Ladies and gentlemen, thank you for standing by. I'm Natalie, your Chorus Call operator. Welcome, and thank you for joining the Q2 2022 results conference call of Beiersdorf AG. Throughout today's recorded presentation, all participants will be in a listen-only mode. The presentation will be followed by a question- and- answer session. If you would like to ask a question, you may press star followed by one on your telephone. Please press the star key followed by zero for operator assistance. I would now like to turn the conference over to Jens Geißler, Head of Investor Relations, and Anke Schmidt, Head of Corporate Communications. Please go ahead.
Thank you. Good morning to all of you. I would like to welcome you to Beiersdorf's second quarter conference call. Joining me this morning is our CEO, Vincent Warnery, our CFO, Astrid Hermann, and Anke Schmidt, my colleague at corporate communications. We would like to share with you Beiersdorf's business results of the first six months of 2022. For today, like last time, we have organized a combined call for analysts and journalists. Anke, could we share some details about the presentations?
Yes, Jens, and good morning also from my side. As usual, we will start with the business review from Vincent and Astrid, and afterwards there will be the Q&A session. Before we get going, let me quickly remind you of some technicalities. Throughout the presentation, all participants will be in listen-only mode. Please remember for the Q&A to limit your questions to two per caller so that we can cover questions of all participants in the given timeframe. With that now, I would like to hand over to Vincent.
Thank you, Anke and Jens. A warm welcome also from my end to today's conference call, and thank you for taking the time to join us. Astrid and I are very pleased to take you through our performance over the first six months and give you an overview of the key developments in the past quarter. 2022 has been a successful year for Beiersdorf to date. The group is clearly continuing on its growth path. Despite facing some significant headwinds, we managed to achieve double-digit growth on group level driven by the outperformance of consumer with 11.7% growth in the first half. These also delivered good growth despite challenges in China and a strong prior year first half. We are not only successful from a top-line perspective, but also on the bottom line.
The group EBIT margin of 15.9%, which is an increase of 50 basis points over the first half of 2021, clearly shows that we are committed to delivering on our promise to achieve an expansion of the EBIT margin in the consumer business in 2022 and the years to follow. Let's take a more detailed look at our performance in the second quarter. After an already strong first quarter, we saw a slight acceleration in Q2. We were optimistic about our second quarter performance just at our Capital Markets Day, and are happy to report today very good numbers driven by a strong end of the quarter. As you can see, the growth of the consumer segment is broad-based. NIVEA, Derma & Healthcare all had very strong double-digit growth in the second quarter.
La Prairie also puts an impressive performance in June at +17% growth, thus managing to limit the negative impact of the lockdown in China. Overall, we achieved strong growth of +11.9% in consumer. The Tesa business recovered very quickly after the lockdowns in China, recording growth of +5.7% in the second quarter. Combined, we achieved +10.7% sales growth at group level. As I mentioned, NIVEA performed extremely well with growth of +13.2% in the second quarter. I would now like to provide you with a few details on what exactly is driving this performance. With our portfolio, we're able to outperform not only the skincare market, but the personal care market as well.
In terms of skincare, we saw very strong growth throughout our portfolio, with particularly strong growth coming from the sun, lip, face, and body categories. We also managed to gain significant market share in the majority of skincare categories. Personal care also had an excellent second quarter. The deodorant and shower categories recorded strong demand, resulting in market share gains around the globe. Allow me to make just one comment on the progress we have been making with the sustainability of our shower products. Last year, I presented to you our first climate neutralized NIVEA shower range. Today, exactly one year later, we have put a version of this product on the shelves with an even stronger sustainability profile. The relaunch of our best-selling NIVEA shower gels mark an important step forward on the journey towards climate-friendlier products at Beiersdorf.
Not only is the new NIVEA shower bottle made from at least 96% recycled plastic, it is also 26% lighter than it was before. The drop in weight means that there is a corresponding 32% reduction in packaging-related CO2 emissions. All our formulas are microplastic free and up to 99% biodegradable. This is something that we are extremely proud of. Back to NIVEA's performance in Q2. The broad-based growth we experienced came not only from a category perspective, but also from a regional perspective. There are two examples I would like to share with you. In Western Europe, we recorded double-digit growth in net sales over the course of the second quarter, and the strong trend actually accelerated even further in June.
As I indicated before, this growth was generated by strong performances through our portfolio with our sun care category clearly being one of the main drivers in Western Europe. Additionally, we are delighted to report that the investments in our face care portfolio continue to pay off. Leading the way in this regard are sales in NIVEA Luminous, which we managed to double year-on-year, making it the primary source of growth in our face care category. These developments were all underscored by substantial market share gains in most Western European countries. At this point, I would like to direct your attention to one of our ongoing success stories, Latin America. This region was once again at the front of the pack from a regional standpoint, delivering another very strong performance in the second quarter with broad-based sales growth.
It is really interesting to see that the dynamics of Latin America development were quite similar to the development we saw in Western Europe. The sun category really stood out. Here we managed to more than double our sales in the second quarter. That was not the only category that delivered a strong performance. There was also significant growth in the face care category in Latin America. I would like to take you now from a detailed look at NIVEA to a more comprehensive overview of our portfolio performance in two main regions, North America and China. Let's start with North America. As mentioned also at the Capital Markets Day, we have established a very successful and diversified portfolio in North America, and have recently extended it with the acquisition of Chantecaille.
Our North America business has been gaining a significant amount of momentum over the course of the last couple of quarters, and this trend continued in Q2, where our portfolio delivered some very impressive numbers. With +15.5% growth in the second quarter, we once again outperformed the competition. All our brands grew significantly in the U.S. NIVEA showed strong growth in the body category, and Coppertone's start into the summer season is promising. Our more recent acquisition, Chantecaille, also got off to a good start with growth exceeding our expectations. I would like to highlight two main drivers of these excellent results in North America, our La Prairie and Derma brands. With La Prairie, we're able to accelerate our client data strategy. We are in a unique position when it comes to client data capture, thanks to our exclusive agreements with retailers in the U.S.
We were able to double our client data capture, a development that made it possible to provide more personalized offers, something that also contributed to a strong sales recovery. With our double-digit growth in the second quarter, we outperformed the market. Our Derma brands, Eucerin and Aquaphor, had already gained significant market share in the U.S. in 2021, and they are continuing to make significant gains in the current year. Aquaphor in particular, delivered considerable market share gains. With developments like this, we are outperforming our competitors on all channels and across all subcategories. When it comes to continuing this encouraging trend, our most recent launch, Eucerin Sun, has been no exception. Initial results have exceeded our expectations, and we are well on track to become a serious competitor in the U.S. sun category in the very near future.
Let us take a look now at our activities in China, and particularly La Prairie. The lockdowns that hit the country in April and May, and Beijing and Shanghai in particular, had a negative impact on our La Prairie business. The situation was aggravated by a number of other COVID-related restrictions, such as the PCR test requirements before entering a department store. Indeed, because we are significantly more dependent on Beijing and Shanghai due to our very selective distribution, we are not able to offset the effects of the lockdown by boosting our e-commerce activity. This is not only because we are only distributed at Tmall, which stopped supplying customers in Shanghai during the lockdowns, but even more because unlike our competitors, we do not promote our brand through festival such as 618 and Double Eleven.
As a result, our La Prairie sales in China declined by -30% in April and May. The good news, however, is that we are already seeing a turnaround. June and July are up +32%. We also opened our JD.com site in three weeks, and you are surely aware that JD.com's market share in online premium skincare went up from 7% last year to 20% now. We will also open 10 new doors before the end of 2022, and nine of them are not located in Beijing and Shanghai. With this in mind, we are expecting very good double-digit Q3 growth, not only in China, but also for the overall La Prairie business. The recovery story for La Prairie is similar to what we have seen with our NIVEA business in China.
After being impacted in April and May by the restrictions to fight the pandemic, NIVEA recovered very quickly in June with strong growth, especially body care in mainland China and also the face care category. Their cross-border sales grew significantly. Moving on to Eucerin, the brand which was the least affected by lockdowns in the second quarter in China. Thanks to our digital-only approach, we were able to almost double our sales year-on-year in the second quarter. Additionally, we recorded strong sell out number in the 618 shopping festival, the second largest and most important shopping festival in China. We are well on track in China, and we are constantly gaining market shares. On product level, Thiamidol remains one of the main growth contributors in our Chinese businesses.
The strong performance of our anti-pigment skin perfecting serum give us additional confidence to deliver a strong ambition and to continue building our brand with the best results. I would like to wind up my remarks with a word or two regarding an iconic wound care brand, Hansaplast. As some of you are likely aware, we are celebrating the 100th anniversary of the brand this year. It was way back in 1922 that we launched our first wound plaster under the name Hansaplast. Today, we sell more than 200 products in 65 countries in our healthcare business, from wound sprays to ointments, bandages and tapes, as well as plasters for various applications. We look back on 100 years of incredible success that has continued unabated into 2022.
Double-digit growth in the first two quarters is a clear evidence of a strong market position in the healthcare business. With these remarks, I'm finishing my part of today's presentation, and will now hand over to Astrid, who take you through our first half 2022 financials in more detail.
Thank you, Vincent, and also good morning from my side. I'm happy to take you through our H1 2022 financials. Let us start with the main figures on group level. We achieved strong organic double-digit sales growth in the first half of 10.5%. In nominal terms, we grew by 15.5%, supported by foreign exchange and structural effects. At the same time, we were able to grow our EBIT in absolute but also relative terms, leading to an EBIT margin of 16.9%, which is an increase of 60 basis points. In parallel, the profit after tax margin went up to 11.5%, and we were able to increase our earnings per share by €0.39- €2.22. Coming to our financials per segment.
In the first six months, we have grown like-for-like sales in our consumer segment by 11.7%. The difference to the nominal sales growth of 17.3% is explained by favorable foreign exchange as well as additional sales from our most recent acquisition of Chantecaille. We were able to increase our EBIT margin by 100 basis points to 15.1% of sales. Our gross margin declined year-on-year, driven by high levels of input costs, partly offset by pricing action. While our absolute marketing spend increased to its highest level ever, we benefited from more efficient investments in digital media. In addition, strict cost measures helped contain our general expenses. The Tesa business faced a very strong H1 comparable from last year.
On the top line, we beat the strong first half year 2021 with 5.4% organic growth. Tesa reports an EBIT margin below last year due to the strong headwinds from inflationary input costs and the temporary disruptions in the China business in the second quarter. Looking at the sales development of the consumer segment of the past quarters, we can see a continuation of strong quarterly performance. After finishing the year 2021 with organic sales growth of 8.8%, we started the year with growth of 11.6% and are confirming this level now with another growth increase to 11.9% in the second quarter. Looking at the performance by brand, Vincent already took you through some details, so I will briefly cover the main developments.
First, we are happy to report that all our brands are contributing to positive sales growth in H1 2022. As mentioned earlier, NIVEA performed very well both in Q1 and Q2 on a global level and across the whole portfolio with an outstanding performance in the sun category. The first half 2022 finished with organic sales growth of 11.2% for NIVEA. Online sales outperformed offline sales once again in the first half. Derma continues its success story in nearly all markets. We see strong market share gains and sales growth in our top countries such as the U.S. and Germany, but also former white spots continue to accelerate like Latin America. Thiamidol remains a very important growth driver. Additionally, Derma again saw very strong online growth.
Our plaster brands continue to outperform the market with the ongoing market share gains and recorded sales growth of 14.9% in the first half. This growth is mainly driven by the wound category, which includes the successful 2021 relaunch of the Bacteria Shield plaster. We already mentioned La Prairie performance in Q2. Nevertheless, we were able to grow with La Prairie in the first half year, and we finished with strong growth rates in June, which makes us confident for the third quarter. Switching now to the regional perspective for our consumer business. All regions are recording positive growth and also this quarter our Americas region is growing faster. Latin America achieved 29% organic sales growth in the first half of 2022. Growth is broad-based from a country as well as brand perspective. Both NIVEA and Eucerin saw very strong results.
North America continued to grow on a very high level, as already explained in detail by Vincent . All in all, we saw a 19.2% organic sales growth in the region. The Europe region also accelerated in the second quarter, lifting H1 growth to 8.1%. Both Western and Eastern Europe recorded similar growth rates, driven by strong performances in the so-called COVID categories such as sun, deo, shower and lips. As reported, our Africa, Asia, Australia region has been impacted by lockdowns in Asia in Q2. Nevertheless, we achieved growth of 8.9% in the first half of the year. Sales trends were especially positive in India, Middle East and South Africa. In addition, Derma performed well in the whole region and continues its growth story in China. Turning to the gross margin of our consumer business.
Assuming constant exchange rates, our gross margin decreased by 160 basis points to 59.6% from 61.2%. We were able to push through significant pricing in the first half, which helped offset nearly half of the additional input costs in H1 2022. Mix effects were flat. The strong contribution from sun, Derma and skincare was offset by less product growth in La Prairie and high sales in lower margin categories in personal care. Cost of sales, logistics and other had a negative impact of 300 basis points. This is mainly caused by higher commodity prices and increases in transportation costs. For the full year, we expect reported input costs to further increase, but also a stronger acceleration of the pricing component, resulting in a decrease of gross margin for the full year.
Despite the lower gross margin, we were able to increase our EBT margin and are on track to deliver slight EBIT margin growth for the full year. The key drivers of the EBIT improvement in the first half were the strong top line development, sequentially strengthening pricing impact, proportionally lower marketing spend, and strict cost control of general expenses. While our marketing spend grew significantly and has reached the highest absolute level ever, the top line leverage, the strong push into more efficient digital media, and particularly precision marketing, as well as a shift of budget into the second half of the year, helped reduce the spend relative to sales. Turning to working capital. In the first half of 2022, we were able to reduce our working capital further to 4.6% of sales.
This decrease was mainly driven by trade payables, where we continue our initiatives around the optimization of payment processes. Let's now move to our Tesa business. Tesa also faced a difficult situation at the beginning of the second quarter when lockdowns in China started. Once again, the business was able to show how quickly it can recover. After a very negative April, the months of May and June saw a quick return of the business. The China region eventually grew by 30% in June. The electronics business was the main driver of the performance in the second quarter. Despite the lockdowns, we could report positive growth in Greater China and the Asia Pacific region in the second quarter. Let me mention on a more general note that Tesa manages the global supply chain disruptions exceptionally well.
With our high service levels throughout the whole year, we were able to achieve a competitive advantage, helping us win new contracts. Overall, Tesa grew by 5.4% in H1 2022, primarily driven by pricing initiatives. Looking ahead into H2, there is an ongoing discussion about our exposure to a potential shortage of natural gas. Here is what we can share as of today. Given our footprint, we have high production volumes in the EU and especially in Germany for both Consumer and Tesa. In both businesses, we have already significantly reduced our exposure in Germany by implementing preemptive measures. These include rearranging gas consumption between sites and backup solutions to use alternative energy sources. We now see a low risk from a potential gas shortage for our own factories. While we do not expect a complete gas shutdown, there still are important risks, of course.
Alternative solutions require investment activity. Additionally, the running cost of operations can go up when using other energy sources. Even though we are prepared for potential gas shortages internally, our suppliers might be affected more severely, causing supply chain disruptions at worst. This brings us to our full-year guidance for 2022. Despite a strong finish to the first half, we will keep our full-year guidance unchanged. There is a high level of volatility, and we see a variety of potential risks going into the second half. One, ongoing supply disruptions and the lingering risk from potential gas shortages, which I just mentioned. Two, inflation seems to remain on a very high level and continued pricing could have an impact on consumer purchasing behavior.
Three, the COVID pandemic which is not yet over, and its further development, which is impossible to predict. Despite these headwinds, we are confident to arrive at our ambitious guidance for the year. Regarding sales of the consumer business, we expect at least the upper end of mid-single digit organic growth for the full year. We reiterate our guidance of a slight EBIT margin improvement. For Tesa we are looking for low to mid-single digit organic sales growth in full year 2022. The EBIT margin will be noticeably below last year's level. This means that for the group, we are guiding for the upper end of mid-single digit organic sales growth in 2022 and for an EBIT margin at last year's level. With this, I conclude and hand back to Jens for our Q&A session.
Thank you. At this time, we will begin the question- and- answer session. Anyone who wishes to ask a question may press star followed by one on their touchtone telephone. Please remember that we have a maximum of two questions per caller. Okay, looking at the queue, the first question comes from Iain Simpson at Barclays. Please go ahead, Iain.
Good morning, everyone. Firstly, if I could just pick up on something you said in the guidance, if that's okay. You said consumer organic sales growth for the full year would be at least the upper end of mid-single digit, if I heard you correctly. Clearly you've done 11.7% in the first half. It sounds as though Q3 has started very well for you. So I just wanted to check that I heard that correctly, and it could in fact be some way above the upper end of mid-single digit, but you were keeping that as a floor, given the limited visibility. My second question, if I just want to drill into what's happening with the NIVEA brand and the rollouts of the various innovations there.
You talked about A&P spend stepping up in the second half of the year. Is that specifically stepping up in NIVEA? If so, is it sort of stepping up to support pipeline launches and any indication you can give us what categories that might be in? Just any color at all as to how we should think about the innovation phasing or the white space launch in the second half of the year and where that additional marketing spend is going would be very helpful. Thank you.
Thank you, Ian. Astrid will answer your questions.
Iain, on the guidance, yes, you clearly heard the at least correctly. It was on purpose. As you mentioned, given current visibility, we are taking a cautious approach. We're very happy with where the business is here today. That said, we have a number of risks, and we are managing and trying to understand those further. In order, I would suggest those are customer negotiations that are ongoing on pricing, particularly in Europe, the lockdowns in China and their continued impact on our business. You know, I would say regular recessionary fears that all of us have right now, obviously in the economy and what impact that could have to consumer behavior. As I mentioned, also supply constraints. We are managing significant amount of bottlenecks and obviously continued challenges around gas and so on could lead to more.
In terms of your question on the second question on A&P and innovation. Yes, we continue to feel very good about our portfolio of innovation going into the second half, and we are planning to support our second half business very strongly. We, generally speaking, always have a heavier second half anyhow, and you know some of the big events that are coming in the second half that we need to support as well. We continue to feel very good about the A&P level we have. We are driving significant efficiency, as I mentioned, also by a significant shift into digital media and precision marketing. We feel very good about the level of spend we have, and we are going to increase that in the second half further.
Okay. We move to Iain, you're all good? Yeah.
Very good. Thank you.
Thank you. We move to the second caller, Guillaume Delmas of UBS, please. Guillaume?
Thank you very much, Jens, and good morning, Vincent and Astrid. First question is on NIVEA. Growth significantly improved sequentially in the second quarter. You did mention the performance was broad-based, but wondering if you could provide some color on NIVEA's growth in the sun care segment in Q2 specifically. I mean, it would just be helpful to understand how much of the brand's growth acceleration was down to that strong performance in sun care versus what I guess would be more underlying and sustainable performance.
And then my second question is on the other line in your P&L. There was a noticeable swing in the first half of this year relative to the same year ago period. I think it's from EUR -14 million to EUR +10 million this first half. Can you provide some color on what this improvement is attributable to, and how do we think about the full year for that other line? Thank you.
Yeah, I will take the first question, and Astrid, we'll answer the second. Yes, we have a fantastic sun care season. We are also, in fact, above the level of 2019, which is also very important. Not only is the market growing, but we are gaining market share. We are also gaining some number one position that we had lost, you know, a few years ago in some big European countries, starting with Germany. All the sun care franchises are doing well. We have a very strong business in kids, for example, which has always been a very strong franchise of NIVEA. We are growing everywhere.
The biggest growth, I would say, the turnaround is really happening in Europe, where we are, as I said, you know, turning around the brand. We are also gaining market share in Latin America, in all countries of Latin America. All in all, you know, this has been a continuous success since last year. We are expecting. Now we see the sellout results and the season is happening. We are expecting a record year for sun care.
On your second question, Guillaume, there are smaller factors going back and forth within that. The biggest of which I would call out is, we were still producing for Bayer as part of the Coppertone acquisition. That's no longer the case, and there were some losses related to that last year.
Thank you.
Thank you. We move on to Fulvio Cazzol at Berenberg, please. Fulvio, good morning.
Yes, good morning, and thank you for taking questions. My first question is on the U.S. One of your competitors highlighted a slowdown in July. I was wondering if you noticed similar trends in any of the key markets that you're in. The second one is on pricing. You indicated that you recovered around 50% of input costs from pricing. I think at the last results presentation in Q1, you were aiming for 80% recovery. I was just wondering, is this still a target? Is the 50% that you've realized so far just reflecting the timing effects of when pricing goes into the market? Thank you.
Thanks for your question. On the U.S. business, as you know, we are particularly strong in sun care. Here we are clearly on a very positive dynamic. We are not seeing any slowdown. On the contrary, we have not only Coppertone doing extremely well, but as I mentioned, also the success of Eucerin Sun, which is above expectations. We don't see also any kind of slowdown on NIVEA. We are more into a kind of mass-market body care environment. Where we see some cautiousness is obviously on department stores. In Africa is obviously part of it where we see the retailers being more cautious and being more cautious in terms of you know, taking orders. It's more, I would say, a cautiousness than really a slowdown that we can see today. That would be the message on the U.S. Astrid?
Yeah. Your second question on the coverage of our cost increases, we are still holding on to the previously stated ambition to cover about 80% of our costs with pricing. We're well on track with that. 50% year to date is where we want this to be. We will see a reduction of cost increases in To Go while our pricing will accelerate significantly. Maybe one fact to give you on the way, when we're looking at our Q2 performance from pricing, half of our growth is driven by pricing in the second quarter. A really strong acceleration there of the impact from pricing.
Thank you for that color.
Thank you. We move on. Bruno Monteyne at Bernstein. Good morning, Bruno.
Hi, good morning, everybody. My first question is back to the gas in Germany. Thanks for that explanation of what you're doing. I presume that you're using Germany for producing your products for a much broader area than Germany sales. Could you indicate what percent of your global sales is really driven by production based in Germany to get a bit of feel of how far that could spread? The second question is back to, I think, something we just heard on commodities and costs. Given where commodities have recently moved, do you think you will reach peak COGS inflation in the second half, or will it be later, or do you see no end to that inflationary cycle just yet? Thank you.
Thank you, Bruno. I'll take both of those questions. Yes, we produce for a much larger part of our business in Germany. About a quarter of our business is supported with production in Germany. As I mentioned, though, we have significantly prepared to ensure that we can continue to support that business through alternative energy sources, through shifting production and so on. We are certainly doing everything we can to prepare for that. I do want to call out, as I said also in my speech, though, we are also, you know, in the end, relying on our suppliers' need to manage that situation as well. In terms of commodities, yes, we have reached a peak.
What you should understand why I'm quoting that our costs will continue to rise somewhat is because obviously we have bought a certain contract and have inventory or a contract open currently at essentially that peak. But we are starting to see a bit of a slowdown of the sourcing or improvement of the cost, which is great. Hopefully that holds.
Thank you very much.
Thank you. Next on our line is Celine Pannuti at JP Morgan. Good morning, Celine.
Yes, good morning. Can you hear me?
Yes, we hear you well.
Excellent. Good morning, everyone. Two questions and maybe a follow-up on just the last question. First on the growth for the second half, if I look at your comp over the last three years, it seems that H2 is an easier comparative. You alluded to La Prairie bounce back as well as some activities in terms of launching. I mean, do you agree with that? Like, I mean, the cautiousness on the top line, is it really driven by the overall environment or are you expecting effectively a slowdown in the second half despite easier comparative?
My second question is on your A&P comment. A&P on consumer last year, you said was the 25.5% of sales. What's the number in H1? And it was 27% last year in full year 2021. Are we expecting it to be below that level for fiscal year 2022, or given the ramp up in H2, it should be above that? Just to follow up on the last question because, Astrid, I heard you saying that COGS inflation will be lower in H2, but prior you said you had stronger costs, so I'm not very clear. All in all, including raw mat, including supply chain, energy, is your COGS higher in or lower in H2 versus H1? Thank you.
Thank you, Celine. I will take the first question. I think Astrid insisted a lot on the word at least. You know very well that at Beiersdorf we prefer to underpromise and to overdeliver. Yes, we are in a positive dynamics. Still, you know, Astrid mentioned the few risks or hiccups that might happen if there is a lockdown again in Beijing and Shanghai. La Prairie might be impacted. We're also in the middle of tough conversations with European retailers on price increases. All of that is making us, you know, be more cautious. You are right, you know, to mention the comparatives of last year and the dynamics of the business. Astrid, on the second questions.
Celine, on A&P, let me tell you what development we saw in H1, and I'll start actually with last year. Last year, H1 spend was 200 basis points above the 2019 level. Media spend, what we care about, was 200 basis points above the 2019 level. We continue in this first half year to be 130 basis points above. We ended up at 24.5 percentage points for overall spend, and again, above the line was 130 basis points better than 2019. We were at a record level for marketing spend ever, so really strongly supporting the business. But of course, what we have seen is very strong sales leverage, which is obviously lowering the percentage spend.
What we've also done is shifted significantly into digital media and also precision marketing, and we're seeing significant efficiencies from that perspective. We have seen through the lockdown some shifts of budgets into the second half. We were obviously not spending when we were seeing the situation in China. We feel still very strongly about having spent the right amount building also for the second half, and we will be higher even in percentage in the second half. In terms of cost, so what I said is we will see a slight increase of the impact from unfavorable costing in the second half because we already have inventory or contracts at essentially peak pricing. The impact of pricing to offset that will accelerate versus the first half. We will try to, again, reach our goal of covering 80% of our cost increases through other measures, pricing and mix.
Yeah. Thank you. Can I just rebound on that and square that with, Vincent, what you said? You said tough negotiation on pricing. Is pricing getting tougher? You seem to think that pricing is accelerating, but at the same time, you mentioned, I think several times now, pricing negotiation in Europe. Can you expand on this, please?
Sure. I think obviously we are being forced and to be much more daring in terms of the price proposals we are discussing with retailers, especially in Europe, in Western Europe. We are having those conversations. We went through the first price increase and it's already. You see that already in the sellout figures of the last weeks. We are entering into the second negotiation about price increases, which is not a walk in the park and which is generating the necessary exchanges with retailers in Western Europe. That's what I was referring to.
Maybe just to add to that, Celine, where we have very strong pricing is emerging markets, Derma, La Prairie, healthcare. The one question mark continues to be obviously Europe pricing, where we are past our first round, but still in the second round.
Thank you so much.
Thank you. Okay, we move on to Tom Sykes at Deutsche Bank. Please go ahead, Tom.
Yeah. Thanks very much, Jens. Morning, everybody. Just coming back to your comments on La Prairie, and you said you were rolling out, expanding by about 10 doors in H2. Could you maybe say what the increase in selling capacity is in La Prairie in H2, and then that's what the increase in cost you're sort of expecting in H2 as well, and whether on the growth that you're budgeting for, you're expecting to get operational leverage in La Prairie in the second half of the year. Obviously it's noted the start that you've got off to in July.
Coming back to the question on Sun, I know you gave some interesting descriptions of what had happened in Sun, but you did say at the capital markets day you were up by 30% year-to-date, and I think that was lower in Q1. Is it fair to say that the run rate of Sun and probably DO were close to double in Q2 what they were in Q1, please? If I could maybe just put one more, could you possibly say what the FX impact at gross and operating margin was, please?
Okay. On the first question, it's difficult to give you a precise figure, but I would say the 10 doors we are opening in the coming months in China might generate an extra 10% growth versus what we are doing today. It's really a rough figure. The interesting thing, and what I insisted on, is that we are expanding. You remember, Tom, that we have only 80, 90 doors in China, so we are still very, very selective, but we are expanding our coverage of the Chinese consumers outside Shanghai and Beijing, where we are overrepresented, I would say. On sun, I was looking at the figures.
In fact, we are slightly doing better in Q2 versus Q1, but overall, we are in the same range of 25%-26% growth versus last year. No big difference. What I see is clearly an acceleration of NIVEA Sun, but it's also because of Coppertone. We had a big Walmart order in the first quarter. All in all, same kind of growth, 25%-26% in the Q1 and in Q2. We see also, that's good news. We start to see the sellout of the season. We have the same kind of range in terms of course.
Thank you.
In terms of foreign exchange, I can give you the impact on the top line. Overall, for consumer, we saw a positive impact of 450 basis points, mainly driven by U.S., Brazil, Mexico and China. With Tesa it was 380 basis points.
Okay. Thank you very much.
Thank you. Next on our line would be Emma Letheren at RBC. Good morning, Emma.
Morning, everyone, and thank you for taking my question. I have two. Firstly, you had a very strong performance in Eastern Europe despite everything that's going on there, and I was wondering if you could give a bit more color there about your performance in Russia and Ukraine. Secondly, you highlighted the potential for prevailing inflation and a potential recession in Europe in your outlook statement in your half year report. I was wondering if you could talk through what action you might be taking now in terms of your portfolio in preparation for this.
Thank you, Emma, for your question. Regarding Eastern Europe, if I take out Eastern Europe, excluding, of course, Russia and Ukraine, we are progressing extremely well. We had a 35% growth in Eastern Europe, doing well on each and every brand. Regarding Russia and Ukraine, if you remember, we have decided to stay in Russia, but with a much shorter assortment, and we decreased the assortment by 70%. We are there, we are doing well, I would say, with what we have, but obviously, we are not growing the business and we stopped investing immediately when the war started. We are just keeping the trademark NIVEA alive. That's the objective and no more, no less.
In terms of recession risk, Emma, to be honest, everyone knows kind of the same, in terms of obviously what we read and what we see. We have a good portfolio of brands that we feel cover us well in you know, recessionary times. We have opportunities even within our portfolio, even within our brands. For example, NIVEA to down trade. Previous downturns, for example, the financial crisis in 2008/ 2009, still saw our business overall grow, at least from the consumer side. Tesa did see a dip, but also a fast recovery. This is obviously a big question mark. No one can really tell what the future will hold.
Answered. Thank you very much.
Thank you. We move on to Jeremy Fialko at HSBC. Hello, Jeremy.
Hi, good morning. A couple of questions from me. First one is-
Sorry.
First one is, when are we looking at the second half margins? From what I gather, we're still gonna see an element of gross margin pressure in the H2, albeit less than what you saw in H1. Your marketing is going to be up as a percentage of sales, and then potentially you will have a less favorable shift in the other costs, all of which could, in theory, lead to the margins being down in H2. When I look at this on a kind of, let's say, bigger historical perspective, your margin H2 last year were 10%, which I think is the lowest kind of half year margin we've ever seen from the consumer division.
Margins down year on year would imply obviously an even lower number than that. Yet you're looking at a business where the sales, you know, seem to be growing very well. You've got a much bigger sales base than before. I just wanted to try and sort of square those couple of things and kind of get your views on that. Then the second question is just on Tesa. Could you talk a little bit about how you see some of the different key industries evolving for that in the second half? Thanks.
I will take both of those questions. H2 margin, as you've mentioned, we always have second half lower margin. We will see a smaller impact from those margin, as you've mentioned, and I tried to answer in previous questions. Yes, our A&P will be up. Likely we won't quite have the same favorability from our, let's say, general expenses and so on because those benefits give it obviously some very significant top-line leverage in the first half. We are holding on to our EBIT margin guidance as we set 30 basis points increase over the prior year, and that's what we're holding on to. Let's see how it goes. Obviously, as we continue to move along, we will confirm our guidance further.
In terms of Tesa, what I'd like to say here is that, currently we see a good business, across the board, obviously driven by, the electronics business, an okay auto business. Again, big question mark on where that industry will go. What we can tell you in general with Tesa, as we've also just mentioned, when there are recessionary impacts with Tesa, we feel that quite quickly, but Tesa also tends to get out quite quickly of those cycles. It's where so far we do not see that impact yet outside of the Q2 lockdowns in China.
Okay, thanks.
Thank you. There's a long list of callers today. Next on the line would be Chris Pitcher at Redburn. Good morning, Chris.
Good morning, all. A couple of questions for me, please. Firstly, on Chantecaille, could you give us an update on how the integration is going, and could you give us a sales performance on a pro forma basis there? You commented how it was ahead of expectations in North America, but how's it performed in Asia? Secondly, on the gas shortage and sort of contingency planning, you mentioned that you're well-positioned, but your suppliers could be less well-prepared. Can you give us a sense of the visibility you have on your supply chain, with some sort of risk assessment across there? I note that your inventory's obviously stepped up in H1. How much of that was contingency stocks? How much was just the higher prices of raw materials? Should we expect a further increase in inventories into the second half to contingency plan? Thank you.
Thank you, Chris. I will take the first question on Chantecaille. We're very happy with the results of the first semester. If I take, you know, the months of February to June, which are the months where which belong to Beiersdorf, we grew 14%, which is pretty good. We see a good well-balanced performance across the U.S., slightly more, Asia, slightly less, but overall a good performance. We also were able to move into the integration the way we wanted to move. We recruited top profiles in finance, in HR, in legal, in tax, in all the key functions, in order to make, you know, a more robust operating model. We are working now, you know, on extending the business. We have obviously the ambition of being in China. We are also working on some IT improvements. Everything is working well and delivering what we expected.
On your second question relating to inventory and gas shortage, we are holding more inventory driven by both what you've mentioned, contingency, but also clearly higher raw packaging materials. Those are drivers. We absolutely are looking to ensure that we have a very good inventory position as we go, particularly into the fourth quarter there. We will do everything we can to safeguard our business. In terms of transparency on impact for gas shortage, I explained where we are with our business. We're also obviously working with all of our strategic suppliers on continuity plans. As you can imagine, they're working with many customers on those, so we have somewhat limited transparency on that, but we're certainly working on securing supply needs.
Vincent, can I just quickly confirm, did you say 14% or 40%, 40% for Chantecaille growth? Apologies.
4.14%.
4.14%. Thank you.
Thank you. Next in our line will be Olivier Nicolai at Goldman Sachs. Olivier, good morning.
Hi, good morning.
Thanks.
I've just got two questions, please. First, on La Prairie, you mentioned in the press release, obviously strong growth in the U.S., but also in Europe. Could you just help us to understand the geographic split for the brand today? Essentially, how big is China versus U.S. versus Europe, and what is duty free today? The first question. Second one, on e-commerce, for your consumer business, can you give us an update on the growth you had in H1? For La Prairie specifically, how much is e-commerce today? Thank you very much.
We, Olivier, your second question was on? Can you repeat?
On e-commerce.
Okay, sorry.
How much growth in H1?
Okay. Overall, you know, if you look at La Prairie today, if you put together the brick-and-mortar business, you put also travel retail, and you put Tmall, it's around one half of the business, in fact, is coming from China, which is why, you know, we are obviously very dependent on the evolution of China. You have something like 30%, which is Americas, and the rest in Europe. When you look at the evolution of the business, we are doing well in travel retail, but we are growing
I mean, in Europe, for example, almost 100% in the big growth, but we are far from the level we had in 2019. We are still like everybody at low figures versus the pre-COVID time. We are sure it will take time, you know, to develop, to go back to good level of business in this region. On e-commerce, we are doing extremely well. You might have seen that we are perhaps one of the only company, you know, still gaining market share on e-commerce. We are progressing extremely well on Derma which is really the first performer in terms of e-commerce growth. We are developing very well our business also in cosmetics.
You know, the growth of online is almost double the growth of offline and particularly in regions like Latin America, but also obviously the U.S. All in all, on a like for like basis, I'm taking into account the fact that we are smaller than some of our competitors in China and the U.S. We are becoming, you know, not yet best in class, but we are part of the best players in e-commerce, and we'll continue to invest in this business.
Thank you very much.
Thanks. We have, Karel Zoete in our line at Kepler Cheuvreux. Karel, good morning.
Hello? Hello?
Yeah, Karel?
Yes. Can you hear me?
Yes, we can hear you. Thank you.
All right. Good. All right. Yeah, the first question is on cash flow. Yeah, that was relatively limited in the first half of the year. How do you see that developing in the second half of the year? The second question is also a follow-up on margin guidance, but from a different angle. In the past year, you showed regional margins when we saw close to 20% EBIT margins in Europe and single-digit margins elsewhere. How is margin differential between different geographies today? And does that explain part of the answer on your somewhat more cautious guidance on margins in H2? Thank you.
Thank you, Karel. I'm gonna take both of those. On the cash flow statement, you have to remember that we paid for our acquisition only once in the first half of the year. That has an impact. We feel very good about our cash flow otherwise, outside of all the strengthening in Derma and through our core. In terms of EBIT development differential, yes, we have obviously in the past had stronger differences between the parts of the business. I would suggest that now over the last couple of years, what we've purposefully done is start to build businesses with, but they are really lasting effect that will obviously continue to help us manage our overall profitability as well.
Thank you.
Thank you. Our last caller today is Pinar Ergun at Morgan Stanley. Pinar, good morning.
Good morning. Thanks for taking my question. Two follow-ups on some of the themes that were discussed earlier. I believe you said gross margin mix impact was neutral. Could you please give us more color around that? I was under the impression that sun care would've had a positive impact, but maybe I'm wrong. Or are you seeing any down trading? The second follow-up is on pricing. On the slides, you're showing 140 basis points benefit to gross margin from pricing. Am I right in assuming that implies about 3.5%, 4% pricing in H1 and maybe mid-single digits in Q2? If so, that suggests your pricing might be lagging inflation. Any thoughts on why? Have you deliberately gone easy on pricing so far, or was that because you faced some resistance from retailers? Thank you so much.
I'll take both of those questions. In terms of mix, you are right, we had very strong sun sales, and they absolutely contributed positively to our mix. Beyond that, we also had very strong Derma sales, which are also highly accretive, as well as just generally our strong skincare business was contributing positively. On the other hand, unfortunately, as we've just also mentioned, makeup, it with less growth year to date than certainly we had hoped, is not contributing to mix. In fact, going the other way. Then also our very strong personal care growth at lower margins is also offsetting, the good performance in the other parts of the business I just mentioned. In terms of pricing, yes, there is a time dimension to pricing, but we certainly have been quite aggressive, I would suggest, around pricing.
As I mentioned, in the second half, it's driving about half of our growth, coming from pricing and again, accelerating. We will see more impact in the second half, which should allow us to get to that about 80% coverage of our costs that we've all along tried to achieve.
Thank you very much.
We have a final caller, David Hayes, SocGen . David, your questions, please.
Good morning. Thank you very much. Just want to look forward to next year. I think we've mentioned the guidance that was given in June. Just to unpack that, are we still guiding for at least 50 basis points margin improvement in consumer next year? Then just going on that number, given what we know now through the first half, can you give us any kind of breakdown in terms of input cost outlook assumptions as things stand in that number? And pricing levels that you're achieving, whether you think they will stick or whether there's a risk that retailers look for some pricing deflation through next year? And also the A&P spend levels. And also the sun care season, obviously a great performance in the first half, but then that leverage benefit.
Are you assuming a normal sun care season next year within that guidance as well? Just trying to work out whether there's any more color you can give us on the breakdown for the 50 basis points. Thank you.
Thank you, David. I will take the first one, Astrid will take the second one. Yes, we absolutely confirm our medium-term outlook, of course, above market, and that we want to increase the EBIT margin by at least 50 basis points every year from 2023. We confirm that. That's clear. Astrid?
Your question related to input, pricing, and sun care. Look, David, if you had asked me those questions a month ago, I probably would give you a different answer. This is part of the challenge in terms of visibility. Certainly, we seem to have crossed a peak in terms of input costs that might have some, I would call it capabilities, but maybe a bit more stabilization of costs next year, so no negative impact. We'll have to see though. It really depends on how that develops in the months to come. In terms of pricing, certainly the pricing we're taking, especially these latest rounds that are starting now, absolutely should have a positive impact next year. We will have to see what happens obviously to consumer behavior and all that.
Those are all dimensions that, you know, we have little visibility, most of us have little visibility on, but certainly the pricing should come through. In terms of the sun care business, obviously we want to build off of where we are the successful year this year. We just launched, as we mentioned, Eucerin Sun Care in the U.S. We will build on that next year with further development of that business. We have, in general, a very successful business with NIVEA and Coppertone, and we're gonna try to strengthen that as well. We do not see sun care becoming a less important part of our business, rather the opposite.
Thank you.
Thank you. Well, that concludes our Q&A. Thank you for having joined our conference call. Beiersdorf's next investor relations event will be the release of our nine-month sales on October 27th. We appreciate your interest in Beiersdorf. Thank you and goodbye.
Ladies and gentlemen, the conference is now concluded and you may disconnect your telephone. Thank you for joining and have a pleasant day. Goodbye.