admin where we are going down also in absolute number by $5 million but of course, also in relative stages and this is going to be sustainable.

Just very quickly, if I may, Financial Times, Deutschland I assume you've seen, ran an article about a week or so ago, talking about the management changes that had been pushed through in terms of your sort of top managers, the people who report directly to the Executive Board, quoting a figure of about 25% being changed. I just wondered if you could give more detail on that and sort of talk about whether you are happy with the management that you've currently got throughout the business, or think perhaps there'll be some more changes in the way.

Not everything what has been quoted there is something which I want to comment on. The overall message is for and that's the reason, yes, there is substantial change in the strategic set up of a company something which we’ve started on a really good thinking process by the end of last year and we decided for a new strategic set up in line with the new organizational set up.

This new organizational setup that I explained earlier which is a Board structure that is suppose to on one hand side, on headquarter, really have bundled responsibilities, both on one is the product side and the other one is the structure and support side and finance and HR, as the two strong elements next to see all here in our headquarter and then we have three regional Board members, which is the new thing for Beiersdorf, absolutely new, really supporting that but we think the appropriate measure in order to be successful in the years to come, being closer to market, being much closer in the collaboration with our general managers of the affiliates in the whole world out there in order to grab any individual opportunity from the markets which is substantial and then gets the support to be then finally coming into life. So therefore we will be faster, we will be closer, we will be more flexible and all this with bit more direct support from Board members who have that time.

So in the line of setting up all this of course you can imagine that this is a major change that we have line towards with the organization on first level then according to that target. And this is the pretty normal but of course intensive change for many functions so that is for me again a signal to show and to go into the future with couple of new talents and new positions and all this is designed to really support that new strategic with the highest impact.

And the headline of all this is change which see is an appropriate saying happening in the company when it comes to preparing for the future.

Thank you very much and should I interpret that as saying obviously a great management flexibility going forward in terms of people being under pressure to perform?

All this is part of the story. The flexibility and change and readiness for change are the things that you need in any kind of company and so therefore I feel personally very versatile with the new setup now which is really designed to support that strategic target.

Just a question on NIVEA, I read in your release that NIVEA grew 2.5% in H1. You also said during the presentation that within this, NIVEA for MEN grew 15%.

I was wondering if you could give us some more details maybe on the respective performance of the different NIVEA categories. Basically what I'm after is which were the one which underperformed and the one which outperformed?

This is a good question and you know us hopefully that we are not the ones that really publish the individual developments of individual segments and also not have when it comes to quarterly development, because that always depends on when are you launching something, when are you doing the re-launching, sometimes you have the activities in the first quarter then we have them in the second quarter, then you have them in third et cetera, et cetera, you know all this. And we use sometimes only certain elements where we say okay here we have real new impact, new strong developments also from time to time, we grab one or the other category when it comes to really showing extraordinary developments.

And when we talk about extraordinary developments, we are really happy about this year that is the ordering category which is the for Men category, which is the strong category that I highlighted early on. And of course there are some categories that if you take the overall numbers, that are not performing in that strong way of course but this is something which goes all over the world and that the individual there is nothing particularly there to talk about.

But there is no such a thing as a brand category that is going underwater, but their development, of course when it comes to the global figure, well that might be slightly slower. But all-in-all, we see the agility, we see the speed, the dynamics of the brand and which will develop the 2.5% for the global, the stronger global skincare brands, is at least from this point of view, for this part of the year and are [case] perspective

And in your release, you mention a decline in NIVEA Hair Care and Makeup. Would you expect that trend to improve in the second half of the year?

Again, this is deferential individual forecast on individual categories. But you're right and I would at least support you in that one, this is the most difficult categories we are in and again that's why we said in our new strategic set up, we will focus on skincare because those are the categories where we are already able to be in the situation to deliver new features, based on strong consumer insights.

So therefore, these two categories might be the ones that could be a more under pressure than others.

I just had a question on the financial results. How can you explain the minus 12 and what can we expect for the rest of the year?

Thank you.

Well, regarding the financial results, let me take that one. As you know the financial result comprises of three categories.

There is interest results and there is pension results and then there is the FX on non-operated items. To break that down a little the interest results are clearly positive, while this of course depends in this magnitude on the current level, interest level which are pretty low right now.

The pension result is slightly negative, in the position and the category FX on non-operated items. This is what striving down the financial result in the second quarter.

That’s due to the very weak euro at the end of the second quarter. You have to know that by company policy we are hedging the dividend payments from the affiliates to Beiersdorf AG in Germany and in the case of the weakening euro and this is exactly what we have in the first six months this leads to negative effects, in other years this effect has been positive.

So it’s always depending very much on the current development and there was a strong move in currency in the first half year.

And what can we expect for the rest of the year?

Well, that depends again on the currencies as we have seen the US appreciate it and if that trend continues, this will also be reflected in the financial results.

Well, thank you for your questions and for having joined our conference call. Beiersdorf’s next Investor Relations event will be the financial analyst meeting about our third quarter results on the 4th of November.

Thank you for your interest in Beiersdorf and goodbye.