Beiersdorf AG

Good morning, everyone, and welcome to our full year results analyst meeting. I'm Jens Geissler, and here with me this morning is CEO, Stefan De Loecker; our CFO, Dessi Temperley; and for the first time, Astrid Hermann, who joined the company at the beginning of the year and will take over from Dessi.

Welcome, Astrid. As you can see, due to the continued development of the COVID-19 situation, this year, again, we're having this online setup for our full year communication.

As you know, we already pre-released our results last night as part of an ad hoc announcement. So today, first, on our agenda is a review of the year 2020 from Stefan.

The financial figures will be presented by Dessi and Astrid. After Stefan's closing remarks, we will have question-and-answer with you as always.

So okay, let's get going now, and I hand over to Stefan De Loecker.

Good morning, ladies and gentlemen. For the second year in a row, I welcome you today to a digital annual press conference.

I hope, however, we will see each other in person again next time. I would first like to give you an overview of the last fiscal year.

Dessi Temperley will then present our 2020 business figures and financial performance in greater detail. Afterwards, I will introduce our 2021 priorities, and Astrid Hermann and I will conclude with an outlook.

But first, I want to highlight 5 points that are important to me after the year 2020. First, it was a year of exceptional challenges.

In spring, the skin care markets decelerated by up to 20%. In this extremely challenging market environment, we were very successful.

We significantly gained market shares with all strategic brands in all skin care categories and in all regions. Overall, in 2020, we won more market shares than during each of the past 5 years.

Second, this success was enabled by our early and successful crisis management and by our employees who surpassed themselves. In my 30 years in business, I have never seen consumer needs change so dramatically so quickly.

Our response to these changes was agile and fast, for example, when we refocused our activities in March on products for hand washing and hand care. Third, 2020 was not an idle year for Beiersdorf.

On the contrary, we continued to invest in our future and made significant progress in implementing our C.A.R.E.+ strategy. I'll come back later on the success of Eucerin and the achievements of our sustainability agenda to demonstrate this progress.

Fourth, C.A.R.E.+ is delivering. The COVID-19 crisis has accelerated the digitalization of consumers and society as never before.

And at the same time, we want to take increased responsibility on driving a more sustainable world. Therefore, we increased our investments by an additional €300 million over the next 5 years.

Yesterday evening, we published the details on the effects of this investment package on our expected 2021 figures. Fifth, I am confident that the skin care market will show recovery by the end of the year.

Over a longer term, the skin care market remains highly attractive for which there are multiple reasons. The world population is still growing.

People also live longer, and health and well-being become even more important. I'm convinced that our focus will help us to shape the future of skin care, and therefore ensure competitive and sustainable growth.

Now let us first have a look at our 2020 financials. At approximately €7 billion turnover, our group sales were 5.7% down on the previous year.

This decline was mainly due to the second quarter. Business picked up again in the third and fourth quarters despite the new pre-Christmas lockdowns.

Our Derma cosmetic brands, Eucerin and Aquaphor, performed very well with over 8% growth, driven by double-digit growth rates in North and Latin America and in Asia, with market share gains in almost every single country where we operate in. Also, Hansaplast was affected by the COVID-19 crisis, mainly lockdowns, and by limitations in sports and fitness activities.

In 2/3 of the countries, however, the brand won market share. NIVEA further strengthened its market leadership positions.

In Latin America, Brazil, where we posted double-digit growth, and Mexico lead the way. Significant market shares were gained in Southeast Asia, led by Thailand, Malaysia and Indonesia; and in the Africa and Middle East region in South Africa and Saudi Arabia.

Even in Europe, which has been and still is particularly affected by lockdowns, we increased market share in key countries such as Germany, the U.K., the Benelux, Northern Europe and Switzerland. This successful in-market performance of NIVEA, Eucerin and Hansaplast is based on 3 main factors.

First, we managed to continue to launch our innovation pipeline as planned, supported by strong marketing and R&D investments. Secondly, we exponentially increased investments in digital media and the development of our e-commerce activities.

And this paid off. In the United States, Beiersdorf was one of the fastest-growing body care companies in terms of e-commerce.

We're able to further expand our digital market share in Germany, where we are the market in e-commerce, the U.K., the Benelux countries, Brazil and India. All in all, our online business grew by 50% and now makes up a high single-digit share of our total sales.

And third, we continued to serve our consumers at an almost normal service level, notwithstanding challenges in the supply chain, such as closed borders. Of all the brands in our portfolio, La Prairie was most hit by the impact of COVID-19 on its most important channel, travel retail.

Also in the crisis, our top priority was to strengthen the La Prairie brand as the provider of the world's most exclusive skin care. Therefore, we consciously continued to abstain from price promotions and brought innovations as planned to the market.

The strategy is paying off as La Prairie regained growth momentum in the second half of the year, particularly driven by the Chinese domestic business, which recorded strong double-digit growth rates for 2020 as a whole. Also, tesa is bouncing back.

After a difficult first 6 months, tesa sales exceeded 2019 levels in the second half of the year. This speedy recovery was mainly driven by electronics and do-it-yourself channels.

This concludes the numbers on 2020. Caring for the health and safety of our employees has been our highest priority throughout this COVID pandemic.

In March 2020, at a very early stage in the pandemic, we allowed almost all employees to work from home whenever, wherever possible. Extensive safety precautions were put in place for all those unable to do so.

We're all working together. We keep the infection numbers low and, above all, prevented chains of infection in the company.

Our staff both at Beiersdorf AG and in our shared services were willing to temporarily forgo some of their salary as we were, all our senior managers in the world. Thanks to their solidarity, we were able to mitigate some of the impacts of the crisis.

This solidarity pact for employment allowed us to avoid resorting to redundancies or the German government's short-time working scheme. In fact, we continue to recruit and train young people for the future, and I'm extremely proud that we managed to match the previous year's offering of our apprenticeships and training ships.

We care for our consumers and our business by understanding and continuing to serve their needs. We significantly ramped up production of hand and body care items overnight and experienced -- expanded our online presence and e-commerce business.

The hygiene measures we implemented allowed us to keep factories and R&D centers operational. Finally, Care Beyond Skin to help vulnerable communities in society battle COVID-19.

At the end of March 2020, we agreed our international COVID-19 aid program worth €50 million. It is the largest humanitarian effort in our history.

The program not only provided immediate relief but also to mitigate long-term consequences for those particularly affected by the pandemic. All this was only possible because everyone at Beiersdorf rolled up their sleeves.

And for this, I want to thank our employees. Ladies and gentlemen, 2020 was also year 2 of the implementation of our C.A.R.E.+ business strategy.

A wonderful example of the strength of this -- of our strategy is the performance of Eucerin. We formulated Eucerin's purpose: We believe in the life-changing power of dermatological skin care.

I believe there's no better demonstration of this than Thiamidol, our patented active ingredient to reduce hyperpigmentation, which I introduced at my first annual press conference in 2019. It is no exaggeration to say that consumers are delighted.

Eucerin's Thiamidol range is the most successful launch in the brand's history. Thiamidol has also allowed us to enter key growth markets such as China, Brazil, Russia.

This is a second priority of C.A.R.E.+. We also invested in the digitalization of our derma brands.

For instance, in China, we launched Eucerin as a digital-only brand. Eucerin is benefiting from online shopping and increased online portion of its sales by over 75% in 2020.

However, digitalization was not only the focus for Eucerin in 2020. The future of skin care is personalization.

After all, we're all different, have different needs and are exposed to different external factors that influence the condition of our skin. Digital technology will allow us to unlock that opportunity.

We have, therefore, invested heavily in recent years in gaining a better understanding of our consumers' individual needs through our Skinly project. Launched 3 years ago, Skinly is an in-depth international scientific project to understand people's individual skin needs.

Over 12,000 women worldwide have completed more than 2.5 million individual skin measurements and helped to create a database of over 67 [Technical Difficulty] recognition as a Climate A company by CDP, a nongovernmental organization that rates companies' climate protection efforts. One area where sustainability is tangible is packaging.

With our innovative NIVEA Naturally Good body lotion bottle, we are reducing weight by 50%. We also switched 90% of our PET bottles in Europe to recycled material.

Packaging and ingredients are important components of our commitment to sustainability and obviously also have a positive impact on our ecological footprint. After the Consumer Business reached the target of meeting 100% of its electricity needs from renewable resources in 2019, tesa followed last year.

I have already mentioned the rapid recovery of our tesa subsidiary in the second half of the year; tesa considerably outperformed the overall market. It benefited in all business areas putting a strong focus on innovation and specialist applications.

For example, specialist adhesives for digital devices benefited from the high demand for tablets created by home schooling. In the automotive sector, tesa attracted new customers with products for the insulation and mounting of battery cells, playing its part in the industry's transformation towards e-mobility.

Meanwhile, tesa's do-it-yourself business benefited from the growth of digital sales channels and the boom of DIY stores during the pandemic. Ladies and gentlemen, my colleague, Dessi Temperley, will now give you an overview of our business figures and performance in 2020.

Thank you, Stefan, and good morning to everyone. As always, I start my presentation with our key figures at the group level.

Group sales decreased organically by 5.7%. Foreign exchange effects and the net impact of acquisitions and divestments led to a nominal decrease of 8.2%.

In 2020, we incurred exceptional one-off costs of €78 million, mainly related to restructuring projects in the manufacturing area, integration costs of the Coppertone business plus the related impairment charges in Northeast Asia as well as the costs associated with the announced Care Beyond Skin program, which Stefan already talked about. Excluding these special factors, our EBIT margin at group level decreased by 140 basis points versus 2019 to 12.9% with the main drivers being volume deleveraging, negative mix, foreign exchange transactional headwinds as well as increased investments in our sustainability and digital road maps.

Profit after tax margin decreased to 9.1%. That's 120 basis points below the previous year's level.

With the effective tax rate, excluding special factors, it's 29.2% in line with our earlier guidance. We remain on track to achieve an effective tax rate of around 28% in 2021 as per our C.A.R.E.+ commitment of 2 years ago.

Earnings per share decreased to €2.73 from €3.40 of prior year. Now some details on our performance by segment.

Consumer sales decreased organically by 6.6% with a nominal decrease of 9.1%. Foreign exchange effects had a negative 3.8% impact, while net structural effects of acquisitions and divestments were a positive 1.3%.

The consumer EBIT margin, excluding special factors, decreased to 12.3%, driven by the impacts of the pandemic, which I mentioned earlier. [Technical Difficulty].

The performance was underpinned by the double-digit growth in the U.S., Latin America and Asia. The Thiamidol product line, as part of the Eucerin brand, continued to materially outperform the market and contributed significantly to the growth of the Derma business.

Healthcare recorded a sales decrease of 5.9% for the full year. During the year, we saw a mixed picture by quarter, very much driven by the high volatility in demand.

In the last quarter, negative growth was significantly affected by the second wave of the lockdowns. Despite the volatile demand, we consistently recorded strong market share gains in the countries where we operate.

The performance of La Prairie was materially impacted by the global travel restrictions. The strong growth in the fourth quarter is driven by the continuous growth in China as well as the domestic travel around the Hainan Island.

We also need to mention here the positive one-off impact of the pipeline refilling in the fourth quarter against the weak quarter of the previous year. Due to the lockdowns and travel restrictions, 25% of the global distribution remained closed at the end of December.

In 2021, we see headwinds, especially in Europe and Australia, where markets are affected by ongoing lockdown measures. At the same time, we see strong momentum in the domestic Chinese market, as well as accelerated e-commerce sales globally.

We now move to our performance by region, starting with Europe. Sales in Europe decreased organically by 8%.

Western European sales decreased by 8.6%, driven by negative growth in Spain, France and Italy, which were all hit hard by the pandemic. Also important to keep in mind is that the travel retail sales of La Prairie are reported under Western Europe, and this faced a material contraction in 2020.

Eastern Europe sales decreased by 5.8%, with demand being very weak especially in Russia and Poland. Eucerin recorded strong growth in the categories of body and face in both Eastern and Western Europe.

In the Americas, our top line grew by 3.2%. Despite the challenging market environment, the business in North America delivered slightly positive growth.

The main contributors here were all -- were our Derma brands, Eucerin and Aquaphor, both with double-digit growth. The Coppertone integration has been running as planned.

While we had a difficult season for the sun care market, we managed to reverse the trend of a weakening market position of the Coppertone brand and improved our market share situation month after month. We are looking forward to starting the 2021 sun care season with an enhanced pipeline of innovations here.

In Latin America, we reported strong growth of 5.4%. Excluding the devaluation impact of the Argentinian currency, which is factored in the number, the growth was at 9.1%.

The performance highlights are the businesses in Brazil and Chile, both with double-digit growth in the year. From a category perspective, NIVEA Body and universal creams were the best-performing categories; while Eucerin and Aquaphor also reported double-digit growth in the region.

In the Africa/Asia/Australia region, sales decreased organically by 10%. Consumer demand in India, Japan and Thailand have been materially impacted by the pandemic.

The continuous restrictions in everyday life caused significant sales decreases throughout the year. On a positive note, our Eucerin sales had solid positive growth in the region underpinned by the growth in the face category and the launch of Eucerin in China.

The development of our gross margin was impacted by a number of headwinds linked to the challenging environment of last year. The consumer margin was down by 110 basis points in the year compared to 2019.

While overall pricing was marginally positive, we faced a material negative impact of 80 basis points from currency devaluations in emerging markets. Another important factor for the decrease in gross margin was the mix effect of minus 60 basis points, driven by the lower sales in La Prairie and NIVEA Sun, as well as consumer demand being stronger for essential personal care items where the margins are slightly dilutive.

We're pleased, however, to report net positive cost effects coming from the focused execution of our efficiency initiatives and more than offsetting the additional COVID-19 operational expenses we incurred in the business. In our C.A.R.E.+ strategy, we have committed to a continuous reduction of working capital year-on-year; and despite all the headwinds in 2020, we managed to deliver on this commitment.

Working capital on a 12-month rolling basis in consumer decreased to 9.1% of sales in 2020. After the strong improvement in 2019, we are proud to say that we managed to further improve both our trade receivables and payables, while consciously increasing our inventory levels in order to serve our customers given the volatile demand patterns.

We will continue our focus on this KPI as we see further tangible improvement opportunities in the midterm. Moving now to the performance of our tesa business, which was also strongly impacted by the pandemic in the first half year of 2020, leading to organic sales decrease of 10% for the first 6 months.

In the second half of the year, however, we managed to regain momentum, delivering minus 1.5% of sales growth for the full year on a like-for-like basis; tesa finished the last quarter with a strong growth of 8%. The recovery in the second half of the year was mainly driven by the continued solid demand in the electronics sector in Asia and the partial still subdued recovery of demand in the automotive sector.

The trade markets segment proved to be resilient throughout the year. The positive trend of home improvements continued in the second half.

Sales in hardware stores and online in the consumer and craftsman division in Europe brought the full year up to 0.8% in the trade markets segment. We reported an improved EBIT margin, excluding special factors, of 15.4% despite slightly lower sales.

While we continued the investments behind the strategic priorities of the business, the 10% increase versus previous year is mainly driven by cost-savings initiatives, which we already started at the end of 2019, as well as a positive gross margin mix coming from the electronics sector's growth. With this, I conclude my comments on the full year results, and I hand back over to Stefan.

Thank you, Dessi. Ladies and gentlemen, in many parts of the world, specifically in Europe, the COVID crisis continues to impact our business in the beginning of 2021.

Nevertheless, we look optimistically on this year. We will see substantial improvements by the end of the year, as vaccinations gather pace in many countries.

In 2021, we will further outperform the market and will continue to invest. The additional investments of €70 million to €80 million a year I announced in 2019 are paying off.

We'll start another front-loaded investment program of €300 million in the next 5 years. Today, consumers expect much more from brands and companies than products and services they provide.

They expect them to take responsibility for society and for the world in which we live. In 2020 therefore, we sharpened the definition of the value our brands can create for people.

Taking care of people's skin allows them to connect with each other to build meaningful relationships. This is NIVEA's heritage, which we should further step up, as we define the brand's purpose to care for human touch to inspire togetherness.

Eucerin brought this brand purpose to life with a new global brand campaign in the reporting year: We believe in the life-changing power of dermatological skin care. And our Healthcare brands, Hansaplast, Elastoplast and Curitas, also have a clear purpose: We've got you covered, for a life uninterrupted.

It concisely expresses the role our health care brands play in people's day-to-day lives and providing comfort and peace of mind by delivering fast and easy care for everyday cuts and scrapes. The future of skin care is personalization.

We understand people's skin better, and we will take this a step further in 2021. We have developed a number of pilots to explore personalized skin care offers based on our Skinly project.

A great example of -- is our new O.W.N brand. O.W.N stands for only what's needed.

We are currently launching it as a direct-to-consumer business in Europe. It uses the latest technologies and finding some skin research and develops a care routine that precisely matches the consumers' personal needs.

Based on artificial intelligence, we can offer the perfect product solution from more than 380,000 formula combinations, individually tailored to the specific skin profile, lifestyle, seasonality and location. Take a look for yourselves.

O.W.N is just the first example of how digital technology unlocks skin care innovation. It goes without saying that we will also continue to leverage digital technology in marketing our brands and products.

In 2021, we will enter a strategic global partnership with Google and work together to inspire consumers with innovations. 2021 will also be a year of further strategic innovations.

Following a successful launch in Thailand, we launched NIVEA Cellular Luminous 630 anti-dark spot care range to Europe and other important markets around the world. The innovative formula of NIVEA's Luminous 630 is the solution for all consumers who suffer from facial dark spots for an even complexion and a natural glow.

We will also continue to consistently drive forward our sustainability efforts. We continuously examine whether we can achieve product improvements and our goals such as in the area of climate neutrality even faster.

We will launch the first completely plastic-free cleanser from NIVEA, which is also eco-certified, WONDERBAR. NIVEA WONDERBARs are skin and eco-friendly, soap-free facial cleansing bars for everything, from makeup removal to deep cleansing and peeling, all with NIVEA's familiar effectiveness.

The idea is to offer a plastic-free solution that covers the entire facial cleansing routine. With Eucerin, we want to, obviously, further expand the Thiamidol's success into new categories.

With Eucerin Actinic Control with sun protection factor of 100, Eucerin offers clinically proven protection against sun-induced skin damage. With this product, we provide a protection for consumers with actinic keratosis, the most common precursor to skin cancer.

Just a few weeks ago, we implemented the largest brand relaunch in the history of our Healthcare brands, Hansaplast, Elastoplast and Curitas. They now offer new and improved product innovations in a more sustainable packaging.

La Prairie expands the most exclusive collection Platinum Rare with Platinum Rare skin rejuvenation protocol. It activates key rejuvenation processes and so reduces visible signs of skin aging.

Ladies and gentlemen, I hand over to Astrid Hermann, who will take over, as from tomorrow, the CFO responsibility from Dessi Temperley. Welcome, Astrid.

She will take -- talk us through the 2021 financial planning.

Thank you, Stefan. Good morning, ladies and gentlemen, also from my side.

I joined Beiersdorf nearly 7 weeks ago and would like to start by thanking Dessi, Stefan, my colleagues and the Beiersdorf team for a warm welcome and for the time they invested in helping me get up to speed on the company, its brands, the strategy and the organization. While there's still a lot more to learn, the first weeks have reinforced my decision to join Beiersdorf.

I came here because of the iconic brands that I grew up with and continue to be a big fan of; and the C.A.R.E.+ strategy, which I am convinced is going to contribute to the company's continued success. I'm looking forward to making my contributions to delivering this strategy, making the right investments for the future, delighting the consumers, driving value through initiatives, such as revenue growth management and value engineering, and developing and supporting the organization and particularly, my teams.

I would now like to transition to talking about our 2021 and midterm guidance. Following an unprecedented year 2020 and with the continued uncertainty we are experiencing, we have had to reconsider our midterm goals.

The massive impact and particularly the long duration of the pandemic is clearly impacting the plans we made in 2019. We remain committed to the investments in innovation, digitalization and sustainability needed in the next few years in order to ensure that we come out of this crisis stronger and with a competitive edge.

At the same time, we will continue to look for ways to drive value, as we deliver our manufacturing network and advance efficiency programs. From today's perspective, it is challenging to make a reliable prediction for 2021.

Independent of the skin care market growth, we will continue to outperform the market. We assume the global skin care market will improve by the end of the year.

We expect sales growth in both business segments and on group level to be positive. With the significant investment Stefan outlined, consumer and group EBIT margins are expected to be on last year's level; while tesa's margin will be below last year.

We are similarly aiming to outperform the market beyond the COVID crisis and are looking to grow consumer EBIT ahead of sales after factoring in the significant investments in the strategic C.A.R.E.+ pillars. We also continue to pursue our other financial goals outlined previously of reducing working capital, driving value and improving our tax rate.

Thank you. I look forward to working with you during this and future events.

I will now pass it back to Stefan for final remarks.

Thank you, Astrid. Although 2021 still starts with a high level of uncertainty, I'm convinced it is the year of the turnaround in the COVID-19 crisis.

We will outperform the market and regain positive growth momentum, while we significantly further step up our efforts in sustainability, digitalization and growth markets. To make Beiersdorf stronger and more competitive in a period of technological disruption in a world of existential sustainability challenges, that was and is my ambition serving as CEO of this company.

Before we take your questions, I would also like to thank Dessi Temperley. I look back on a period of intense and trustful collaboration as we develop, announce and ignite the C.A.R.E.+ strategy together.

She successfully drove many of the C.A.R.E.+ initiatives with great professionalism and outstanding commitment, and she played an essential part in weathering the COVID crisis well with a solid financial base to further increase the pace of our investments now. Dessi, thank you very much for all your hard work, and I wish you all the best for the future.

And now we would like to answer your questions.

We're getting questions over your telephone line, so when you ask a question, please turn down the volume of your video connection so we can hear you without delay. So I have the first caller here, Guillaume Delmas of UBS.

Welcome, Astrid. Two questions for me, please.

The first question is on the incremental investments of €300 million over 5 years. When I look back at the ad hoc press release from 2 years ago, you were already flagging the need for more investments behind opening new markets, digitalization, sustainability.

So my question is what did you underestimate 2 years ago? And does the new package include additional initiatives versus the €70 million to €80 million package announced in 2019?

Or is it more a case of the cost of implementing C.A.R.E.+ going up? And I guess, ultimately, how confident are you that the incremental €300 million will be enough and that you won't have to increase your investments further in 1 to 2 years' time?

And then my second question is on your medium-term organic sales growth ambition. Because previously, your goal was to reach a 4% to 6% organic sales growth range in a sustainable way by 2023, at least for the consumer division.

Today, you haven't provided any quantification on your medium-term organic sales growth objectives. I understand there is a lack of visibility for 2021, but beyond that, I'm simply wondering why you didn't provide this medium-term organic sales growth objective.

Should we see this omission as a potential downgrade to the 4% to 6% range?

Thank you for your question, Guillaume. On the additional investments compared to what we said in 2019, the fundamental reason for the C.A.R.E.+ strategy hasn't changed.

It's very clear that the disruption -- digital disruption and importance of sustainability, has only been confirmed. What we've seen is 2 things.

The first one is the results of the C.A.R.E.+ strategy and how we've been able to drive the initiatives as such. And in so far, the €300 million is both further accelerating of what we're doing, increasing the impact but also attributing to new initiatives on top of that.

If we take specifically with this change, and I think that links also to your second question, is the impact of the COVID-19 crisis. It's clear that digitalization, as we estimated 2 years ago, is important.

It only accelerated. And therefore, I believe that the impact and the investments we need to do increase in order to further accelerate our capabilities in that area.

As far as guidance, on the midterm guidance on the market is, also there, we obviously mentioned that this is compared to beating the market competitive growth. We start and remain on that position.

And yes, '21 is difficult to predict. But based on '21 and the recovery rate is certainly not easier if you know what -- or if you look at '21 and how the recovery rate will develop over the coming years.

And since the underlying market development or recovery is the base of our organic growth, that's the reason why we didn't -- or abstain at this moment to make a concrete number on that one. The fundamental ambition remains the same.

Okay. So we go to the second caller.

I see here Richard Taylor of Morgan Stanley, please.

And first of all, a very warm welcome to Astrid, and best wishes to Dessi for your future ventures. So a couple of quick ones and then a little bit more of a longer one.

So -- and I think this was alluded to in Guillaume's question, but really, I want to drill into what top line impact you're expecting from the new investment. And secondly, can I confirm that you launched your first D2C website on NIVEA this year and also your first store on Tmall for La Prairie?

Because whilst, of course, this is progress, it suggests that you're still quite a long way behind on your digital strategy. And then if I may, I'd like to go back to a question I asked at your last reset in February 2019 because I think it still holds.

If we look back, you had a year of transition in 2010. You had a year of transition in 2011.

We had a year transition in 2019. Of course, 2020 was impacted by the pandemic.

It looks like 2021 is going to be a year of transition and probably '22 as well. So that's 4 in a row or 6 in 13 years.

There's been no dividend growth over that period and only a small balance sheet deployment in Coppertone, which I think is being barely mentioned today. So this is the third major reset in 12 years despite already having lower margins than peers and average growth.

So my question is, do shareholders outside the major shareholder matter? And why will it be different this time?

Accelerating growth has always been the target, and beating the market in which we operate is the ambition. We've invested this year -- or I'm sorry, in 2020, in order to get the maximum growth, we invested more in absolute terms in marketing.

It means we invested more in R&D. And I think it pays off in the market in which we operate.

And we're convinced that with the investments we do and specifically in the elements of accelerating growth, that impact will continue to come through in the top line. As I said, everything is relative to the underlying market recovery, but that top line impact -- significant top line impact will come through and is coming through.

On your questions on direct to consumer, no, we already had since a couple of years, direct-to-consumer websites with NIVEA in a number of countries, which we are rolling out and expanding in 2021. Yes, La Prairie launched in December, presence on TMall in China.

And this will allow us -- and targets to attract and recruit new and younger consumers that until now where we believe there is a potential over and above that with the recruitment we have done over our physical stores or the existing own website. And the first results, where very, very short, are indicating exactly in that direction.

On your broader question on transition and the numbers, we are in -- and I obviously cannot comment or will not comment on 2011 years before I even joined the company. But yes, I do think that we are, in generally, as a market, as society in a period of transition of fundamental changes of disruption.

That this disruption, and I addressed this already 2 years ago, is not something we can address or we can successfully address in 1 year or 2 years. And as you point out, 2020 obviously came on top of that, which was unpredictable for all of us.

So insofar that we have a period, currently, of transition is clear. I think as well, I've read and I read the different reports you are publishing, which I think, in a large number of cases, accurately describe the buyers of position, where we have the opportunities to accelerate with the opportunities to tap into more growth.

That's exactly what we intend to do with the investments, and that is exactly what we're doing as such. Of our shareholders matter coming through that, and I think the best way shareholders are served, in line with the belief and the conviction of the company, is to invest in growth to recruit and satisfy consumers.

And we take a long-term perspective on that one. I think we've always been very clear about that and always been very transparent about that.

That, that is the conviction and the belief of the company to do so. And if I bring the description, the accurate description of where the opportunities are, where the disruption comes from and the transparency that we will take that position and continue to take that position to strengthen the company to assure that the company stays as successful in the next 5, 10 years during this disruption period as we were in the past, has always been very clear, the perspective of what we've been taking.

So insofar, I think the position of the company and going forward because that is basically, fundamentally, the growth. Recruiting the consumers is a fundamentally basis for the long-term success of the company, and that we have opportunities and a need for investments is obvious.

And that is the reason why, as I said also 2 years ago, we addressed this with determination and urgency. And that situation has not changed, even if certain of these elements have accelerated or increased in sense of urgency like in sustainability over the last 2 years.

Thank you. So I think we move to the next caller.

Let me just remind us all that we would like to have those two questions per caller, please, as a limit. Thank you very much.

So we move on to Bruno Monteyne of Bernstein, please.

In the past, you had your margin sort of objective of 16% to 17%. You didn't put any numbers out today.

But would it be fair to say that 12% to 13% is the new '16 to '17 percent, and that's what we should focus on? And the second question is going back to the previous question about what shareholders want outside the family.

And clearly, you say you want to be able to grow and acquire more customers, which I can say support as an objective. But does it really require a 20% EPS payout in terms of dividend?

Does it really require €5 billion on the cash on the balance sheet to be able to achieve your long-term objective to continue to grow? It seems to be quite disproportionate in size compared to any other companies that are growing materially faster than you.

So I'd like to understand the quantification of how big the cash pile and how small the dividend should be to be able to give you the freedom to invest in growth.

Thank you for your question. If 12% to 13% is the new 16% to 17%, it's not something I would confirm.

As we say, we are still in a period of unclarity and uncertainty on the recovery rate, but we do commit to drive the -- improve the EBIT margin as investments, and the results of these investments come through. It's hard to say, and that's why we take into consideration the uncertainty of the recovery rate of the COVID crisis.

And I do think that I've read a lot of different opinions about what the expectation then specifically is market-by-market. But the commitment and the conviction that the investments will come through also in the margin is what we expressed.

On your question regarding cash iteration and dividend. The company has -- and I addressed this in 2 years ago already, this company has, admittedly, a conservative financial policy.

And we've been, I think, considering there, coming back to the answer before, always been very transparent about that factor. And I do think that in years like COVID, exactly that conservative policy also pays off for a company of our scale and our company of our mix profile, namely the ability to weather the crisis successfully, while continuing to do what is right for the company in the long term.

So insofar, I do think that situation, as we have today, pays off in situations of crisis. Going forward, as such, we remain -- stick to the opportunity not only to invest in our own business, but to look at M&A as we did 2 years ago with Coppertone.

And if we have similar strategic opportunities, let's also not hesitate to go forward. As far as the dividend is concerned, it fits obviously into the conservative financial planning.

Certainly, in times of crisis, it's already estimated. And that at least is, as far as we are concerned, is at least not a surprise going forward.

So we move on to David Hayes of Societe Generale, please.

So two questions from me. Firstly, on the cost investment and then on La Prairie.

So just on the €300 million, can you be more specific about where that money is going? I guess, broadly, you talk about ESG-related expenditure, digitalization and then new market opportunities.

Can you at least break down what the €300 million looks like across those 3 broad buckets? And the second question on La Prairie, you've obviously talked about being on TMall going into this year.

And also, you had a huge success, it sounds like, in Hanan at the end of the year. So two questions related to that.

One is, are you confident of maintaining the prestige image of La Prairie moving forward with those moves? And secondly, is there a strategy to bring maybe the price point down at the lower end to make it more accessible for more customers moving forward?

And is that part of the margin reset plan that the margin is a little bit lower on that brand specifically?

Thank you very much. On the €300 million, yes, I can give you a little bit more insight on where the focused areas are in the investment without breaking down and allocate exact investment numbers because, obviously, there are many other elements, including the volatility of the situation.

In digital, we focus on consumer connection, as we've always said, which is both a consumer connection in terms of media and precision marketing, but also in direction of personalization. The second area or third area is the area of e-commerce and developing the digital channel as such.

These are accelerating elements, and it goes without saying, I already mentioned that in my speech, that digitalization has accelerated over and beyond what -- yes, I expected 2 years ago being unaware of the crisis impact that we would have had. Fourth area in digital is the investment in data, systems and processes, which is obviously the underlying infrastructure that we need in order to be able to activate the consumer and the front-end investments.

On sustainability, the implementation of the agenda is accounted for, the part here that we are looking for, and that will be the major focus point in the coming weeks and months is on ambition and possibilities, investments into climate care and how we can accelerate our ambitions there. In growth, as mentioned before, we see the biggest growth opportunity are in our so-called white spots.

And the 3 major white spots focus is how do we get a bigger impact, a bigger footprint in our major white spots, which are also the biggest markets and the most developed markets, the strongest growth markets in skin care, China and the U.S. In the U.S., obviously, with the acquisition of Coppertone, gives us a leverage and a size that allows us to further develop the market and to capture a bigger part of the business.

In China, I said, the big part is we are with La Prairie, very happy. But the impact, the possibility for our other brands, which we now started with Eucerin and will further develop in NIVEA, is the key element on that side.

On the other side is the emerging markets, in which we are growing fastly as has been the underlying growth success over the last 5 years, as such already. Obviously, also impacted by COVID.

But there, we are progressing strongly, and we will want to continue to tap into that. I remind you what I said two years ago, if you compare our strength situation for -- in NIVEA in Europe compared to the relative situation in the emerging markets, it's clear that we have a massive opportunity through penetration and driving, attracting more consumers.

On your second question on La Prairie. Yes.

And the two elements are massively linked to each other. The absolutely key element of the La Prairie equity -- brand equity is in the exclusivity of the brand.

That's why -- and looking into more the luxury part of the skin care market, we've seen a massive acceleration of promotion intensity, promotion, depth of the industry. We are very consciously -- as I already told or explained in the mid of last year, we consciously did not go into that direction in order to preserve the brand equity.

La Prairie, linking to your second question, is at a price level, which is sometimes a multiple of the other brands in that sector. And it's -- I think it's very clear that even if we would do price promotions, the impact of the price promotion and the impact on the brand equity would completely undermine this exclusivity of La Prairie.

Therefore, there is no intention, rather the contrary, in order to drop prices in order to increase growth. Short-term growth would obviously increase, there is no doubt about that.

But the fundamental strength of the brand, being the most exclusive skin care brand in the world, would be long term affected. And that is something we will not grow.

And we see as well that in the recovery, what we have, where we are, that, that exactly is paying off. And we believe that, that is also the future of the La Prairie brand.

So we move on to Olivier Nicolai of Goldman Sachs, please.

Just two quick questions, please. First of all, on tesa, you mentioned significant investments, which will impact, obviously, margin in 2021.

Which area are you going to focus on? Is it on auto?

Is it on DIY, on electronics? Or is it across the board?

If you could give us a bit more details there, that would be helpful. And then just a quick follow-up on Richard's questions on La Prairie and the recent launch on TMall.

How significant are the buyers in La Prairie? And how much space is there really for La Prairie given the already very well-established position of brands such as [indiscernible]?

The first question related to tesa. So for one, tesa did have a good year last year.

We were especially happy about the impressive recovery in the second half. And tesa is experiencing some of the same market dynamics as our consumer business is experiencing in terms of digitalization, e-commerce growth, and therefore, is also going to invest in its future to really strengthen those areas and develop further potential for growth.

So the areas of investment will be around digitalization, really supporting their e-commerce, marketplace and B2C businesses and then also sustainability, looking to solvent-free products as well as lowering energy consumption. And then they'll be looking to explore new growth potential in investing in those areas as well.

Thank you, Astrid. It's interesting to see, as a final comment on this topic, that, obviously, the tesa business is confronted with the same challenges and opportunities, very similar to consumer, digitalization and the impact on the industry in the different sectors, the whole impact of sustainability with their customers and themselves and obviously, the growth opportunities.

And the investments, as Astrid just explained, are channeled into that direction as well. On La Prairie, the TMall -- entering TMall is an opportunity that we believe is still there.

Even if you look at the Chinese market. And with the positioning and price positioning of La Prairie, we believe there is increasingly opportunities to further tap in consumers that we can reach over TMall on top of what we've been reaching before.

We see, as I already said, that the consumers on TMall are new consumers and are generally slightly younger than our core consumer in La Prairie. And that is a key element on the La Prairie brand.

And I don't want to sound arrogant, but more self-confident is that La Prairie, with the exclusivity, inherent to exclusivity positioning, does not really look or does not really position itself versus what other brands have been doing. We see that with the La Prairie positioning we have and exclusivity, this gives us further leverage in reaching consumers in China.

So next in line is Karel Zoete of Kepler Cheuvreux.

The first question I have is with regards to the additional investments in sustainability and digitalization, basically coming back to some earlier questions. And we see this also at many of your competitors in personal care and skin care businesses.

But the bias of the impact on the profit margin is quite significant. So the question is, basically, why is the impact to your margin that large?

And aren't you able to save cost elsewhere to offset this impact? And then the second question would be on the medium-term expectations you have for your Chinese business.

Clearly, you want to develop that business and become large in skin care. But where are we today?

And what should it be in 5 years from now? What would be the vision?

And also, what would then be an appropriate level of profitability for your Chinese business? Should that be above company average or in line?

And where are we today?

Thank you. Digitalize the -- in -- specifically, digitalization and sustainability.

I believe, I'm convinced that we, as a company, have an opportunity to do more and can do more in these areas. We need to accelerate more, and that is the reason why we need to act now.

I also believe that, as I said before, that the cost and the return of these investments will come through, but the urgency to address and to accelerate is not only now, but it's also a lever in order to be able to get that return going. On the Chinese business, we believe that, number one, the Chinese business will massively outpace the growth we have worldwide.

And I think considering the relative position we have with major brands like NIVEA and Eucerin, that is almost a logical ambition we have. Obviously, that is an investment that is particularly heavy in order to unlock that potential in China.

As such, the division is obviously that, with that growth and with the brand equity that is existing, that as models that we run in other countries in the emerging markets before, that, that will pay back and will bring the profitability in the mid-term, approaching the company's average.

So the next entry I see would be Iain Simpson, Barclays.

So a couple of questions for me, please. When we think about this reset versus the last reset in terms of where the incremental money is going, is it just that all the priorities of kind of two years ago are getting a top-up in spend?

Or is it that there's new areas of focus for this additional spend versus 2 years ago? And if so, which areas are being prioritized more and which areas are being prioritized less?

And then to ask you, if I may. Firstly, a sort of technical question.

Could you just remind us how the FX impacts on gross margin works for 2020? And what were the drivers there?

But a more general question, look, arriving at Beiersdorf from outside the company, what do you see as your sort of key priorities as CFO? And what, if any, kind of cultural changes or changes in operational practice or low-hanging fruit do you plan to be driving through in the next couple of years?

Thanks, Iain. The supplementary investments of -- this investment cycle is a combination of two.

First one, if I look over the last 3 years and specifically the last year, we see an exponential acceleration in the importance of digital. I think COVID has digitalized also a part of the world, consumers, customers, employees alike.

And that acceleration is an acceleration that does not change their priorities, but needs more investment in order to be able for us to capture the opportunity. And sustainability is a very similar issue.

It's knowing they're not an acceleration, but the sense of urgency to address these elements has certainly not gone down and will further increase over the coming years. Therefore, a part of the investments is indeed, I would say, topping up on the priorities we had in these areas already before.

The same applies to the growth opportunities that -- in the white spaces that I just comment about. But there are obviously parts that we want to accelerate more and fund more.

One of them is what I announced 2 years ago, the importance, the vision of personalized skin care. We are now in a phase where we're able to start activating a lot more, having a lot more initiatives at the start, which we will also are and will fund going forward.

Asset on the -- or first -- I'm sorry, first, Dessi on the foreign exchange.

Iain, I can take the question on the foreign exchange. So the foreign exchange impact is mainly at gross margin level, and it is 80 basis points for the consumer business in 2020.

It is material. And the main reason for that is that a lot of our cost base for finished products is still in euros as our manufacturing footprint is more European, although we have been changing that in the last 2 years.

But obviously, with the devaluation of many currencies and the euro strengthening in 2020, that was the impact we had and which obviously flowed down to the EBIT margin as well.

And Iain, thank you so much for your question to me. So let me reinforce that for one, we will absolutely continue the successful programs to drive profitability and efficiency that Beiersdorf has been doing for the last years, such as revenue growth management, value engineering and optimizing the manufacturing footprint.

This has been very successful for Beiersdorf, and certainly, I very much know quite well from my previous employees as well. So we will continue that.

We will secondly also look at all line items of the P&L to -- for waste to fuel growth to offset our investments, obviously, and enhance profitability. And clearly, we do see some efficiencies coming from digitalization.

And then I want to reinforce it again, we do commit to driving top line ahead of market. We do want to grow our market share.

And then as we've said, post-COVID, we will also drive EBIT beyond top line growth. Thank you.

Okay. So we go on with Celine Pannuti, please, JPMorgan.

Yes. My first question is on the -- if I look at your growth initiative, so -- and results so far of C.A.R.E.+, you mentioned that you are gaining share everywhere.

And when -- however, I look at your French competitors and what they have reported by category, you materially are below. So is it because your under-indexing in online that you are underperforming?

Or can you explain maybe what am I missing? And also when you talk about the white space, you mentioned China and the U.S.

On China, you talked about the introduction of online -- introduction on new brands plus online, but what about the U.S.? Can you talk about what specifically you want to do there?

And my second question is on the La Prairie. You mentioned that there was a bit of a pipeline fill in Q4.

What does that mean for Q1, please? And more broadly, is there any indication you give us -- you can give us on maybe short term in the first quarter?

On market shares, we measure market share is very active, obviously. And as you know, there are, specifically, for example, in China and in U.S., we are not everywhere present and we do not have the same weight in our portfolio as they could be.

And specifically, if you look at these markets, the size of the market and our relative presence makes obviously an impact if you look at total numbers. When we are looking at where we operate in, and there, we, as I said, have gained market share.

And if I look and I go through very strong market share, as I said, in every skin care category, which we operate, and basically across the board in a very similar dimension, going from body, face care, sun, although the sun season was very bad, but the share increase was significant, men lip. Each of these categories globally and in the region, we gained share.

If you look at the countries, already in my speech highlighted, where the major countries in which we operate, we also share. The same applies on our Derma cosmetic brands.

It's clear that the footprint, that's why China is an opportunity, has an impact, obviously. But if we compare the core countries in which we operate, there, the impact and the market share increase is considerable.

Obviously, I will not comment on our French competitor. I think competitors motivate and inspire.

It's clear, but we look at where our performance is as such. But there is a difference taking into consideration of mix geographically and category, and scale is clear.

On La Prairie China, La Prairie, very -- doing very, good. We believe there is further growth potential.

We now introduce Eucerin. And we are, with NIVEA, accelerating and working on increasing local innovation.

I think local innovation, as I explained 2 years ago, has been a major component in unlocking the potential in, for example, countries like South Africa and India. And in a dynamic market like China, this is even more important, and that is where we are really looking into China.

In the U.S., the acquisition of Coppertone, and therefore, entering basically in a second skin care category. Our business in the U.S.

is a body care category dominantly, both on the dermatological brands and on NIVEA. With Coppertone introducing into the sun category, we increased our footprint and our scale.

And that gives us the opportunity to further develop in the direction of a skin care brand opportunity, and that is where we're focusing on. And the same thing as in China is obviously also true in the United States.

The difference in the market shares is not driven by e-commerce. If that, obviously, e-commerce in a country like China is a major driver for e-commerce development worldwide is clear.

And it is clear also that our limited footprint in China has an impact there. But if I look in the e-commerce development in the countries in which we operate, in the U.S., in Germany, in the U.K., in these countries, we've gained share in e-commerce and usually outperformed the majority of competitors.

Although as I said, that might not control immediately in a number -- in an absolute number. On La Prairie, I pass over to Dessi.

Yes, indeed. Thank you, Celine.

We had some pipeline feeling, which I called out in my speech. However, Q1 is looking good.

We're very positive on the developments that we see in La Prairie. And despite the fact that we still have some of our outlets shut due to the restrictions, indeed, we see a positive trend in the demand, and we are optimistic on the performance in 2021.

Okay. Looking at the queue, we now have Chris Pitcher of Redburn.

Firstly, looking at remuneration. I mean sales growth and market share, clearly, your primary financial objectives.

Margin ceased to be a component of the annual bonus from 2019 as you went into this investment phase. Can you confirm that in the post-pandemic period, margins will be introduced as a metric so that you align your public expectation of consumer EBIT growth ahead of sales growth with the internal ambition and to give investors reassurance that the delivery of the ambition, and importantly, that the return on investment is an important consideration for you?

And then secondly, also looking at remuneration, digitalization is also component. I appreciate this covers a multitude of functions, but is percentage of sales from e-commerce an important part of that?

And if so, can you confirm whether 50% growth was in line with your target? And if you can share some target ambitions and percentage of sales so that we can gauge the effectiveness of the digital investments being made, I think would that be a real help.

Thank you for the questions. On the first question regarding margin.

Margin is important, as we said and as we also confirm in where we are going forward. Post-COVID, with the investments and the growth, we want to have a margin growth ahead of sales growth.

It's difficult to predict when is post-COVID going to hit in, but that's exactly the intention. So insofar, I can reassure that margin also in this period is an important measurement and will remain an important measurement with the ambition we outlined.

The growth of 50% of e-commerce is over and above in 2020 of what we estimated. Obviously, as I already said, the impact of COVID has given a push to e-commerce sales almost everywhere in the world.

And so far, 50% growth was over and above the target we originally set. We are now at a high single-digit percentage of our sales, and we have a clear ambition by 2025 to have a higher double-digit percentage of our sales coming through e-commerce as such.

And that is where we believe the opportunity is for us and where, as I explained, a number of our investments are focused upon.

So I can see we have one more caller, Philip [indiscernible].

Maybe quickly on the level of C.A.R.E.+ investments in 2020, can you just give us a figure on that? You lumped that together with some other onetime items.

And then secondly, on Thiamidol business again. Can you -- if you look at the performance of your French competitor while you arrive somewhat at the conclusion, you had a major innovation, but your competitors -- so you launched.

So is -- has Thiamidol not fully lived up to your expectations? So is it not -- has it not been significant as we expected?

Or have you lost in some other categories? Just a bit more color on that one, please.

Okay. Let me take the first question on our investments in 2020.

Were they in line with our plans? Yes, they were.

We committed to investing around €70 million to €80 million per year as part of the C.A.R.E.+ strategy, and we indeed did not cut the investments. They were investments in white spots, which we already talked about in China and in other parts of the world, especially with our strong innovation pipeline as well as in digital capabilities.

We invested in sustainability and so on. So yes, the €70 million to €80 million investments were used as per plan.

And we had other savings due to value engineering and so on to partially offset that, but the investments were executed as per the plan.

[Indiscernible] in 2021, you planned it. Basically no big change from what you invested in 2020 basically.

Maybe I should answer that second part. So yes, in fact, what we have communicated is that this additional €300 million over 5 years is on top.

So we will invest what we had said previously, plus on top the €300 million. They will be front-loaded to the first couple of years as we really want to accelerate the growth, and we're looking to have about half or more in the first couple of years.

Going to the success of Thiamidol. Thiamidol has exceeded our expectation in 2020 as such.

But again, coming to where we are and what we are doing, Thiamidol has been rolled out in all major countries in which we operate. But 2 important comments on this one.

Thiamidol has not been introduced in the U.S. at this moment.

Thiamidol application is one of hyperpigmentation, face hyperpigmentation. And in the U.S., our derma brands are basically in the body care segment.

And so far, in that effect of Thiamidol on the global numbers, the U.S. is not part of that in the beginning.

And as I pointed out before, the impact in that being at the start of it is obviously, at this moment, outweighed by the success outside. If you take these two major markets -- that's in consideration with these two major markets.

All the other markets over-delivered compared to what our original expectation was.

So we move to the last caller today, Tom Sykes, Deutsche Bank.

Yes. Just to follow up again on the comments on FX and I think the raw material cost.

Can you be a little bit more specific on the gross margin outlook and particularly what at spot FX you see the transactional impact at gross margin is? And secondly, on the raw materials, what raw materials impact do you expect?

And really, is some of that raw materials impact part of the €300 million, please?

Yes. So on the FX first, how we look at 2021, which I understand is the question.

We do not expect such a strong negative impact in 2021. However, we do expect some negative impact when we look at spot rates today where they are.

In 2020, the impact was 80 basis points. We -- at spot rates today, we're looking at around half of that coming from FX.

On raw materials, it's mixed. We saw some -- we did have some tailwinds in terms of raw materials prices in 2020.

Some of the commodities are coming back up, but although we do not see such a significant impact from raw materials increases in 2021. And I need to underline here that we continue with a very strong pipeline of projects of value engineering, so driving costs out in order to be able -- from our products and from our manufacturing as well so that we are able to offset any of the material cost increases, which we see in 2021.

Okay. Well, thank you for all your questions.

We are closing the line now. Thanks for having joined our conference call.

We certainly appreciate your interest in Beiersdorf as always. So thank you, and goodbye.

Thank you very much.