Beiersdorf AG

Jens Geissler – Head, IR Stefan Heidenreich – CEO Ulrich Schmidt – CFO

Catherine Rolland – Kepler Cheuvreux Javier Escalante – Consumer Edge Research Iain Simpson – Barclays Andreas Riemann – Commerzbank Celine Pannuti – JPMorgan Harold Thompson – Deutsche Bank Pablo Zuanic – Liberum Capital Jörg Philipp Frey – Warburg & CO KGaA Gael Colcombet – MainFirst Bank Robert Waldschmidt – Merrill Lynch Rosie Edward – Goldman Sachs

Thank you. Good morning, and welcome to Beiersdorf’s half year results conference call.

The presentation of our results will be given by our CEO, Stefan Heidenreich; also with me this morning is our CFO, Ulrich Schmidt. You can follow today’s presentation on the internet by using the link in our invitation to this call.

You can download the file from Beiersdorf’s Investor Relations site. We will start with our disclaimer regarding forward-looking statements.

And I can now handover to Stefan Heidenreich and the results of the first six months.

Good morning, ladies and gentlemen, and welcome to our conference call. Our Group CFO, Ulrich Schmidt and I are pleased that you have accepted our invitation.

We would like to present our results for the first half of 2013 and then give you an outlook on the business development going forward. First of all, Beiersdorf is on track.

In the first half year, we recorded strong sales growth in both of our business segments, consumer and tesa. We are pleased to report that sales growth was well above market in both business segments.

We also increased market shares in key countries and core categories, and our product innovations are well received by our consumers and by our trade partners. In essence, we are becoming increasingly better at translating the potential of our brands and our company into economic success.

Let’s turn to the figures. First half Group sales of EUR3.163 billion, represents the growth of 6.6% on a like-for-like basis, and an increase of 3.3% in nominal terms.

The operating result excluding special factors improved by 11.2% from last year’s EUR390 million to EUR434 million this year. The EBIT margin of 13.7% is a strong improvement over last year’s comparable of 12.7%.

Both business segments; consumer and tesa, contributed to the Group’s success. tesa sales grew by 7.4% like-for-like, and by 4.2% in nominal terms to EUR522 million.

EBIT increased by 31.6% to EUR83 million. This means our EBIT margin was 15.9% compared with 12.6% in 2012.

These results once again underline tesa’s strong international position. In the consumer segment, we again saw good growth with sales rising like-for-like by 6.5% and in nominal terms by 3.1%, from EUR2.561 billion in 2012 to EUR2.641 billion.

Across the various regions, sales growth was mixed. Let’s start with Germany.

In Germany, strong new product innovations enabled us to grow by sales by 2.7% like-for-like in the first half year, despite a weak overall market. We have clearly met the expectations of our consumers in our home market.

To Western Europe and Eastern Europe, like-for-like sales in Western Europe declined by 2.3%. As with many other companies, Beiersdorf was unable to escape the impact of the tough economic conditions across the region on consumers purchasing behavior.

Sales in Eastern Europe were down 1.3% year-over-year, slight growth in Poland was offset by a decline in Russia, where we saw customer destocking as a result of the overall economic situation. However, our market share continued to do well.

To North America. In North America, we saw a positive sales development with like-for-like sales by 4.3% after a drop of around 2% in 2012.

Going forward, we aim to realize potential of this market even more and for this reason, have optimized our structures and reporting lines. North America will now be managed as a separate region, independent of our European businesses.

To Latin America. In Latin America, we saw significant sales growth of 19.9% like-for-like, NIVEA and Eucerin successfully maintains the upward trend in this focused region.

To Africa, Asia, Australia. We also saw sales growth in Africa, Asia, Australia region with an increase of 19%.

The main driver here was a positive development of our Chinese business, NIVEA and NIVEA Men in particular extended their market shares. EBIT in the consumer business segment grew by 7.3% from EUR327 million to EUR351 million.

The EBIT margin increased from last year’s 12.8% to 13.3%. Ladies and gentlemen, these figures show that Beiersdorf is on a good track.

The systematic implementation of our Blue Agenda over the last 12 months has given our company a clear boost. The appointment of new executives to key position has been an important driver.

We have filled a large number of senior positions with top talent from within the company, and only recruited externally where this was not possible. However our key drivers remain strengthen our brands, increasing our innovation power, and extending our presence in the emerging markets.

Let me give you some examples to brands. We have sharpened NIVEA’s brand profile.

We introduced a new brand logo and new packaging for many products around the world. These changes plus better and more targeted advertising campaigns has increased consumer awareness and lifted our market shares.

In addition, we are in the process of expanding our digital communication. Here we want to intensify the dialog with consumers and make them feel even closer to NIVEA.

To innovation. Successful innovations are key to Beiersdorf and its future.

This is why developing new products is always at the heart of what we do. In the first half year, we launched two extremely successful innovation, NIVEA Deodorant Stress Protect and NIVEA In-Shower Body line.

Both has the potential to become pillars of growth in the future. In addition we achieved a breakthrough in anti-aging research with the new NIVEA Cellular Anti-Age line.

Its innovative formula contains cell activating ingredients, which when used regularly stimulates the skins own cell renewal process to promote a more useful appearance. To emerging markets.

We set out to strengthen our focus on emerging markets and create our presence in these regions. Strong sales growth in the first half year led to expanded market positions in these markets.

Ladies and gentlemen, I would like to conclude by giving you an outlook on business development for the full-year 2013. We are aiming for like-for-like Group’s sales growth of 5% to 6% in 2013, further leveraging our current strategy.

The Group’s EBIT margin from operation is expected to be 12% to 13%. In the consumer segment, we predict like-for-like sales growth of 5% to 6% for 2013.

We estimate the overall market will grow 3% to 4%. Investments in effective marketing activities should provide further support for strong growth.

The EBIT margin from operation is expected to exceed 12% in 2013. We expect tesa to record like-for-like sales growth of 4% to 5% with market growth estimated at around 2% to 3%.

The EBIT margin from operation should be approximately 14%. Ladies and gentlemen, thank you for your attention.

My colleague, Ulrich Schmidt and I would now be happy to take any questions you may have.

So this concludes the presentation and we come to Q&A.

Good morning. I have three questions actually, if I may.

First of all, you gave us a guidance of 5% to 6% organic growth for the whole year for the consumer division. Could you give us some color by the trends for the main regions?

This was my first question. And my two following questions would be about tesa.

You indicated in the report that there are some one-offs at the EBIT level in Q2. I just wanted to know if you could give us some more information about these one-offs, and could you quantify them?

And the second question is about your full-year guidance in terms of EBIT margin for tesa? Do you include these one-offs in your margin?

Thanks very much.

So for first question I will answer. The two others Ulrich will answer.

Well Group sales of 5% to 6%, at the moment we are over that trend. However as also others have indicated, markets are still sluggish.

We see some risk at the horizon with emerging markets also indicated by our competitors. How that will affect us?

Who knows. Clearly our objective is to grow above the market, which we estimate to be 3%, 4%.

And yes, let’s see how that goes. I mean as long as the sun shines in July and that continues I think we will have a good second half year.

Okay, but regarding the expected performance in Germany, Western Europe and Eastern Europe, could you give us some flavor about the trends that you expect for the whole year in these regions, please?

Well again I mean I think Europe is more or less flat, what I see as a general trend in the market, and the emerging markets will further grow double-digits. That’s my estimation, yes.

Thank you.

How far that goes? Again it depends on how the market develops.

We’re at the moment very pleased. Product innovations came in.

They are developing very nicely. Teams are also getting on steam, so I think at the moment I am pretty – yes, ambitious for what is still happening, but again we have to be cautious and have to see what’s happening.

Okay.

Yes, regarding tesa one-offs and EBIT. So there is small one-off on tesa, it depends and not on the project that comes to market.

We have been especially successful in achieving specification for core innovations and project. That means normally to build up stocks, and very often it’s a one-time.

It depends on the timing of that projects. Secondly, we have successful pruning of low margin business done in last year.

You might recall Bandfix business we closed down. This was a label business with low margin.

We also have closed down a Singapore plant that was rather standing for low margin business. So that had especially positive effect on the second quarter.

Finally, we had done last year a devaluation on the assets of our Swiss business, which we closed down, and this was one-time effect last year. So that the comparable increase have not been as it looks like in reporting for Q2.

At the end, these one-offs will not repeated itself in the second half year, so we will come to more normal business in second half year. We depend in tesa on the development of the core industry, paper industry, car industry, electronic industry.

Okay. But could you tell us what would have been the tesa operating profit growth in H1 if ever we strip out all these exceptional items, please?

That is difficult to say what – of those projects coming to market, what would be normal innovation. We would think that 14% is a normal EBIT margin that we have.

This is mainly driven by the industry business, whereas you have single-digit EBIT margins in consumer. And consumer is rather slightly growing only or flat.

Okay. So it would be your assumption to guess that in Q2, your underlying EBIT margin was around 14%.

Is that right?

Yes. I mean that’s what our full-year guidance is also aiming at, so that gives you an idea.

Okay, thank you very much.

Thank you.

Good morning everyone. I actually also have three questions.

One, the first one is actually a clarification. As we look tomorrow and the second part particularly in Europe, to what extent what was mathematically an easy comp in Europe in the second quarter which was down negative 6.1%.

It’s closer operationally to discontinued operation because it represents termination of line extensions such as make-up and hair care. Can you give us a sense of knowing that the comps going forward are also have these (inaudible) whether we should just assume that Europe will be basically flat to down half a point.

Is that a correct assumption? I assume that essentially the viability of the comps, particularly in the second quarter, they were at negative 6.1%, it’s actually a discontinued operation as opposed to an easy comp?

Okay. Right, obviously the quarter one of last year, a good quarter.

Quarter two of last year a weaker quarter. And overall I think we beat both quarters.

Again I remain confident because we’re gaining momentum. I think that’s the key message that – when you re-look at it, we have (inaudible) and what is also very pleasing if you look at it a bit more specific at the German numbers, we started in our home market, and this is our key market also profit-wise, we started negatively return that nicely around to positive number for the first half year.

And again I remind the sun is shining, and as long as the sun is shining as strong as it is, I think we will have a very good quarter three in the way [ph].

Okay, understood. So moving to Brazil, right?

Could you give us a sense what was the growth rate in Brazil in the second quarter? I think the last quarter you disclosed the growth in Brazil was 13%.

What will be growth in the second quarter?

Yes, the growth has been in line with the Latin growth. So it’s in the area of 20%.

Around 20%. So that means that other sections in Latin America accelerated probably, Mexico that would be the case then?

Yes, we are gaining momentum in Mexico. The special effect for Latin is the Venezuelan situation we discussed last time.

We have very high devaluation of the currency. It’s difficult to also get foreign exchange to import.

We’re very satisfied with that business having gained market share, but on the other hand – in nominal terms, it’s much lower than it was last year. And that is a lot the Latin numbers.

So the other markets are also growing nicely in real and nominal terms.

And a question on China. You mentioned in the first quarter that the first quarter was helped by the sell-in of the newer SLEK line.

Could you tell us what was China growth? How you see the sell-out or the consumer takeaway of the SLEK?

Could you give us a sense of how you see the SLEK gaining traction with consumers or any sense of the growth in China, how much is fleet they’ll [ph] takeaway to the extent that you can fix it versus selling into more retailers?

Okay, in China as you know we have two businesses, as I mentioned in my speech. I would give already a slight green light on NIVEA.

We were in heavy waters last year. We were under tough competition here.

The pleasing thing in the last six months and you can look that also in the news and reports we had regained shares against major competition and NIVEA overall also increased. So that’s very pleasing, and I think that should also – for going forward be a good sign.

On SLEK, we have good sales. We also see some slight increases on market shares.

Here I would still like to take more time, as we said in 2014, we’re coming back, and recall what’s happening in China in direct, hair care, we have a lot of launches going on as you know. Some are working, some others we have to rework, but overall we are in the right direction.

And finally on the currency impact on EBIT growth, I mean I understand that some people may have underestimated the currency depreciation on the impact on the sales line, but could you tell us what was the equivalent – the currency impact on the profit line if you, please?

You mean the overall impact for the overall business or just basically?

Yes, just basically if you step back, why would it be – is the impact of the depreciation of emerging market currencies on the top line on South would be equivalent in the profit side, or it would be less or more, I just would like to understand. Why would it be a currency neutral EBIT growth, if I may?

Yes, it’s rather neutral because we have sourcing and production in all parts of the world, and we have also hedged the currencies, so that we feel secured.

Okay. Thank you very much.

You’re welcome.

Thank you.

Thank you very much. Just a couple of questions from me, if you could gentlemen.

Firstly, it would be very interesting to hear how much of the sun care business you would normally expect to have in the third quarter in Europe, we’re obviously just trying to get a bit of a handle on what continues good weather in Europe in the third quarter, it could be worse for your consumer business. And also within tesa, I think you may have benefited a bit from the sort of phasing of a major smartphone launch that we’ve seen recently, so if you would like to give any indication as to what that may have been worth on the top line in tesa?

Thank you very much.

On the first question that’s like a weather forecast. I can’t give you an exact answer.

The only thing I can tell you, the half year numbers were definitely with bad weather, because until mid-June, end-June we had best weather across Europe as far as I am concerned. And it has turned around dramatically, I could use the word dramatic because it went very hot and what we see is in our business, and you know I started 12 to 18 months ago, actually if sun comes out, we’re not only talking sun creams, we’re talking shower products, we’re talking deodorants, we’re talking all kinds of products at the moment, and they seems to be going very well when there is warm weather.

So how long that continues? Believe me the last weekends are always looked upwards, does that goes in that right direction.

This weekend is still good, then it’s clean and dawn again so we have to see. Maybe it’s very good August so far so good.

We’re pleased that the weather came in like that.

Yes, regarding tesa phasing. You’re right assuming that it’s part of the business.

On the other hand it’s part of the electronic business and we’ve done good projects, so it’s part of what I call projects getting specification in new smartphone that might stand for 1% or 2% of growth.

Thank you very much. Just a follow-up if I may, sorry, I am not asking you for a weather forecast for the first quarter, but I wonder if you could just let us know how much sun care was of third quarter consumer last year, just so we can try and sort of back it out, and you said that you felt that sort of bad weather in the second quarter – in the first half rather had hurt your consumer Europe business.

I just wondered if you could sort of make an attempt to quantifying that, as to what you think you might have done if you’d had more normal weather? Thank you very much.

But I’m afraid the weather forecast will have to do, because we’re not providing the detail of the sun care business, but of course it’s among the five most important brand groups that we have. But the details, we don’t disclose.

And perhaps add to that, normally you have three effects; first of all, you do very limited additional sales across trade – its reluctant to order late in the year, but then you have less returns so that used to be in the fourth quarter, and then you have higher new orders in next spring if trade stock is limited. So that’s a very complex one, where you see the effects in these rather three quarters than just in one.

All right, thank you very much.

Thank you.

Andreas Riemann, Commerzbank. Three questions from my side.

The first one would be on product launches. What is the plan with regards to the regional rollout of NIVEA Cellular?

And the second one on marketing. Can you give us an idea of what was the marketing budget as a percent of sales in H1 this year compared to H1 last year?

And the third one on tesa, without providing numbers, can you at least give us an idea what was the price and volume mix in the second quarter? That’s it from my side.

Thanks.

Okay, to the first question. The other two Ulrich Schmidt will answer.

The first question as you know, Cellular was from the – for the kids we had, the last one we launched. We launched that in May, in the major European countries.

And so far we are very pleased, but it’s early time. And we’re rolling that concept out globally, but obviously we’re not telling you where we’re going to go now.

Then regarding tesa, it’s difficult to say because it’s not the same assortment that you compare against each other in the moment where we have project and high-end products that are high value products and you get different mix. So if we break that to set down we might have half of that in volume, half of that in mix, the price effect is quite limited.

Regarding the question marketing budget, that is obviously consumer question. In the first half year, we had 29% marketing budget of consumer sales, that compares to 28.6% in the first half 2012.

And regarding the price-volume mix in the consumer, we don’t provide specific data, but you can assume it’s actually all volume with prices being more or less stable.

Okay. Maybe a follow-up on the rollout of NIVEA Cellular, is that something for 2013 and 2014?

I know you don’t want to pull out the regions but maybe timeframe?

Well you can be absolutely sure about that, okay, I mean I made that very clear that in Black & White already in the last calls and my teams know that inside out, we are not going to sit for one year, we’re not going to prevail for two years, we’re not going to build out for three years, we saw that – it’s a part as long the potential is there. We are now hitting into the third quarter of year in Black & White deodorants, and I can tell you we’re still moving very, very strong upwards.

So I mean on the Cellular, is not going to be one day journey, nor one year journey, it’s definitely going to be a journey hopefully for the next century to come. That’s how big we see that potential of that product group.

Okay.

Yes, good morning. Thanks for taking my question.

I have three please. The first one is, I would like to understand how you explained the contrasting performance in Western Europe versus Germany, now you talked about attention from a management standpoint or was it that it’s tougher in other markets to get the ball rolling with your innovation in the market share again that you seem to indicate in Germany?

My second question is on the region, the Asian region and you mentioned – we’ve seen a strong acceleration in the second quarter. You mentioned some sell-in can you – is that correct with a boost from an extra selling in Q2 and therefore what would be the underlying run rate please?

And finally, on tesa, you grew around 4% in Q1 and 11% in Q2. If I take the top range of your guidance of 4% to 5%, so if I take 5%, that means you’re expecting 2.5% in H2.

So can you explain why we should see this big deceleration in the second half? You indicated that you only had 1% or 2% boost from the smartphone launch, so I just want to understand what happened really in Q2?

Thank you.

Yes, let’s start with the situation in Western Europe and in Germany. That’s the focus that we’re having also (inaudible) to make sure that the home market is secured and all innovations are launched with energy in Germany, not only the test markets, normally the first market to launch.

And when we have strong launches normally, we do it first in Germany and then we see if it’s convincing. Secondly, the brands especially strong in Germany and therefore when you see a strong innovation you see market share coming up very strongly.

Western Europe consists of course also of certain part of Europe that’s really down with the market, that is markets like Spain and Italy. They are in still mid-single digit down.

So it’s difficult to really grow there. We are growing market share there and are satisfied.

Regarding Asia, specifically in China we started to discuss the sell-in and the special effect. First of all, we have done number of launches in SLEK and that had an effect on one already.

Now this launches are done customer by customer and therefore it’s an ongoing effect. Secondly, we have started bigger restructuring also now finally merging the two businesses into one, and that will also affect the third quarter.

Well we expect rather a flat business, and now the trade is well stocked and we can support to sell out double-digits, so we are satisfied with that.

Ulrich, just to clarify, so you’re saying that you expect flat China or flat Asia in the third quarter?

We expect rather flat China in the third quarter because of internal projects, but we will see that now sell-out is not at risk because the trade has enough stocks.

Yes, Sure. All right.

And finally regarding tesa. As I was saying that’s characterized by the new innovation and projects.

This project have been coming to market with a focus of (inaudible). Now we need to watch how the sell-out will be for the rest of the year.

Normally if you launch something that also the customer stocks [ph] for number of weeks or months, it depends. And so the reorders start only slowly over the next months, and therefore we are cautious saying the rest of the year.

We would not assume that’s like Q2.

Fantastic. Thank you.

Thanks.

Yes, thank you very much. Good morning everyone.

Few questions if I may. Stefan, you talked a lot about products and your new launches, Deo Stress Protect and your In-Shower product and of course now on the face cream.

I mean you’ve got six categories. Could you maybe just go through the six and just say how the product launches or the new products are working, and you do referred to significant share gains where you are making launches, but I guess if there is lot more other lines which are not discussed.

So when you talk about share gains, are you talking about the totality of the portfolio or just around these new ideas? The second question is on the U.S., you’ve decided to separate the U.S.

from the European sale, I mean are there any I guess financial impact from doing that, but I guess more philosophically why are doing this? I mean you have repeatedly said that, you have yet to find an answer to the U.S., so is this the answer?

I guess Iain had a good go on sun, I mean your guidance as you say those imply slower growth in the second half, and you have flagged risks on emerging markets for example, but you then go onto say execution is really good because the sun is shining. So I’m just not really sure, are you just saying things could slow or things have slowed, which is a probably the better question?

And then finally for Ulrich, if I may. You are the head of Latin, you clearly think Brazil and other parts are doing well, but even there, there is a lot of inflation there.

So is your strong growth in Latin, a price-led model or actually it’s the bottles [ph] the volumes which are doing – sustaining that growth? And is there any change to the full-year tax rate guidance, please?

Thank you.

Good. I mean first of all to your first question, I think for me always in every call I repeat this, products and innovations are the heart of that company, that’s the key.

And I remain – if I see the pipeline for the years to come, I am not worried. We have great pipeline coming up, great products coming up, so that makes me feel a lot better than I – when I started here.

In terms of the categories, I think the overall market shares, we measure among in the top countries and we measure among the six categories, overall our shares are up. That particularly is stronger in body where we launched the In-Shower body product which is appealing very well.

We are also seeing great traction on face now which is important because it’s a big category. And on deodorant we are still doing extremely strong with the launch of Black & White and Stress Protect and more to come.

The remaining three, we’ll see launches mostly in 2014. New things are coming up there, but also new things are coming up for the first three.

So overall, I am pleased and that should also turn further into market share growth. In terms of U.S., the answer is simple.

I took over Europe, North America literally by April. Peter had left us in August, but as always I took charge there.

I think the answer is just simply, I could never understood why Europe and Northern America put together, right? They have nothing to do with each other’s.

The markets are completely different. Our positions are clearly different.

And if we want to have a chance to have us succeed in the U.S., I wanted to have to explain [ph]. I also gave the new manager there who take charge of that, the team remains the same.

It’s that the answer Harold, this is not the answer but the prerequisite to become successful one day hopefully. And to the guidance, well to the second half year, we are little bit cautious let’s put it like this.

We are – or let’s say it is a little bit like you said we are mixed, and if such that we’re seeing great traction, we’re seeing – we are lot more positive on growth. Our innovations as you see in Germany, it seems to gain tractions, so we hope more to come than also in Europe and around, but when also listening to what my competitors says and what the markets indicate, I mean it could slowdown.

I have not seen it does slowdown but it could slowdown. And being Adriatic businessmen you always get a little bit cautious of where it can go.

So at the moment, there is no rain literally on the horizon, but I think we should remain cautious and see where that goes. So far, so good, but markets could go down and then obviously we would be affected as well.

So that remains to be seen.

So you’re saying you’re growing like 7% on your third quarter, is that what you’re saying?

Well at the moment, I mean as I said, the first half year you saw – I mean we saw actually an acceleration in the trend when you see first quarter to second quarter. Second quarter was up to 7% in September [ph].

And I remain and that’s why I gave an indication with the sun being out. I mean this is weather like we like to have it in Europe, especially in Europe where we have seen slighter sales over months and months and months.

I think this hedge is at the (inaudible) but I think I would point once more up to, I mean to Germany that sounds relative really [ph], but look at Germany, we turned a negative trend in quarter one to a very positive trend to the half year and market shares are aligned with that. So I am bullish when it comes to the things – of the things we did in Germany.

Hopefully, we can also translate it into other European countries and you bet that we would.

Yes, regarding Latin America. You’re right, Harold, it’s partly price-driven market.

We have especially two markets that have very high inflation, that’s Argentina and Venezuela. And of course from time to time you have Mexican devaluation like you have it this year and last year in Venezuela and we are affected by that.

On the other hand, the two indications that we are doing especially good. We have double-digit volume growth, that’s a hot figure and we have high increasing market share that’s also hot figure in most categories.

Okay.

Regarding tax guidance your last question, that’s unchanged. It is 35% for the full-year.

We did have an increase in tax rate in the second quarter due to some internal dividends being paid as every year which brought up our reported tax rate and so we are going for the 35% which is going to go down to 33% in 2014.

Thank you, Jens.

Okay, thank you.

Good morning everyone. Three questions, and all of them regarding consumer EBIT margins.

Number one, your guidance is still above 20%, but in the first half margins went up 50 bps, a bit less in the second quarter. How should we think about second half?

Should margins below fasted [ph] or slower pace than in the first half? Number two, what is the – when we think two three years south for the consumer division in terms of margins, how should we think about that in terms of guidance, because again the guidance for 2015 of above 12%, clearly guide very little expansion versus 2012?

And the third one is actually regarding margins also. Typically your second half margins in the last two years have been lower than the first half by above 150 bps.

And I am just wondering why is that, what is the seasonality factor there? I have a follow-up, but if you can answer that, please?

Thanks.

Yes, there are especially two factors affecting the margins. To a big extent it depends on A&P, we are doing.

And that A&P, again it depends on the innovation pipeline that we are having. At the moment, what we see is strong innovations.

We tend to further invest and drive sales and market share. So our first priority normally is not to drive EBIT margin, not to drive business and therefore it’s rather positive indication if we are cautious with EBIT margin because it means that we’re determined to invest behind the business and behind the innovations.

So that would be also true for the second half. The reasons for having lower margins in the second half purely depends on the fact that we have more than 50% of sales in the first half, so that automatically the EBIT margin on the second half seems to be lower.

Part of that phasing is sun business and other businesses where we are depending on Europe and those part of the market that are in Northern part of the hemisphere.

Okay, thank you. And just a follow-up, I mean obviously when I look at your Latin American numbers, high-teens in Asia, significant acceleration in the first half compared to 2012.

Can you just remind us about what percentage of sales in skin care in the Latin American division compared with Asia? And then just a broader mix, (inaudible) at all significant difference that we should keep in mind?

And then number two, just remind us about your competitive position. I mean obviously Latin America very strong for NIVEA.

Asia, I think you are still very fragmented but you’re still very small there in terms of market share. Just very briefly just some color between the two regions of emerging market level?

Thanks.

In very broad terms, it’s fairly simple, I mean we have traditionally a very strong foothold in Europe and we have relatively moderate positions around the globe. And I think when we set out, Ulrich Schmidt, myself and the team, we clearly said we’ll take a couple of focused countries, a couple of focused regions and accelerate there.

How are we in these regions? In general, still small.

If I compare against the big giants, we’re still smaller, but in certain categories where we focus on we’re gaining traction and we’re gaining share. So that’s why you see relatively strong sales in this regions with relative moderate EBIT margins, whereas in Europe it’s exactly the opposite way, and always basically for net sales and still good margins.

And this business at the moment 50/50 more or less, so it’s fairly simple that will go over the time more towards probably 60/40. When that happens?

I don’t know, but I mean that’s mathematically going into that direction. And I think to the overall answer to your question is, we said our (inaudible) our first and foremost goal is to grow our business, and we have been one of the slowest performers in growth.

I think when you look now up, I think we are one of the fastest companies in growth in our categories and that’s where we want to be. We want to grow our market shares.

First of all, we want to get traction, get our products out and again I remain very, very clear as long as I have regions where I have potential, more important as long as I have great innovations which have potential, we will invest. And we go after that and we go significantly behind it, we will not stop there, and look what’s going to happen.

EBIT margin in the long run be okay, as we always said, but first and foremost we are on growth and market positions.

Just with your skin care as a percentage of sales, what would be the percentage for Latin America and in Asia, if you can compare those two please? Thank you.

That’s all.

Let’s say that the tendency – in Asia, the skin care market is huge, especially face care. Basically we use to build our brands via body care before we enter face care.

So we don’t anticipate to full extent that we could long-term in Asia. Whereas in Latin America, we have very strong personal care market, very big deodorant market, personal care market.

In Latin America, the skin care is (inaudible) certain extent to direct sales [ph] company. And as we discuss last time or before, there is a strong opportunity for us for modern trade taking over part of that business from direct sales and for us profiting from that.

We have very strong pharmacy business in all that countries. We are very strong in Eucerin in the pharmacy.

So we are also doing very fine in our skin care business in Latin, but still it’s limited.

Okay, thank you.

Hello gentlemen. Some questions on margins again, I am afraid.

So probably can you shed a bit of light on the strong margin improvement that you had in the Americas region in the quarter, also the exclusively Latin, what was the reason behind that, and particularly do you consider it sustainable?

Yes, we have had a nice increase that’s mainly due to increase in sales that we have. Investments normally in Latin America come in second half, because then the summer starts in Latin.

That means that we are in the high-single digit. There should be also medium-term because we regard that part of the world as investment area.

Okay, sounds good. And I noticed that in the second quarter despite actually the strong tesa growth, you had for the first time again a nice improvement in gross margin.

Can you shed some light on how much is the improvement from a better mixed effect or price effect due to the innovations, and do you expect it to continue to actually counterbalance some of the A&P increase in that second half of the year?

Yes, especially the case over the last years for tesa, already we have stronger development thoughts innovation, high-end products. We have very high investment done over the last decades in R&D and engineering.

So that’s – I think the fruits coming out of that, and we think it’s an ongoing development of the tesa business.

But probably I am also a bit misleading in my question. Actually tesa should still have the gross margin diluted for the Group in the second quarter or am I wrong?

Yes, tesa had a very strong increase in its gross margin, so that – under that I think the dilution. In fact you’re right, tesa has a stronger growth.

The gross margin will dilute because it’s not on the level of cosmetics.

Yes.

But if it’s doing a nice increase in gross margin, so we’re compensating it.

So in consumer you basically didn’t perform as strongly as in a Group level?

On consumer, you need to also pay attention there in the calculation, because at the moment while the emerging market grows like the 14% that we’re seeing at the moment, it’s rather diluting the gross margin because with more matured markets you still have higher gross margins. If we keep the overall gross margin means that we have done improvements in the single countries and it’s the portfolio effect.

Okay.

That keeps us stable. Okay?

Okay, helpful. And probably one last one on the Cellular launch.

If I am not mistaken, you are exchanging or replacing two lines with Cellular, do you expect also a positive margin and cost affect from the launch or how is your view on that one?

I mean the (inaudible) are good margin as you know, and there (inaudible) were very high priced. And that’s also new strategy as you know, we are basically coming with products which are eventually giving much more value, I mean when you look at Cellular that has a fantastic value.

I think that’s also one of the reasons why it works well, we particularly priced it at a level which is I think unheard of in that category. And this is in line with where we see the NIVEA brand is going to play.

It’s not going to be in the high premium things or the premium ones, we are affordable and we want to deliver NIVEA into every home.

Thanks a lot. It was very helpful.

Thank you.

Yes, good morning gentlemen. My first question is on the performance of the three main brands in consumer in Q2.

Did they outperform in line with average cost rate or was there any underperformer in the quarter? Secondly on the emerging markets, you mentioned some potential risks or heads [ph], are you taking any specific steps in order to anticipate or manage these risks, and are you becoming maybe a bit more careful in terms of your deliveries to your retailers?

I think you mentioned some destocking going on in Russia? What do you think about the inventory situations in Latin and in Asia?

And finally, a question on the cash flow. We see that it seem to have been increasing substantially in H1.

What is the driver behind the increase? Thank you.

Yes, on the three brands. I think all of them are doing extremely well.

NIVEA obviously is the bread and butter. I mean that is as we see growing extremely well.

Eucerin was even better in the first half year, also behind strong launches and La Prairie has a lot of launches coming out in the second half year. So I think all the brands at the moment are pumping at full blast.

Yes, regarding the risk in the emerging markets, you see that there are some market that were slowing down substantially especially Russia from strong growth even double-digit to minus, very similar development has been in Poland recently. We see also some other selective markets being much more moderate like India.

The consequence for us is that we are really tracking the inventory. We have internal system tracking also inventories of distributors.

You will be aware that at the moment where market decelerate that people will also reduce their stocks, and that have a substantial effect on the sell-in. So that had happened.

At the moment, we would not think that this is an ongoing effect but that was an effect that we have seen especially in those areas I was mentioning in the last six to nine months and will depend how emerging market overall condition will develop. More recent develop in some Latin countries, they are also not growing as fast as they used that doesn’t automatically mean that the retail market need to be effected, but that’s an pre-warning that would also pay attention to track stocks.

Okay, thank you.

Good morning gentlemen. Just two questions if I may, given there has been a lot so far.

One, in terms of cost savings and where we are on that plan, could you give us an update in terms of – particularly what’s going on in Europe from your actions there? And two, you clearly mentioning launches in Germany in particular to start with and then you rolled out from there.

Can you just give us an update of how many countries that Stress Protect and the shower moisturizer in currently and how many more are yet to come? Thank you.

Yes, regarding the cost saving, we have done that project two years ago. Restructuring as a consequence of the new operating model, that was executed in plan and all saving has been achieved.

The saving target has been done in first phase of 2012, second phase now in 2013. We have double-digit EBITDA [ph] effect this year, so it’s a big part of the effect of saving that we are going to see this year.

On the other hand, as I mentioned, we are reinvesting at the moment what we see is strong innovation and (inaudible) to be expected next year, that’s due to the restructuring in China that we are doing at the moment.

Yes, Robert. To the rollout, Robert, as always we are not giving any details here, but it’s clear that if something works, we go global, that’s clear, as long as the inside premiers [ph] where the consumers in certain countries.

And some have reached already far outside Europe, some are still going outside Europe. So far the only thing I can say to this innovations is I am extremely pleased about the three, four hits we brought.

They have clearly not even met, they have clearly overachieved our expectations so far. And the even better news is more to come.

So that makes me pleased, but we have to work very hard now in the months to come to gain the first mover advantage to keep this. I guess our friends from other companies will come one day.

That’s a legitimate and we’re preparing for that too and yes, and then next launches to be coming in 2014. So it’s a lot of work for my teams out there at the moment.

Lot of things they have to handle on the floor. And when you go across Europe and visit some stores, you will see a much bigger presence of NIVEA than it used to be.

My dream of Blue Walls is coming more and more true. The design is paying its impact, the new products are coming and I think consumers – and I think also the trade are recognizing that we are trying very hard to go back to the top.

Sure. If I can just go back on the cost savings program.

So are we saying now that all headcount reductions that were announced have been removed and there is no further benefits to come from that, or is that still working its way through the system in terms of SG&A efficiencies?

Yes, so when I was saying the program was fully executed, that the reduction in headcount has been finished in Europe. Therefore saving done.

On the other hand, it’s what the also aware that markets are developing much worth especially in Southern Europe than we have thought two years ago. And that we are happy to have executing this program in order to also prepare for the future.

The only thing that’s still remaining is that we need to also take a bunch of time and we have contract agreements. So everything in the project is finished, but now that just we need to run through this products into these contracts, which will take also some time into the 2014.

This is also why we talked about the initial step-up, 25/75 EUR90 million as you remember, that still holds true. The project as such is finished, but now the savings need to kick-in.

And as we just said, they are not for sure going to be seen on the EBIT line, of course we also reinvest.

Okay, thank you.

Thank you.

Good morning. If three short clarification points for me, firstly on A&P.

Is your guidance still for 28% to 30% of sales? There has been obviously a lot of discussion around your ambitions to reinvest, and also for the first time I think it’s actually been – a comment has been included in your outlook for 2013.

So we’re not sure whether we should look into that any further? Secondly, I read somewhere I believe that NIVEA entered little and oldie in Germany in H1?

Can you confirm that, and if so, perhaps give a little bit more detail in terms of product lines? And finally, clarification on volume price, I believe Jens said earlier, it was 100% volumes, so 6.5% volume in consumer, can you confirm that’s right?

Thank you.

Good. The first question on A&P again.

We are not giving any guidance here. Point is and remains, if we have chances to invest and that’s also in line with our supervisor board and our major shareholder, we will do invest and that obviously will impact the marketing budgets and further if we go ahead, but that is what we see inevitable to do for our business.

And on ID [ph] or other customers as you know, we have a clear policy, we are not commenting on any customer relationships, no listings, no anything. Regarding the volume issue, I think there the situation is quite different in parts of the world.

So the comments saying the growth coming from volume especially true for Europe, because in Europe you can’t – in this environment, you can’t do price increases, but we need to rationalize. In Latin for example, if prices need to compensate also inflation and the other, price increase would rather be 5% to 8%.

So we have not done the overall calculation for the company, but we need to look to it region by region. Focus at the moment has been Europe, so my understanding was that the comment was relatively true for Europe.

Okay. And anything on AAA in terms of price volume?

Yes, in the AAA you have very different situation. In some countries like China you have the inflation also salary grow like 10% every year.

So automatically you do a price increase also 5%, 6% in China. And all the other countries, it depends.

Okay. Thank you very much.

Okay. Thank you for all the questions and for having joined our conference call.

Beiersdorf’s next investor relations event will be the publication of our nine months figures on the November 5. Thank you for your interest in Beiersdorf and good bye.