Hello and welcome to the B&S Q1 2025 trading update call, hosted by Peter van Mierlo, CEO, and Mark Faasse, CFO. Please note this conference is being recorded, and for the duration of the call, your lines will be on listen only. However, you'll have the opportunity to ask questions, and this can be done by pressing star one on your telephone keypad to register your question. If you require assistance at any point, please press star zero, and you'll be connected to an operator. I will now hand you over to Peter van Mierlo to begin today's conference. Thank you, sir.
Good morning to you all. Thank you for dialing in and showing your interest in B&S. We are here to talk about the trading update on Q1 2025. As we know, we will speak mostly about turnover, as you must have seen in the press release this morning. Yeah, how would we look at Q1? Overall, definitely in line with expectations. It has never been our strongest quarter, as you probably know or are aware of. Things have moved along, and if I look at the total, then we still see a constant currency growth of 4%, leading to a reported revenue of EUR 570 million, so say approximately EUR 560 million. These are good numbers. You see health in the middle, also showing a reasonable, reasonable performance.
If you would normalize health, that does not impact the overall numbers very much since the growth was limited to exactly the same growth as overall. So 14.5 to 15.1, and obviously, we have divested this segment in April. As you know, if we look at the divested non-strategic activities of liquors, as we communicated to the market at the beginning of April, we see at the reported numbers, because obviously since we have divested it in April, the numbers are still included in 2024 Q1 as well as in Q1 2025. If we would normalize overall revenue for these activities, then that would increase our growth to approximately 10%. If you do the math, I mean, it is already in the press release that there is EUR 2 million revenue around the non-strategic activities in 2025, so this year in Q1.
In 2024, that number was around EUR 25 million. You're not getting specific numbers because it's a bit of an art to define the non-strategic activities that we've sold. These are definitely into the right direction. If you look at the new group, so excluding health and those non-strategic activities, we would have, and if we would have only reported those, then we would have seen a growth of 10%. If I go to the different segments, in alphabetical order, I'd like to start with beauty. Beauty, definitely, a good performance during Q1. The growth was mainly in B2B, B2B due to the availability of goods in the markets that, yeah, availability has increased.
There's no denying there, and the continued growth in B2C, especially in the U.S., which has a core, which we have incurred. Turnover B2R, so the platform, our selling through Bol or Amazon or any other global platform, those sales have decreased slightly. For the same reasons that B2B grew, in terms of availability of goods, I mean, if the availability of goods increased, that does have a pressure effect on the pricing, and as a result, gross margins came down a bit. If I move to the second segment, that's food. As you all know, food has three different subsegments, so to say: maritime, mainly our sales to the cruise industry; duty-free, mainly sales to duty-free shops across the world. That's a global business, as well as sales to, in the case of exports.
That is definitely global, also quite a bit into Africa. The first two subsegments have seen substantial uplift. The last one, export, has been under pressure, and that is due to the challenging market conditions that we have incurred in those markets today. Health, I already talked about, and since it is not part of the group anymore, I will restrict myself. Then liquors. Yeah, liquors, so the turnover declined if you look at Q1 to Q1. The turnover of European wholesale companies was in line, with a + 1%, and the international trading activities decreased with 16.2%. If you would, that is, that is completely attributable to the activities related to the non-strategic activities that we have divested in April.
Then, personal care, personal care grew 10% in Q1, gross margin under pressure in line with budget, but lower than last year, which has everything to do with the global market circumstances. If I move to travel retail, then travel retail, we have closed down a number of shops last year, for all the right reasons, so to say. If we would normalize those shops, so take them out of the revenue in 2024, then we would have seen a normal growth of the travel retail business, since, you know, there is still some revenue in 2024 regarding those closed shops. It goes without saying that you do not incur any revenues in the shops that you have closed in 2024 and 2025.
Travel retail did definitely in line with our expectations, and I think I speak for the complete executive board that we're happy with their efforts and their execution on operational excellence that they have been doing. That concludes actually my comments on the different segments. If I look at the outlook, there we have taken a bit of a different approach than since Mark and I are doing these calls. The reason why is, we do, we feel confident about the turnover expectation that we took into our outlook. We have abstained from giving you a guesstimate regarding the EBITDA margin, and that has nothing to do with what we know now. That is also incorrect, I guess, but there is not anything specific that we are aware of now that would prevent us from meeting the EBITDA margins as we have communicated those in our capital markets day.
We also felt it was a bit ridiculous, with all the uncertainties currently in the world and everything that is happening from day to day, and a U.S. president, which is kind of difficult to predict if I put it politically correct. We felt it would be better if we inform you a little bit more about the cost development in detail. We have given you some information on gross margins, by the way, in this press release. We have also told you, that is also in the press release, how the OpEx and the staff costs actually develop. We wanted to inform you about EBITDA margins for the full year after we have got another quarter under the belt and hopefully have also a little bit more transparency or insight into the geopolitical and economical trade wars which are currently going on.
That is the reason why we abstain from the EBITDA margin percentages at this moment in time. I guess my idea was to leave it a little bit at this. I'm sure you understand that if you're gonna pose any questions on the public to private process that we are in, that we will tell you that we're not gonna answer those, and that has all sorts of reasons, as I'm sure you're all aware of. We will abstain from any comments around that process. Yeah, I think I'm looking at Mark and yeah, Mark and I agree that my comments were about approximately what we wanted to say. I did my 12 minutes and 57 seconds . Over to you.
Thank you. As a reminder, if you would like to ask a question or make a contribution on today's call, please press star one on your telephone keypad. If you change your mind and want to withdraw your question, please press star two. Please ensure your lines are unmuted locally as you'll be prompted when to ask your question. If you'd like to join the queue for questions, please press star one on your keypads. The first question comes from the line of Robert Jan Vos from ABN AMRO-ODDO BHF. Please go ahead.
Yes. Hi, good morning all. Thanks for the opportunity. Yeah, a couple of small things. When you talked about the, just a clarification, when you talked about the growth excluding the non-strategic liquor business that was divested, you mentioned 10%. That refers to the division, right? That's the liquors division. So 10%. [Crosstalk] Yeah, sorry.
Yeah. Yeah, sorry. Let me directly answer that, Robert Jan. That was referring to the overall growth, approximately the 10%. For the segment itself, it's also approximately 10%, just above 10%, so.
Okay. Yeah. Yeah.
For both the division and also the group. Yeah, exactly. Then both excluding the health divestment as well as the non-strategic liquor business.
It is one answer for two questions, almost.
Thank you. Yeah. On the outlook statement, if you say we expect consolidated top line to grow at approximately 5%, taking out the divested revenue in Q2 to Q4 of 2024, that is pretty much the same as saying that you expect organic sales growth of approximately 5%, right? I mean, taking out what has been divested is not in the equation, obviously, but then you are talking about organic sales growth of approximately 5%, which is then the same as what you said in March.
Exactly.
Yes.
Okay. That is also clear then. Lastly, maybe coming back on the EBITDA margin comments, the full year update was not that long ago. I heard you say a couple of times, and also in the press release, it was mentioned a few times that basically everything is in line with expectations according to budget. I'm still a bit puzzled why you cannot reiterate or do not reiterate the 5%-6% margin at this stage. I heard your explanation, uncertainties in general, nothing to do with trading so far, but these uncertainties, if I'm not mistaken, were also there already in March. Why now not reiterating that guidance?
Two things I would say, Robert Jan. First and foremost, as you are perfectly aware, probably at the beginning of April, things started to shift, to put it mildly. The beginning of April, things did change to a certain extent. The uncertainty increased and intensified as compared to, let's say, mid-March. Q1 is our slowest quarter, but also after Q1, we start our build-up of the inventory for the remainder of the year. This is, of course, also impacting the remainder of the year's sourcing and the sales opportunities we project for the remainder of the year. As such, the changes, notable as per the beginning of April, did impact the outlook for the remainder of the year, the uncertainty surrounding the outlook.
Okay. That's clear.
Does that answer your question?
Yeah. Yeah, it did.
Maybe as you're asking. [Crosstalk]
The only. Yeah.
What we wanna make, yeah, we just, we have been rethinking this for the last three days, and we didn't, we just didn't feel very intelligent saying that we can project the next nine months, because of all the uncertainties. Again, that's also the reason why I made this statement, it's not that it's because of what we know now, it's we don't know what the indirect impact of all those tariffs, etc., etc. I mean, yesterday, the whole world was cheering again, at least the financial world was cheering again. I mean, these are movements in the financial markets and also in the logistical markets that have, yeah, obviously a very strong impact. The direct consequence of all the tariffs, I feel relatively comfortable. The indirect consequences of everything that's going on, recessions, etc., etc., that's where the major uncertainty is.
That's clear. Thank you. Yeah, one small logistical question on the pending public to private. You put in the press release of today the dates for the half-year results and also nine months. Nine months is at 11 November. Do you still expect to be listed by the time of the Q3 or nine months results in November, or is the process going such that you expect that to be completed before that?
I must say, first of all, a compliment. Thank you for being so curious. And also another compliment, thank you for being so persuasive. The answer is that we're not gonna comment.
Okay. Okay. That's, can you remind me what was, I was looking it up, but what was in the official announcement, mentioned on the timing? I didn't find it immediately, but I thought there was some kind of mentioning about the timing.
Again, thank you for your creativity in terms of the approach. I do value this and appreciate it, but I'm not gonna comment.
Okay. That's it from my end. Thank you.
Thank you.
We currently have no questions coming through. As a final reminder, if you'd like to join the queue for questions, please press star one on your keypads. The next question comes from a line of Martin Verbeek from The IDEA! Please go ahead.
It's Martin Verbeek of The IDEA! I do apologize. I delved in a bit later. Firstly, we do see a drop in gross margin of 70 basis points. Is that also in any way connected to the fact that Easter was in Q2 this year and in Q1 last year?
I must say that, of course, festivities these days, and the shifting of these days regarding trading days, etc., do impact turnover as such and turnover compilation within the group to a certain extent. From this perspective, also with regard to the trading update, this is indeed always an influence. With regard to the gross margin, I would say, mostly on turnover. Does this answer your question, Martin?
A bit. Therefore, I have a follow-up. Because if you look at the second quarter 2024, we do see a gross margin of about 14.9. Q1 to Q2 drop of some 90 basis points. Therefore, would it be fair to assume that this time you would see a sequential increase in your gross margin from, no, I would say, 15.1 to 15 to, to, to, yeah, to a somewhat high level.
Yeah. You should also take into account that the reported figures, as per half-year 2024, also included some one-offs, which also are being included in the gross margin. It's also included with our half-year financial figures shared with you guys as well. There's an impact.
Sure, sure, sure. I looked at the adjusted ones. Maybe it's also a nice follow-up that the gross margin you referred to in your press release included those one-offs. Which were those one-offs in? Because we don't know if they were, you reported on the half-year figures, we don't know if they were in Q1 or Q2.
Exactly. Again, this being a trading update, we do remain focused on the turnover and sharing the information on turnover. Why did we also include the gross margin percentage during this Q1 trading update? Just also to give you a highlight of the magnitude of the Q1 development. That's it. Again, focusing on the trading update and the Q1 normalizations for 2024, we'll also resemble this in our half-year figures to be shared with you guys in August. Please take into account that indeed the reported gross margin as per half-year 2024 was impacted by the normalization items. Just to be clear, the gross margins you mentioned in this press release are excluding those non-recurring items. The gross margins reported in this press release, it is fair to say that these exclude the main normalization items, the one-off items.
Second question concerning your inventory, and particularly the value of your inventory, because we do see that prices are changing rapidly. Do you expect maybe that you can make a gain on your inventory position, that the products you have in your inventory have risen in price in the market?
As a general comment. No, as a general comment, we always try to make a gain on our inventory. We are a commercial company. No, I do understand your question. Again, being a trading update, we focus on our turnover developments, which, to be shared. It is a fair statement that, of course, during times like these, we always focus on our inventory positions. This is a normal course of business, and the current market circumstances give additional reason to focus on our inventory positions.
Okay. Thanks very much.
It's, it's, I mean, what you're, I guess you're referring to are inventories in the U.S., which were already in place before the tariffs discussion. Whether you can benefit from those is dependent on a lot of things, right? It's not like, okay, there's 10% tariffs, so you can raise your prices 10%. I mean, it's completely dependent on the amount of inventories at your competitors, which we do not know, by the way. It is dependent on the price elasticity of the product. Without having done extensive research on this, but I, I believe that different fragrances have different price elasticities. Then it becomes quite a difficult analysis to say, okay, how much would you be able to gain from those new measures?
That is, what I'm sharing with you are our thoughts on how to address this internally. It's not so much that I'm referring to reported numbers or something, but it definitely has our intention how to move, managerially also with those new circumstances and to see whether we should change our expectations, yes or no. I know it's a lot of language without saying anything, but it does hopefully give you the breadth and depth of the complexity of steering into the right direction.
Much appreciated. Thanks.
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