Beiersdorf AG

Stefan Heidenreich - CEO Ulrich Schmidt - CFO Jens Geissler - IR

Toby McCullagh - Citigroup James Targett - Berenberg Bank Christian Weiz - Baader Bank Philipp Frey - Warburg Research

Good afternoon. Welcome to Beiersdorf’s Analyst Meeting.

Its our pleasure to have you all here in our headquarters in Hamburg today. We are pleased to have reported a year of strong organic growth.

You’ve already seen our sales figures on January 15. Today we’d like to look at additional aspects of the year 2014.

We will start our meeting with a message from our CEO. Stefan Heidenreich, who will talk about the progress we’ve made in the successful year behind us based on the Beiersdorf Blue Agenda.

Then, our CFO, Ulrich Schmidt, is going to talk about some financial aspects of last year and both the outlook for this year. And then the last part of the meeting today we will as always have the Q&A session.

So I suggest we get started now and I hand over to Stefan Heidenreich.

Hello, ladies and gentlemen and warm welcome to Beiersdorf’s full-year financial analyst meeting. Thank you for joining us today.

Ulrich Schmidt and I will report on the company results for 2014 as well as on its operational and strategic development. We will also provide an outlook for 2015.

Ladies and gentlemen, 2014 was a difficult year for the consumer goods industry. This makes us even more pleased with Beiersdorf’s success.

We remained fully on track in 2014. We again achieved above market sales growth since yesterday evening.

We also know that we were the fastest growing company in our field and increased earnings excluding special factors. We gained market shares and became more innovative and competitive.

We are truly on a sustainable profitable growth path. Our success is based on our clear business strategy and its systematic implementation.

This has made Beiersdorf stronger and more powerful. We’ve achieved a level of stability that gives us good reason to expect further growth even in the challenging political and economic conditions of today.

The Company’s strong performance can be seen in our results for 2014. We increased organic group sales by 4.7% and nominal term sales growth by 2.3% to €6.285 million following on from last year’s €6.141 billion.

EBIT excluding factors, special factors, improved by 5.9% from €814 million to €861 million, excluding special factors the EBIT margin was 13.7%, also a new record compared with 13.2% in the previous year. Profit after tax excluding special factors rose from €537 million to €581 million.

The Executive Board and Supervisory Board will propose a dividend of €0.70 per no-par value share bearing dividend rights to the Annual General Meeting. To the consumer part, the consumer business segment recorded organic sales growth of 4.8% in 2014 in nominal terms where it rose by 2.1% from €5.103 billion to €5.209 billion.

This positive sales trend was driven in particular by our three core brands, NIVEA increased sales by 6.2%, Eucerin by 6.0% and La Prairie by 5.1%.EBIT excluding special factors rose by 6.3% from €638 million in the previous year to €678 million. The EBIT margin excluding special factors improved from 12.5% to 13%.

All regions contributed to this positive sales trend. In Europe, we strengthen our market position in January sales growth of 2.0%.

Sales in Western Europe rose by 1.6%. Beiersdorf recorded especially strong sales growth in Germany.

We also saw healthy growth development in the United Kingdom and Spain. Sales in Eastern Europe rose by 3.6%.

In the Americas region, we increased sales by 6.2% with sales growth of 4.6% in North America and 7.1% in Latin America. Once again, we saw especially strong growth in Brazil.

Most other Latin American markets also generated good growth rate. Macroeconomic developments, however, in Venezuela and Argentina had a negative impact on the regions growth rate.

Sales in Africa, Asia, Australia continue to perform well with growth of 9.6%. Many markets in the region generated good or extremely good growth rates, although economic growth has eased in some of the markets.

The growth rate for the region was negatively impacted by the weak development in China. To tesa.

The tesa business delivered organic sales growth of 4.4%. In 2014, nominal sales rose by 3.6% from €1.038 billion in the previous year to €1.076 billion.

Sales rose in both the industrial and consumer businesses. Growth was once again driven by the electronic and automotive industries in the Americas and Asia.

This success once again reflects tesa consistently high innovation power. EBIT excluding special factors rose by 4.3% from €176 million to €183 million representing an EBIT margin of 17% compared with 16.9% in the previous year.

Ladies and gentlemen, we are satisfied with the year 2014. We have demonstrated once again that we can deliver profitable and sustainable growth even under less favorable economic conditions.

We are clearly on the right path of our business strategy, Blue Agenda. Our success is based on strong brands, high innovation, power, on expanding our presence in the emerging markets and our highly motivated people.

To our brands. We have truly outstanding, internationally successful brands and we manage them for success with our disciplined brand strategy.

In the past year, we significantly raise the profile of our core brands, NIVEA, Eucerin, and La Prairie and continued to successfully position them in the market for the long-term. At the same time, we increased our focus on the Labello, 8x4, Hidrofugal, Florena brands.

Our new division Pearl Brands aims to leverage the potential of these brands and to further strengthen Beiersdorf’s brand portfolio. To the innovations, Beiersdorf’s ability to develop and successfully market innovation is one of our key success factors.

Our goal is for our product range to precisely meet our consumers’ expectations, and wishes and as part of this process we’re increasingly responding to specific regional consumer needs. In 2014 one of our core achievement was to focus on and drive new product development.

At the same time, we are continually improving our long-term marketing strategy in order to better support our major innovation, hence to extend significantly the innovation cycles. Our success proves that we are on the right track.

NIVEA Deo Black & White, NIVEA Body In-Shower, and NIVEA Face Cellular Anti-Age have set long-term trends and establish new market segments. These innovations achieved double-digit growth also in 2014.

Other new product is NIVEA Q10 pearls, a highly effective anti-wrinkle serum. This is the first product to make pearl technology accessible to the mass market.

Also in 2015, Beiersdorf will continue to drive the market with further big innovations. Markets.

Beiersdorf remained firmly focused on European markets. The Company extended its position in the mature markets of Europe in 2014, increasing both its sales and its market shares.

The further expansion of our presence in emerging markets over the last few years has become increasingly important to the Company's success. These markets will continue to generate high growth rate in to the future, also the economic development is expected to be more volatile in the coming years.

Emerging markets accounted now for 52% of our consumer business segment in 2014. In the past year we actively expanded our development and production capacities in these emerging markets.

Our goal clearly is to focus product development even more strongly on regionally specific consumer wishes. In July 2014, Beiersdorf opened a production facility and regional laboratory in Silao, Mexico to meet the growing demand in the Latin American markets.

We also started building a production facility in Ahmedabad, India to strengthen our local footprint in India. This is expected to open already in mid 2015.

We are also are in the process of expanding our production facility in Santiago de Chile. The work is scheduled for completion in 2015.

Let me come to Beiersdorf people. Ladies and gentlemen, 2014 was a successful year for Beiersdorf.

Our more than 17,500 employees contributed to this significantly. The expertise, the motivation, the commitment, the passion, and their pride, each has to basically complete our corporate goals and have made Beiersdorf definitely better and more competitive than many of our competitors.

And I’d like to express my sincere thanks to our employees. Ladies and gentlemen, I’d now like to hand over to my colleague, Ulrich Schmidt, who will conclude this presentation with an outlook for financial year 2015.

Thank you.

Yes, let me continue with an analyst quote “growth story set to reaccelerate”. We feel operating model is right.

On the other hand, environment today is -- was out or with a little inflation, so what we see is the real growth and nominal perhaps slower number, but still market share growing and we see that. This is an ongoing trend.

Key figures for the group and to start with sales. Sales growth had been 2.3%, like-for-like 4.7% in all over the world.

You’ve seen that the gap was narrowing. Mid of the year we had a flat development in nominal, because of the strength of the euro.

Since then the trend had been reversed and today end of the year, now January, we even see nominal grow stronger than the like-for-like. So we commend always on like-for-like and that's the rest is depending on consolidation.

Beginning of last year, I had announced that our like-for-like definition is rather conservative because we translate sales of Argentina and Venezuela with actual exchange rate and not with like-for-like. So that costs of course substantial growth, but we feel that’s a proper definition.

The EBIT development in official numbers, including special factors have been slightly down from €820 million to €796 million. Same with profit after tax €543 million to €537 million.

To earning per share is nearly flat, €2.35 to €2.33 and that based of dividend payment. Here we accept that we’ve special factors and have officially and in euro flat earnings per share.

If we come to rather analytically clever a way of presenting and that's a continuity we always have than we have excluding special factors and you might recall special factor had been write down of the China brands that we’ve done because of the year. So operating business like-for-like had grown EBIT from €840 million to €861 million, profit after tax have grown from €537 million to €581 million, and the EBIT margin had grown from 13.2% to 13.7%.

Profit after tax margin grown from 8.7% to 9.2% and earnings per share in euro had grown from €2.33 to €2.53. Now we come to breakdown of sales and EBIT regionally and we start with Europe.

We had slight growth of 0.9%. In like-for-like it had been 2.4%.

That's mainly due to the ruble development and [indiscernible] that’s of course not in euro. So also there we had a effect of translation.

EBIT is on a very healthy margin of 17.2% and growing. Americas 2.2% of nominal growth, 5.6% of like-for-like.

We have seen that they’re not been bit more than 7% and U.S something like 4.5%. The EBIT development was flat.

We have 7.1%. Last year we had 7.5%, so that's standing and that's indicating that we had lost some profitability in Argentina and in Venezuela due to the currency effect and that of course translate the assets within your exchange rate and you’ve some losses in your books.

Africa, Asia, Australia we have grown nominal 5.4% and like-for-like 9%. The EBIT margin is proper one with the 11%.

Americas, Latin America and Africa, Asia, Australia are standing forward in emerging markets and what we see that investment is right to be done over proportionally. Now we have development of consumer sales and EBIT split.

You can see that since 2010 we have grown our share in emerging markets from 44% to 52%. And so profitability -- as a share of profitability from that part of the world had grown from 21% to 29%.

For those who follow the reportings year-after-year, there you can see that we have -- last year we had different number in emerging markets, that’s because we always implies in foreign exchange rate of last year or the actual numbers of 52% that we have today is was exchange rates of 2014. Same had been true last year as we’ve now lost in currency -- the euro had lost in currency that is a statistical effect.

In fact, also this year we had grown about 5% stronger in emerging markets than in mature market and that had been the case also here year before. So if we are here using the figures, we also announced.

If we were to translate it that was nominal figures, it would look like differently. For example, if we translate emerging market to mature market with nominal exchange rate of 2014, it would be 50-50.

So next year you might see 50-50 for the year 2014 and you might see again 52 or 53 or 54 for emerging market in next year. So this is very much statistics.

It might confuse a little bit. On the other hand, we want to be consistent with our reporting.

Now come to tesa business. tesa sales growth [indiscernible] had been strong.

The operating margin was even stronger than the very high last year. We continuously invest behind R&D infrastructure.

We are happy to report that last year Europe contributed nicely to the growth. Basically tesa drive sales with system solutions for industry.

We work together with R&D centers of our customer, we work on specifications, we try to optimize process -- production processes of customers. We invest into application engineering and sales force all over the world, but also in the emerging markets.

And finally we have grown substantially the number of people in our own labs mainly Germany, but also U.S and Asia. This year we will move into our new headquarter, also we will have a new lab here in Hamburg or North of Hamburg.

And tesa, people are very proud of that. It will also create new synergies and cooperation with each other and fuel the innovation further.

We have a look towards the capital expenditures. You can see that we’ve grown it steadily year-by-year.

We want to be prepared for the growth in emerging markets whereas we are just rationalizing and increasing productivity in our European plants. Last year we had finalized the investment to the plant of Mexico.

You have seen a picture. We have started a plant in India mid of the year.

We will finalize it in spring already. We have started to extend the plant in Thailand and we’ve enlarged the production plant in Chile.

So I think that will be the peak of our investment 2014 where we lower number 2015 and for the next year, so we should increase the capacity slightly in a number of countries like Thailand and India, had been the major investments. Come to the guidance of the year 2015 for consumer.

We see sales growth in the area of 3% to 5%, somewhat it’s very volatile. It's a rate that we think is a realistic one.

EBIT margin should be slightly above the year 2014 and tesa sales guidance for, let’s say, its gross EBIT margins might slightly be below previous year. So we have no clear sign of weaker market in tesa.

But we will continue to increase our investment level and secondly we move out of headquarter, move all of labs that have some extra cost of what we consumed over here. So the total group, we’d see sales growth of 3% to 5% and an EBIT margin slightly above previous year and the same is true for profit after tax margin slightly above previous year.

That concludes my presentation. Thank you.

Okay. So now we had a strategy update and the review of our full-year figures 2014.

Who we have the microphones ready, and then we can take your questions please. Okay Toby.

Hi. It’s Toby McCullagh from Citi.

Couple of questions. First is that you have turn to reproduce an analyst quote, that says the sales growth is set to reaccelerate.

You’re just on 4.7% this year, 4.8% in consumer and finished the year north of 6%. Your guidance for next year is 3% to 5%.

Are you saying that you disagree with that analyst view or are you trying to say that your guidance is erring on the side of being conservative, particularly given you -- where you are with the innovation pipeline? And secondly, just on the Pearl brands1 or the known big three brands, if you like, I [indiscernible] that in total they’re down about 5% in 2014.

I wonder how much of this you would put down to China hair and the destock there? Or put in other way what was the decline of the other Pearl Brands and what are you doing to turn those around and can those realistically turn positive in the near-term?

Thanks a lot.

Well, as always we start the year with guidance which needs all things in a way conservative [indiscernible] 3% to 5%. I think if you just look -- if the year would be a stable year, I think we’d be more towards the 5%.

If the year, however, continues to be as volatile as it looks at the moment, then the question is whether this 3% is more right and so on. What I’m trying to say with that is I’m of the opinion that this year will be one of the most volatile years I have experienced in my last 20 years and you will win -- you can win big time if you're eager, read to signs and direct your troops in a very speedy way.

I give a couple of examples in a minute. But a lot of things will happen from a political, economical situation just political I think you follow all yourself from the Latin Americas to the Russians to Syria, et cetera et cetera.

But just give you one example, what just happened in the first weeks of this year, you're all aware of that. First of all, we have a dollar strengthening, which continue -- started already last year, but it is now even higher that puts tremendous pressure on our American friends like never before.

Now on the first sight that looks good for us, because they have to come up with new ideas and the other thing that will not increase the pressure in the markets. Number two, you take something like the Indian rupee, you take the Southern rand, you can take even the dirham, a lot of things are going positive was, the question then is how do you use it?

Just bunk it into EBIT or are you using it to accelerate and win market shares? Having said that, you take the Swiss francs, right?

The Swiss franc caught, I guess, all of us by surprise, that suddenly the price premium which we have between Swiss border and German border increased from around 20%, again up to 35%. And this means you can't wait.

This means you’ve to act the next day and get your brand into position. Those who act fast and act smartly and find the right way can win big.

Another thing which I think is a never heard situation at the moment is the Russian situation. I can repro that over the last months we have significantly increased growth and we enjoy at the moment record market share wins.

On the other toll, we’re all aware that price increases have to take place at the moment and they're taking place. And we hear or have seen announcements of price increases in unprecedented matters.

Again the question is how do we act is at one and do you take share, do you gain share, do you follow? So a lot of questions and it has been already in these weeks, very good.

The bottom line is that actually at the moment we’re better off than our competition, because we're not an American company, we are not a Swiss company. And so a lot of the things play in the positive way, yet I still think times are very volatile.

And that's why I was saying bottom line the 3% to 5% guidance is a very good guidance. Now depending on how the market goes, you can take it this way or that way and I think during the course of the year, Toby, we’d be a lot clear of where it heads to.

As I said already in my presentation, we do expect this year a relatively slow start into the year. Totally different to last year, were we started very strong, but there also we had quite a lot of the Chinese stockings in.

And we will have I think pretty strong Q2s, Q3s and then the quarter four I would say it depends a lot on how our innovation would. Obviously we will come with a lot of good innovation which also which is a smile on my face.

But again they also have to prove in the markets. So overall are we set for the storms?

That [indiscernible]. Are we going through the storms?

Definitely. The question is, how good are we going through the storms?

That’s the only question. And I find it a fascinating year with all this things, because I think Beiersdorf -- [indiscernible] or NIVEA has always proven then in difficult times.

My predecessors had a good hand and I hope that my team -- only in my team we have a good hand this year.

Regarding the other brands?

Yes, the other brands is I think all I mean, first of all, our three core franchises which comprise the majority of our turnover, all in the range of 5.5% to 6%. So that's good.

Within the sectors we have categories growing over 10%, categories also in the low singles. Coming to the other brands, we -- that's anyhow a long-term quest, I mean, you will not call it Pearl Brands in the next year, you expect already results, what we can report is we have very good success or we see good success behind Labello.

We see extremely good success behind 8x4, why? Because we're riding the aluminum [ph] free trend in Germany, which is a very particular trends only in the German speaking markets.

We have quite some good success behind Hansaplast again, just putting our effort [ph] behind it. We have to work still hard on the China hair care brands and we still have to work very hard on Florena.

So big spec at the moment, but taking into consideration that is only a year, some good signs.

Hello it's James Targett here from Berenberg. Just a question on where you see your input costs for this year and in particular obviously with the oil price and BET?

And how you see that translating into margins and obviously pricing as well in both consumer and tesa? Thank you.

Yes, so you all have seen oil price coming down. Well, of course we had done some calculations saying to which extend its affecting us.

Same is also true for dollar nominated procurement where we have very much indirect effects, because it was a -- of course a volume we’re purchasing and oil is limited. On the other hand, freight contracts depend a lot on the oil contract and a number of other one.

We profit from that this year into course of the year we will see effects, so that would be rather single-digit euros. In euro and dollar its same situation, we normally have euro contracts.

We have hedged. Normally we hedge 35 -- 75% of what we have, so if we see effects coming later, still in the course of the year we will see something also in production, in raw material.

Effect would also see high single-digit euro coming from that. So that's a status of today.

It can change even the next months, so we'll see how that trend develops.

Can I just ask you if -- that will lead to any change in your attitude towards pricing and promotions this year?

Of course, we are not talking about pricing. And as I said before, I mean, oil prices I did not mention yesterday, Venezuela the currency started to react again.

We have the Chinese markets I mean -- we have -- I can only say we have to be very eager. Don't expect that also we see pluses.

If I have pluses, I rather invest further. I think it’s a year which you can take this way or that way and I repeat, we will definitely seek the chances and the opportunities and my teams are on fire, they are really on fire.

We are the fastest growing at the moment among our peer group. We win market shares and we will continue to do it.

I think it's a year where we can win shares, that's what I told my troops and I think we'll do that. Now that means rather investing than bunkering money for the margin.

So that -- that's why the guidance is also good that even if we see pluses, we rather see the chart [ph]. And yes, we will see how that goes over the year, but it’s very volatile at the moment and a lot of things at the moment happening and only an eye, we just spend 2.5 days with the Board.

It’s fascinating at the moment, but very unstable and it’s such that you can’t say what you planned in September, October is the same with what situation you’re here. And I mean that positive, that's what I want to bring over.

As you have to seek the chances and be very fast, very fast. And there is something in Switzerland when you may be on that one, of course you have to act.

Of course, you have to act. Its clear that in the end of the day, everything we do is to watch the consumer and the consumer will not appreciate a premium of that size to the German market.

So you got to act. And that means, you got to do something and that means you have to do there was a trade and that means in the end you’ve to restructure your business.

The people, you have to fundamentally think about your model of how to do business in Switzerland. That's what we're doing.

Christian?

Hello, Christian Weiz, Baader Bank. After the question regarding your CapEx, you said that this €301 million amount is rather the peak.

So I would assume this is largely for Mexico and also the new headquarters of tesa. So if you look into 2015, what would be a reasonable amount that we should assume?

Then you were mentioning that you continue to invest in Thailand. What shall we assume after this peak and after 2015?

What's an amount that we should assume for the years thereafter? Was that -- is it kind of a maintenance type that should come later on?

It was the base that we have in terms of depreciation is about €100 million. And so as I said it's a peak.

I clearly mentioned that this year ’15, we might have €200 million and years -- the following years less than that between €100 million and €200 million.

Okay. And then, maybe if I may a follow-up on tesa.

I mean this new headquarter seems to be finished now and you mentioned that you’re going to relocate into these new headquarters. Will this run against your reported EBIT or will you take this as a one-off?

So the issue is mainly to which extend you can activate the cost. So of course as this is also affecting a text position we try to write down part of the cost and activate it to a reasonable extend.

We will not have an effect of double-digit euro, but we have some million of effects from that. That being partied through also this year, we will continue next year and then we will have a better year 2016 because the effects are over.

Okay. Toby again [indiscernible]

Hi there. Just a follow-up.

I want to put some questions about the moving parts behind the other operating income, which was pretty significant in the quarter. Is there anything that we should be aware of either in the comps or can you just talk us through the major moving parts in that part of the business?

Yes, the operating number of provisions in we’ve had announcement about anti-trust that we had also to build the provision for. And then you have other operating, you have exchange rate effects.

So normally we book against actual exchange rate when we buy goods and when we sell. The hedging effects we book -- the effects out of hedging we book on the other income.

So that had been the case last year. We had a big part in and this also affects this year.

So anti-trust provision and hedging that are heading up.

Can I just clarify? The French anti-trust was taken in 2013 not 2014, so is it the absence of taking of charging for that provision that creates the big delta year-over-year?

As the anti-trust had also been to ’13 because we were building provisions, therefore the effect was limited that we have last year, because mainly we had built a provision for the €72 million. And now that was just the balance.

Yes, so there was in the other operating result that was the steps, so to say, coming from roughly 5 to 45 when you look at the numbers. Clean so to say and that is the absence of the charge for the provision and what's driving that one and please keep in mind we always get lot of questions on the other operating result, because the income side and the expenses side and the above worth roughly €200 million and of course as this also lay to around zero, there are always questions coming up with this every year and every quarter.

But this time the clear reason is that we had these enormous, so to say, provisions then built over the last years and that had a positive. So it looks positive in this year's number.

Warburg please?

Yes, Philipp Frey, Warburg. Can you elaborate a bit on your regional margins?

It's been very successful in Europe, if plus on the 20 basis points. Now a bit comment -- further comment on the effect of exchange rates in the Americas?

Would you have been up if you exclude Argentina and Venezuela and also the movements you’ve seen in the Asian margins and your outlook on that one? And probably also on the level of A&P spending, first of all, what’s the Q2 and Q4 and we’ve generally see now in the industry that A&P spendings have come down a bit or particularly actually the advertising part of the degradation [ph] and what are you seeing in the industry?

Do you expect this to continue or particularly you also step up your advertising effect -- efforts now with your strong momentum?

Well the second part is very clear and [indiscernible] same way if you and my management team would be sitting here, message would be very clear, step on the gas. Second thing, however, same token it is get more efficient.

And I think what we have proven its very interesting we did lately a couple of analysis because we wanted to look at a bigger scheme, we actually have significantly increased the effective media. These are little consumer and we’ve significantly reduced what we call the non-working media.

And that leads at the moment, because it's true what you say [indiscernible] competition has -- it's also one of the reason why quarter four went good. Competitions are very simple, they basically announce big margin increases then the same quarter four gets tied.

What they do, they take the gas away and that means we get shelf voice shares which we only don’t enjoy. So come to quarter one, we have back to even again and we see what happens.

But also there to the point we had before, just because I want to sense you a little bit, in Russia for example, we just got yesterday with the night before the media expense in January have come down by 25% in our industry. Now we have not stepped down.

So -- but that means again that’s decisions which you’ve to take, how much you want to spend against certain markets. In terms of the margin, its very simple also like we always said, Europe remains the cow, delivers the milk as we’re getting better in the Americas region, [indiscernible] effects of Argentina, Venezuela, Ecuador we would have had great results that’s part of life.

And when it comes to the price [ph] it’s a mix deck, very strong in Japan. We actually became number one in our categories first time ever.

I think its the only western brand obviously we have a very healthy joint venture with Kao, but we will have the majority, we became the number one in our categories. [Indiscernible] is the only brand which achieved it and it [indiscernible] really Japanese, the NIVEA brand there.

And we're doing quite well in Southeast Asia, but had terrible market conditions lately. Vietnam coming down, Malaysia coming down, also Thailand being bettered, so that situation there changed quite heavily.

South Asia pretty good, also still position -- small position there growing at tremendous rate. And yet China remains a miracle I guess for all of us.

And you enjoy all the financial analyst meetings, so I don't have to tell you too much it's -- that’s a moment, the situation which everybody tries to egress, what really happens there and you see certain trends, but that doesn’t give you the answer. So I think I have obviously contracts left, right, center and I mean I think the majority I heard is downturns of 20%.

I even heard downturns of 20% from companies which you would not expect even in January. So it's a very volatile market there in China at the moment.

So cards will be newly laid out and yes, that’s the situation on the regions and the margins and over time we see, then you have to take deeper and deeper there where we win or gain a certain market position, you always call that a number one, number two where fairly easy also to see good margins. But at a lot of markets, we invest into the markets and as I explained several times already before that has to do with the history that would be a relatively small on the emerging markets do and that has to grow in that cost investment and that’s why the margin is lower.

Any other questions?

Hi. Thanks.

Just for the follow-up, actually just two on innovations. Firstly, on the Q10 with Pearls, I guess last time we spoke they were relatively new in the market.

Can you just elaborate a little further on progress there? Perhaps where they have gone -- which markets they have gone into and where we should expect them to go into the relatively near-term?

And then secondly, again relatively recently you’ve spoken about having recent innovations in four of your six main categories. Should we expect the new innovations that are currently in your pipeline to be in those categories still or in the two where we haven't seen them?

Or I think -- correct me if I’m wrong, but you have alluded to perhaps testing out some innovations into new adjacent categories, is there anything that you can update us on there? Thanks.

I have to be very careful now. A lot of good questions.

Unfortunately I wouldn't even answer all the ones. Well, let's start, first of all, it -- as I explained in the last time, it is very, very positive that we see in certain categories innovations which are now running already into their fifth year.

Black & White again enjoyed double-digit growth on much higher basis than any other innovation we did. And you take In-Shower, also took double-digit growth and I can say because its -- that is not I think an issue.

The first signs in America look tremendous, what that means? First signs means, not conclusive, first signs means smiling, but I mean we need to see repeat rates and that would take months, but the first signs are wow!

So that is a [indiscernible] and just by having these two big hits it means that the power or the focus of the priorities you put behind this two in terms of new innovations limited. So if the team would be sitting here and they will present data to me and I wouldn't see Black & White on one to three in Deo, I would get very angry.

At the same on body, I think In-Shower, we are in the third year we’re riding that bonanza like nobody had. And it is very interesting on Black & White probably to you, because I know you’re always very interesting is like why we now have hundreds of copycats, we still remain the leader there.

And on In-Shower it is very interesting because we know it's extremely difficult formula. There are not a lot of people who follow it out there.

We still enjoy the relatively unique position. Taking the Men part, we are successful with the Sensitive line, which fits very much the NIVEA Men image, we will continue.

I do expect more innovations in Sun, but not in ’15, but coming that’s the demand from [indiscernible] that I say on Sun we should be better, but we need more innovations. We have as you said on face a couple of hits in.

Pearls where we launched we see very, very encouraging results. So it's also interesting that I have to make that remark, that Chanel launched Pearls in December and now we saw [indiscernible] with Pearls unfortunately for price of €350 upwards, so you can for have for 1395 an equivalent alternative.

So -- but that says that Pearls will come and Pearls is still what you see in the Pearls technology is amazing and I think we'll have a lot of Pearl technology coming up not from us, from others, this is just the start, but there are many possibilities with Pearls which were not been able before. And then it's true we are testing in some markets, some hot stuff.

Now that you have to find out by yourself, but I think soon you will hear it in one way or another. Let's see how that works.

I mean, test markets, it’s the old style of basically saying look, trying feels [ph] with a new innovations, not heard of, which come out of R&D, where you give it a try. And since we’re extremely innovative at the moment and we have a lot of new innovations, sometimes it's a question because we can’t launch it on NIVEA, where can we launch it?

What can we try? So these questions are now coming up.

And it's a fascinating thing at the moment. So innovation pipeline wise Toby, I think we’re full, quite full.

I mean there are certain areas where we would like to be better. But I think so far if I look at all our six categories and I look also vis-à-vis the competition and now a little bit arrogant from them, there is absolutely nothing.

And that you also see in the shares. Nothing which I found, I fall all over.

So -- and especially now this year, I can see [indiscernible] things. So we see and wait what the competition will come up with, but so far we are running the trends and I think you'll hear that from the consumer and the customers now.

This is [indiscernible]. You said earlier that you see a relatively low slow start into the year and expect an acceleration towards the second half.

And this is purely based on your innovation or is that just your assumption that we're going to see an overall melioration [ph] of the environment?

No, its purely two factors. One, that we know what happened last year in China and the correction started to take place as of April, May as you all are aware.

And since we clean it up, we are running now against the high China first quarter. And then the second thing is the acceleration of the innovations which will take place.

And that is normally, I mean, innovations come in more during the first quarter. It also depends on how we do with the customers and whether you find your year-end contracts and all the rest of it.

Normally they really kick in as of quarter two. End of Q&A

So I see no further questions. Well, then I will say this concludes our Q&A session.

Let me just remind me before -- let me remind you before we close, Beiersdorf’s next investor relations event will be the publication of our Q1 figures on the 7th of May and we also have the AGM on the 31st of March. So thank you for joining us here today.

Goodbye.