Ladies and gentlemen, thank you for standing by. I am Emma, your Chorus Call operator. Welcome and thank you for joining the Beiersdorf Conference Call half-year results 2020. 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. Please press the star key followed by zero for operator assistance. I would now like to turn the conference over to Mr. Jens Geißler, Head of Investor Relations of Beiersdorf AG. Please go ahead, sir.
Hello. We're still there. Good morning, everyone. Welcome to Beiersdorf's half-year conference call. This is Jens Geißler, and here with me this morning is our CEO, Stefan De Loecker, and our CFO, Dessi Temperley. I'd like to share with you Beiersdorf's business results of the first six months of 2020. Due to ad hoc regulations, we already pre-released our main sales figures by the 6th. Now, as usual, we will start with a presentation and a business review. Remember, when you re-register for Q&A, there is a limit of two questions per caller. And with that, I will now hand over to Stefan De Loecker.
Thank you, Jens. Good morning, ladies and gentlemen. I would also like to welcome you to today's conference call. Today, we will look back at the first half of 2020, which was marked by exceptional circumstances due to the COVID-19 pandemic. The COVID-19 pandemic has had a far-reaching negative impact on our business, especially in the second quarter because of the significant contraction of skincare markets, our core business, around the world, and the crisis is not over yet. As we look ahead to the future quarters, we will have to continue to adapt to an uncertain and very volatile situation. Even though the market is declining, we were able to gain market share in our core skincare categories, a clear sign of our brand's strength, our ability to react to rapidly changing consumer demand, as well as the resilience of our teams and the organization.
Also, in this time of crisis and uncertainty, we stick to our Care Plus agenda. Its strategic pillars have become even more relevant, both in the short and in the long term. Therefore, we continued and will continue to invest in this strategic program and keep developing our brand's equity, digitalization, skincare innovations, unlocking white spots, and sustainability. Ladies and gentlemen, since the crisis began in Wuhan, from day one, we have focused our efforts on three priorities. First, to take care for the health and safety of every employee around the world. That was and remains our highest priority. We have proactively given employees the option of working from home. We're constantly adapting to a new normality. As part of this effort, we enabled our employees to return to their office locations in a flexible and coordinated manner, in addition to working from home.
It is a combination that has already become a new normal way of working. Secondly, to care for our consumers and therefore safeguarding and continuing our business by adapting our offer and activities to the rapidly changing expectations and shopping behavior of our consumers. We also have been able to keep our service level at a very high level. Third, to care for vulnerable communities in a society battling COVID-19, and not just with one-off immediate aid, but with a long-term aid program. I will return to that later. Over the past few months, this demonstrated and strengthened the qualities that define us as a company. Our teams have been working around the world to remain close to our consumers during these challenging times and to provide them with the very best support possible. Values like trust and caring for one another are becoming important once again.
Care is what Beiersdorf stands for more than 135 years. Let us start by looking at our sales situation in the first half of the year. As said, the effects of COVID-19 are clearly visible. Organic group sales fell by 10.7% year on year. They stood at EUR 3,449 million in nominal terms, down 10.1% on the prior year figure. Sales at the consumer business segment declined by 10.9% and at the Tesa business segment by 10%. The performance of the various consumer brands was mixed. Nivea and our healthcare brands posted a fall of 8.8% and 7.7% respectively. Our derma brands defied the crisis and grew by 6.2%, not least thanks to the continued strong growth of our Thiamidol innovation. Our selective skincare brand, La Prairie, suffered a sharp decline in sales. Travel restrictions and lockdowns led to a drop of 41.9%.
Allow me to provide you now with insights into the underlying market dynamics, to explain to you about the ways that we have been tackling these challenges, and outline our plans for the second half of the year, and I would like to start with our selective skincare brand, La Prairie, which was hit particularly hard by the COVID-19 crisis during the second quarter. The entire luxury cosmetics market, including skincare, was subject to a massive decline. The travel retail business decreased drastically by up to 70% at times, and we expect it will take time to recover. The acceleration of our e-commerce business by 40% versus last year, and even stronger performance of our online sales on the La Prairie e-boutiques, with a growth of over 60%, driven by China, where the growth was over 80%, could not, however, offset this decline.
At the end of March, so just before the start of the second quarter, a total of 82% of our La Prairie doors were closed. The market decline has driven a drastic increase in promotion intensity by competitors, both with 20%-50% discounts and the extensive provision of free samples. As always, and also in this unprecedented crisis, we are holding true to our course of strengthening the most exclusive luxury brand in the skincare market. In order to safeguard La Prairie's exclusive brand equity, notwithstanding the stronger competitive pressure, we will continue to forgo discounts. Exclusivity also means offering the consumer an exceptional brand and product experience. The exclusive skin treatments and the high level of service in La Prairie stores are an essential part of this.
Over the past two years, La Prairie has initiated the closing of more than 1,000 doors that failed to meet the brand's exclusive standards. This process is designed to provide consumers with the most intensive, highest-quality brand experience in selected stores. Despite the COVID-19 pandemic, we are continuing this strategy, and this process will be completed in 2021. This uncompromising approach to experience, service, and quality is rewarded by our consumers as demand for La Prairie remains high. Our most recent figures show step-by-step recovery. In China, where we were able to achieve 47% sales growth in the second quarter, a clear proof of the exceptional loyalty of our consumers. Business development prior to COVID-19 showed what La Prairie is capable of. We will return to this dynamism and win people over with powerful innovations because La Prairie constantly redefines the essence of excellent and innovative skincare.
One obvious example of its market-shaping role is the innovative eye care products that are being introduced at this moment. The Skin Caviar Perfect Concealer is the perfect combination of concealer and eye care. It smooths the skin and creates a radiant look. The Cream La Prairie with the White Caviar Eye Extraordinaire demonstrably improves skin's elasticity and moisture and helps reduce shadows and contrast in the expanded eye area. In spite of the corona crisis, the derma segment performed strongly in the first half of the year and generated 6.2% growth. Derma cosmetic markets proved to be more resilient than the overall cosmetics market. Pharmacies were one of the key reasons for this. They were classified as essential businesses worldwide and were therefore allowed to remain open during the weeks-long lockdowns and were met, on top of it, with high trust by consumers.
Moreover, demand for products that offer solutions to skin problems remained intact despite the crisis. At the same time, our online sales increased significantly. One of the highest sales generators was our derma business in North America, where e-commerce contributed to more than 20% of total sales. Eucerin and Aquaphor also outperformed the competition in our key markets during the first half of 2020, gaining market share across regions and categories. Eucerin is and will remain a skincare brand that treats skin problems in a unique way, embodies the very highest derma cosmetic expertise, and enjoys the trust of dermatologists and pharmacists worldwide as a result. We will continue to pursue this successful strategy with a clear focus on further expansion of our digital presence. Powerful innovations, such as the successful Thiamidol range, drive our business and make our brand one of the leading providers of medical cosmetics for skincare.
With the help of Thiamidol, we have been able to unlock additional white spaces for Eucerin and became number one in the even skin market in Brazil and Russia. The strategic decision we announced last year to enter the Chinese market with focus on e-commerce is paying off. Eucerin had a promising start and has already successfully expanded its online presence in a very short period of time, confirming the high acceptance among Chinese consumers. In the second half of the year, we want to further intensify the success of our derma brands and convince consumers with a strong product pipeline. Our successful launch of the Aquaphor Body Ointment Spray in the United States is being followed by its global rollout under the name Eucerin Aquaphor. This is our first protect and repair ointment in spray form.
We are continuing to write the success story of Thiamidol and are setting new standards. We are now in the process of introducing the first anti-age product with Thiamidol, the series Eucerin Hyaluron-Filler + Elasticity 3D Serum. Thanks to its patented active ingredient, the product offers a holistic solution for mature skin in persons aged 50 and above. This is aimed at the three typical dimensions of skin aging and not only tackles age spots, but also wrinkles and loss of elasticity. In contrast to our derma cosmetic brands, our iconic Nivea brand was more heavily impacted by the COVID-19 pandemic. Let me start to describe the main effects of the COVID-19 crisis on consumers and shoppers. Consumption behaviors have changed.
Demand for essential personal and hygiene care products such as soap, handwash gel, and hand cream were much stronger, and fundamental trust of consumers in brands and companies became even more important. Many people have dramatically changed their shopping behavior, with the aim of spending as little time as possible in-store and increasingly shopping online. Furthermore, mainly in Europe, many in-store activations in quarter two were postponed to the second half of the year due to the crisis. International travel has collapsed. Markets of the tourism industry, an area where we are active and particularly with our sun protection products, are suffering along with the travel retail business. At all times, we have adapted agilely to changing consumer needs, reworked media plans, and modified our product assortments.
Ladies and gentlemen, with our focus on skincare, we are affected by today's declining markets, particularly in our important sun protection market, which fell 33% below its level in June versus June 2019. The market decline affects all categories, but personal care remained more in demand than skincare. The fact that despite these market developments, we still succeeded in gaining share in all skincare categories demonstrates our resilience and the trust consumers have in our core brand. There was great demand, in particular for our classics, the universal creams, but also hand creams in the second quarter, both in Germany and worldwide. In this regard, Nivea has benefited from the fact that it is close to consumers even in times of crisis, understands their needs, and enjoys great trust worldwide. Our increased market share confirms that the Nivea brand purpose to provide superior skincare for all remains highly relevant.
The COVID-19 crisis does not change that. On the contrary, as this crisis increases the awareness of the importance to take care of one's personal health. To gain the best possible understanding of consumer needs and to meet these needs with targeted innovations, we must be as close as possible to consumers and stay in a constant dialogue with them. This is why we have increased and will further increase our investment in digital technology and digital communication. We constantly enhance our products and will enter the second half of the year with a strong plan. One example of our innovations is the new Nivea Q10 Energy range that we recently launched. It is a face care range that provides the skin with the energy it needs and counteracts the early signs of premature skin aging.
Another example of our innovative strength is the addition of a new anti-age range to our NIVEA Naturally Good portfolio. We entered the growth segment of natural cosmetics by launching this range in Europe at the end of 2019. The products, which are based on at least 95% ingredients of natural origin, are performing clearly above expectations. Ladies and gentlemen, the relevance of our long-term oriented care plus strategy has never been clearer than during these exceptional times of crisis. Let me now briefly update you around our work in particular areas and our progress in the first half of the year. The COVID-19 pandemic has given a strong boost to e-commerce business worldwide. Long before the pandemic set in, we understood one thing quite clearly: communicating with consumers digitally is a key success factor that we aim to leverage systematically, and our investments are paying off.
We achieved an increase of more than 50% year on year in our online sales in the mass market around the world. More than ever, consumers are using digital media, are searching for suitable skincare product recommendations, and are buying them online. Therefore, we massively increased our investment in digital media in the first half of the year by 40%. We fulfill consumer wishes best when we maintain a close relationship with our consumers. In a reflection of this understanding, we are focusing on a digital dialogue with consumers and interactive communications, a practice that has never been more important. Over the past few months, we have significantly boosted our reach and interaction with consumers around the world by 25%. Gartner's recently released 2020 ranking for the digital performance of FMCG brands also confirms we offer our consumers an excellent brand experience across all channels.
Nivea was again named a digital genius in Germany and remains the undisputed leader. Beiersdorf's skincare expertise is a critical factor in unlocking our white space potential worldwide. Therefore, we invest in our global research and development network as part of our C.A.R.E.+ strategy in order to respond to consumers' wishes and the trends and dynamics of regional markets. We have now officially opened our new innovation center in Shanghai, the second largest innovation center worldwide after the one at our headquarters here in Hamburg. We invested EUR 10 million in this new location downtown Shanghai. The new site enables us to work closely with consumers and to quickly develop relevant face care innovations. And not just for China. The innovation center's job extends well beyond the development of locally relevant innovations.
It also works closely with Beiersdorf's global research and development network and shares findings from local markets worldwide. This significant investment in our R&D represents a clear commitment to growth in China and Asia, a strategically important region for us. Ladies and gentlemen, our commitment to sustainability will not be sidetracked by this crisis. On the contrary, we intend to make a real, long-range contribution for people, society, and environment. We have manifested this commitment in recent months with our sustainability agenda. This historic crisis has once again highlighted the essence of Beiersdorf and the values we stand for. We care beyond skin. We live up to our responsibility and work in areas that extend well beyond our core business, superior skincare. Over the past three months, our core priorities have included helping society battle COVID-19, and not just with a one-time immediate aid, but with a long-term commitment.
Beiersdorf launched the largest globally coordinated humanitarian aid project in the company's history in the last quarter. This is a EUR 50 million program aimed at supporting the battle against COVID-19. We have not just given immediate aid under this program. We're also offering long-term support. Our teams initiated a truly remarkable project in mid-March. We converted individual production lines in 13 countries on five continents to produce medical disinfectants in a very short space of time, with the objective of donating a total of one million liters of disinfectants to hospitals and medical staff around the world, a goal we achieved last month. We have also distributed five million skin and hand care products in more than 20 countries so far that medical personnel and physicians can use to treat their particularly distressed skin.
This is our way of expressing our gratitude for their tireless efforts for us all during this difficult time. Apart from donating products, we have doubled the personal donations made by our employees to various international aid organizations. As another key pillar of our aid program, we will provide financial support to existing partner organizations and other global groups. We want to use our financial donations to provide support where it is urgently and quickly needed. Above all, we want to help global organizations resume and carry out their long-range projects under the challenging conditions created by the pandemic. In the selection process to choose partner organizations, we concentrate on several different focus areas. In one program, we are working in South America to enable girls to lead self-determined lives. Our donations are also funding the training of healthcare workers in Africa who can support local communities.
Elsewhere, we are helping social entrepreneurs put innovative ideas for solving social challenges into action during and after the crisis. At the global level, we are going to choose three complementary partner organizations that have good local networks and can build on many years of experience. In addition to donating products and supporting local fundraising activities, Tesa has also already supported a global crisis fund that Doctors Without Borders can use to assist projects and regions where help is most desperately needed. Ladies and gentlemen, I would like now to ask Dessi Temperley to present the financial results for the first half of the year.
Thank you, Stefan, and good morning to everyone. We start with the key figures for the Beiersdorf group. Sales decreased organically by 10.7%. Foreign exchange movements of minus 1.4% and acquisition effects of a positive 2% led to a nominal growth in euros of minus 10.1%. Our EBIT margin, excluding special factors at group level, decreased by 170 basis points to 13.7% as a result of lower sales and negative mix impact between business units and categories. Please note that we booked total costs under special factors of EUR 31 million. These included EUR 12 million of donations to support communities in the crisis, EUR 8 million of one-off integration costs of the Coppertone, as well as EUR 10 million of impairments of goodwill in China linked to the Coppertone acquisition. Profit after tax margin, excluding special factors, was 9.2%.
The net financial result was minus EUR 40 million, driven entirely by unrealized foreign exchange losses on securities in our financial portfolio and additional risk provisions due to the heightened volatility of the financial markets. Despite this volatility, our financial assets generated a net positive return. The tax rate, excluding special factors, was at 30.8%. Due to a change in business model for one of our divisions, we took a one-off provision to reflect a potential tax risk. Notwithstanding this charge, we expect the full-year effective tax rate, excluding special factors, to be around 29%. Earnings per share, excluding special factors, decreased to EUR 1.37. Now some details on our performance by sectors. Consumer sales decreased organically by 10.9%, with nominal growth of minus 9.9%, including foreign exchange profit of negative 1.5%, and net acquisitions impact of plus 2.5%.
The consumer EBIT margin decreased by 200 basis points to 13.3% due to both the sales decline and margin mix impact, especially given the contraction of the travel retail business. Beiersdorf sales decreased organically by 10%. Foreign exchange headwinds led to a nominal growth rate of minus 11%. Despite the sales performance of the first six months, Tesa's EBIT margin at 15.6% dropped only slightly below last year's level due to a favorable mix, as well as the cost savings program launched at the end of last year. Taking now a closer look at the sales development of our consumer business, the already difficult first quarter of the year was followed by a second quarter defined by the outbreak of the pandemic. Lockdowns and travel restrictions led to a sales decline of 18.7% for the second quarter and 10.9% for the half year.
Just as a reminder, the sales growth of Argentina is calculated based on current year average exchange rates. Therefore, reported organic growth includes the material devaluation of the Argentine peso. If the sales growth of Argentina had been reported at constant currency rates, as for all other countries, the consumer organic sales decrease would be slightly better at minus 10.6% for the half year. Before going to our regional performance, some more color on the growth performance of our brands for the first half of the year, as well as the second quarter. The worsening conditions of the COVID-19 pandemic in the second quarter led to a decline in sales throughout all brands. Nivea closed the first six months with minus 8.8% growth in the mass market, which was heavily under pressure. We recorded positive growth in Nivea body and shower.
Most impacted by the lockdowns were our sun category, as well as the categories of face care and deodorant. Our derma brand, Eucerin and Aquaphor, delivered strong growth of 6.2%, driven by the double-digit growth rates in Asia and North America. Our successful 2019 launch with Thiamidol underpinned the continued strong growth of the Eucerin brand. After a strong first quarter, healthcare was materially impacted by the crisis in the second quarter, leading to an overall sales decrease of 7.7% for the half year. While the decline in Europe was moderate, emerging markets were impacted more severely. From a category perspective, wound care and sports had the highest decreases, which is partly caused by the temporary lockdowns of professional and amateur sports. La Prairie was our most affected brand in the first half of 2020. The decrease in sales of 41.9% was driven by travel restrictions and lockdowns globally.
By the end of March, 82% of our doors had to close. Looking at single regions, the sales decline was led by Americas, followed by Europe and Asia, while mainland China reported positive growth for the first six months of the year. On the next couple of slides, as usual, I would like to elaborate on our regional performance, starting with Europe, where our sales decreased by 12.8%. Western Europe decreased by 14.3% in the first half. This decrease was led by the significant impact of the lockdowns in France, Italy, Spain, and the UK, but also because of a strong decrease in the travel retail business of La Prairie, which is mainly reported under Western Europe. The sales impact of Eastern Europe was slightly lower at minus 6.3%.
The largest sales decrease in this region was in Russia, while Poland and Ukraine showed resilience with only slightly negative sales growth. Next is our Americas region. We are pleased to report that we could deliver positive sales growth of 1.5% despite the difficult market conditions. Adjusted for Argentina at constant foreign exchange rates, the growth rate for the region would have been plus 3.5%. North America reported a slight decrease of minus 0.2% in organic sales. Strong growth in derma and in Nivea shower were offset by the sales decline of La Prairie. With strong results in the first quarter, Latin America managed to deliver positive growth of 2.8% in the half year. Adjusted for Argentina at constant effects, the growth would have been at plus 6.3%. On a country level, Argentina and Mexico had challenging market developments, while Brazil and Chile kept up the growth in Latin America.
Finally, in the Africa, Asia, and Australia region, we reported an organic sales decrease of 14.4%. La Prairie sales were significantly affected by the COVID-19 crisis in this region. We see the biggest impact in Africa, as well as in countries like India, which were in full lockdown mode for a longer period. On a positive note, we could see a swift recovery of sales after the reopening of stores in China. The sales dynamics in the first half year had a material impact on our gross margin development. The gross margin of our consumer segment was down by minus 130 basis points in the first half of the year compared to the same period of 2019. We reported slightly positive pricing with a 10 basis points effect on gross margin.
We also managed to fully offset the COVID-19-related on-cost in manufacturing and distribution through the continuous execution of our cost savings program, a key enabler in our C.A.R.E.+ strategy. The main driver for the decrease in gross margin is the mix effect coming from the significant decline in the La Prairie and NIVEA sun sales, as well as consumer demand shift from skincare to personal care products, the latter being overall margin dilutive. Turning now to our margin performance, the consumer EBIT, excluding special factors, decreased to 13.3%. Along the P&L lines, our marketing spend increased by 60 basis points to 25.6% of consumer sales as we continue to invest behind our brands and winning innovations. Our general expenses, as a percentage of sales, increased by 80 basis points despite cost reductions and the continuous hiring freeze, which could not fully compensate the negative leverage from the sales decline.
Research and development expenses increased by 50 basis points as we continued to invest in our innovation initiatives aligned with our CarePlus strategy. We had a positive impact from other operating results, mainly driven by improved foreign exchange hedging results, as well as a positive effect from our reverse supply arrangements with Bayer, resulting from the Coppertone acquisition. The Consumer Division's working capital on a 12-month rolling basis decreased to 9.5% of sales at the end of half year 2020. In our CarePlus strategy, we committed to an ongoing reduction of working capital, and we continue delivering on this target even in the challenging environment of the first half of the year.
While we had increased levels of inventory in order to ensure that we meet the volatile demand levels from our customers, we also saw the first positive effects on our trade payables from the introduction of our supplier financing program as of the start of this year. The continuous focus on managing the heightened risk of the trade receivables also paid off, with our levels of debt outstanding staying largely in line with the levels of the previous year. Moving on to our TS business now, the impact of the corona crisis on the global economy is also felt in our adhesive business, where on total level we saw like-for-like sales decline of 10% in the first half of the year. The direct industry segment recorded a 14.5% decrease in sales.
In this segment, the crisis in the automotive sector, which started already in 2019, continued and worsened due to COVID-19 in the second quarter. In the electronics business, we saw a slight sequential improvement in the quarter from month to month. The trade market segment showed a more resilient development, especially the consumer and craftsman division reported good growth rates in Europe caused by the strong demand in the DIY channel, which helped keep the sales decrease at -3.4% for the first half of the year. Despite the top-line development, Tesa's EBIT margin decreased only by 40 basis points to 15.6%. A positive mixed development, as well as cost savings, including the restructuring program initiated at the end of last year, helped to protect the EBIT margin. This concludes my comments regarding the first half-year results, and I now hand back over to Stefan.
Thank you, Dessi.
Ladies and gentlemen, the second quarter was a major challenge for us, and even though we are already seeing the first signs of a business recovery, developments in the second half of the year will remain highly uncertain and volatile, particularly in terms of the risk of a second wave of the pandemic and a potential worsening of the economic situation. These uncertainties significantly affect the ability to forecast. For the current fiscal year 2020, the sales growth in our business segments and on group level will be negative. Group EBIT margin is expected to be significantly below prior year level, but one thing remains certain: the potential and relevance of the skincare market of the skincare category remains very healthy, and demand for skincare will recover.
Our C.A.R.E.+ strategy addresses the key issues: digitalization, sustainability, innovation, tapping into new growth markets, and locking white spots are more important than ever. That is why we are going to continue to position ourselves for the future with targeted investments in our strategic priorities and with selected initiatives that mitigate the COVID-19 pandemic economic impact on our business. The COVID-19 crisis has demonstrated quite clearly what we are capable of as a team. We have also learned where we can and will become stronger. We will continue to enhance Beiersdorf's life on this strong foundation. Our aim will be to make Beiersdorf's life even more agile, impactful, and efficient in order to be competitive in a much more volatile future. Therefore, we will strengthen our ability to increase innovation intensity.
In this new normality, we want to significantly reduce our own complexity to be able to react to changing market conditions much more flexibly. And finally, further increase our supply chain agility and resilience. This will enable us to deliver our CarePlus ambition of generating competitive, sustainable growth even in times of crisis. Thank you for your attention. Now, Jens will take over for the Q&A session.
Thank you. We'll now start the Q&A session, and we're happy to take questions. Just please remember that we have a limit of two questions per caller.
Ladies and gentlemen, 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 touch-tone telephone. If you wish to remove yourself from the question queue, you may press star followed by two.
If you're using speaker equipment today, please lift the handset before making your selections. Anyone who has a question may press star followed by one at this time. One moment for the first question, please. The first question comes from the line of Richard Taylor with Morgan Stanley. Please go ahead.
Good morning, everybody. Thanks for the questions. Two from me, one on free cash flow and then one on margins. Can you just step us through the moving parts on free cash flow, please? Obviously, it was a bit depressed this half, somewhat helped out, I suppose, by reducing CapEx a bit. So if you could just talk us through the moving parts there and maybe if we should expect that sort of same muted free cash flow in the second half.
And then, on margins, obviously, quite a lot of moving parts around in margins with the special items, etc., etc. But your guidance for margins to be significantly down. Again, can you just talk us through your thought process around there? Obviously, you've done a very good job protecting margins in the first half, but I suppose I'm asking how sustainable that's going to be for the second half.
Yes. Good morning, Richard. Thank you for the question. Indeed, our free cash flow specifically was significantly lower. There are a number of moving parts. The biggest one, of course, is the net cash flow from the investing activities. And this one amounted to EUR 164 million, which was basically our CapEx investments, as we have spelled out that we will continue to invest in our manufacturing capacity, as well as the investments in our new headquarters here in Hamburg.
So the total of those was EUR 180 million. The other part was the purchase of securities, and that was EUR 68 million, which we decided to do as part of our investing activities. The third moving block, of course, is the gross cash flow, which is coming from our significantly reduced margin, and that is another roughly EUR 80 million of difference. So those three are the main drivers of the reduced cash flow. It is very difficult to predict what the next year's, sorry, the second half year cash flow is going to be, but we also expect that to be below second half year and along the same lines as the first half. In terms of the margins, we have guided significantly below, and we define as we have done so in the past, significantly below being more than 50 basis points.
There is still a lot of uncertainty for us to define really the margin deterioration with more precision at this point of time. But at the moment, that is as far as we can guide, given the visibility of, or the lack of it, of the moving blocks on the margins.
Thank you, Dessi.
Thank you. Thank you. Moving on to the next caller, please.
The next question comes from the line of Celine Pannuti with J.P. Morgan. Please go ahead.
Yes. Good morning. I would like to, if you could provide some more visibility in terms of how the quarter trended for you in consumer and any talk about June numbers or how July has been performing. That's my first question. My second question would be on sun care. You said that sun care was one of the most impacted. Can you quantify that?
Should we expect this to continue to be complicated in Q3, or are you seeing a bit of some form of a season, given that some of the lockdowns in Europe have been opened? If you could also comment on how Coppertone did in the first half and whether we should expect this to be back to profitability in H2. I don't know if they were not in profitability in H1, but last year it was not the case. If you could comment on that. Thank you.
Thank you for your questions. How did the quarter two trend in the mass market? April and May were almost equally impacted. You see big differences between countries and categories. While Europe was very much impacted by, A, the trends I already mentioned, consumer orientation to different categories.
The fact that people were in lockdown not only affected their ability to shop, but obviously also the demand of the kind of products they were going for, and then what I already mentioned, the fact that a lot of the activation, the in-store activation, listing of new products, etc., has been postponed for obvious reasons, as retailers gave priority to more essential categories and to the fact that obviously restricting the amount of people in a store led to reduction. June was better. We saw that as restrictions got loosened as such and some activation restarted. July is even better. I would use the word significantly better than June, and so far, that is what we mentioned as first signs of recovery.
I think also there, if you make going a little bit more in details, that recovery is better for or is showing in all categories as such, also including some. But we see that certainly in emerging markets, the development of the COVID-19 crisis, the spread, and the impact in Latin America, in Africa, and India is still very volatile, and the effects are not always very visible. So in so far, that is what we see at this moment. Sun care is indeed the most affected category, and that obviously is driven by a number of things. One is certainly, if you look at the whole year, is that the Easter season, which in Europe is important, was not happening for the reasons we know, and we are talking here a decline that is deep double-digit as such.
The outlook going forward, as you say, there is some kind of summer season happening. We see an improvement of offtake, but certainly not at the level that we had before. But we recognize obviously that with the month of August and partially September, there's still something to go for. It remains extremely difficult to really foresee and predict where it's really going to end. That affects not only Europe, but also obviously North America as such and Coppertone. Coppertone in the quarter two exceeded last year's sales. That is obviously a positive sign. But as I already said in half year one or in the quarter one call, while the integration continues as planned, the ability to work the brand and impact the brand level is impacted by this delay of sales as such.
As for the outlook for 2021 or 2020, we remain with the same uncertainty as I mentioned in the European markets.
And on the question of margins, we remain with the dilution of margins in Coppertone in the first half of the year. And we can expect that in the second half, the Coppertone brand will remain dilutive to our EBIT margin.
Thank you. Just precision on July. You said that July was significantly better than June. Was it still negative?
July was still slightly negative. Thank you.
Okay. We move on, please.
The next question comes from Guillaume Delmas with UBS. Please go ahead.
Good morning, Stefan. This is Guillaume. Two questions for me.
The first question is on the second half of the year because it seems that you and pretty much all your competitors are planning a marked step up in new product launches and heavy marketing investments. So my question on this is, do you see a risk of the market becoming overcrowded with innovations in the second half? And as a result, a potential increase in the cost of doing business in beauty, and particularly around promotional activities. And then my second question is on margins in consumer. You reported 13.3% operating margin in H1. Consensus seems to be for around 13% for 2020 as a whole. So that would imply at least 300 basis points of margin uplift over the next three years to reach the low end of your medium-term target.
My question here is, given how much the world has changed since you introduced your margin target, does your guidance now look too optimistic and almost requiring a V-shape recovery for both La Prairie and Sun Care? And similarly, given the accelerated shift you're seeing towards e-commerce, do you see an opportunity here to further increase your investments above and beyond what you were thinking 18 months ago, even if that would mean less than initially anticipated margin expansion? Thank you.
Thank you for your questions. As far as the half year two in 2020 is concerned, yes. I think that there is going to be a significant increase of competitive intensity, if you put it like this, and partially has to do with what I already said. There is a postponing of activities, what I would qualify, but not a cancellation in quarter two.
And if I make it a little bit black and white, you will see activation of nine months and six months, and that obviously will increase quite massively. And it's probably also to make the maximum of any kind of uplift that would be happening is clear. I think that will go together not only in launching. A number of the launches is, I think, also a factor that launches and new products with high shelf delayed as such. And that competitive intensity is not only on innovation, but also on promotions, is my expectation as such. If it's overcrowded, I think it's hard to say. We will see. I don't think that at the end of the year we will have more than what we had in a normal year, but it's bundled in a more limited amount of time, which makes obviously some challenges in execution.
Margin consumption, I refer back to what I said before. I think at this moment, I'm not very able to really predict what is going to happen in the next three to six months. Due to uncertainty, it's certainly difficult to say even further down the line, and my absolute focus at this moment is on the now, on the immediate future, and we will have to then look further into what investments are concerned, how the market shapes up in order to make comments on more longer-term perspectives.
Thank you very much.
Thank you.
The next question comes from the line of Iain Simpson with Barclays. Please go ahead.
Thank you very much. Good morning, everyone.
I'd be interested if you could talk a little bit about how you are seeing consumption of La Prairie trend, where the outlets have reopened, and whether the sort of, I guess, consumer demand for super luxury products looks to have been impacted at all by the macro environment. I know you said China grew, which sounds pretty positive. And then secondly, from a phasing of sun care, you commented on a little bit. I know it's early days, but are there any data points or anything you look at that give you any sort of indication as to how the European holiday season is tracking or anything that you perhaps had in July in terms of shipments that you can give some color on just to help us try and think about how much of a sun care benefit you might have in Q3 versus Q2? Thank you.
Thank you. On the consumption trend, I already commented on the La Prairie trend. We see at this moment no indication whatsoever that the appetite and the demand for La Prairie by the target consumer has been impacted, rather on the contrary. A lot has to do with the fact, what I said before, is the combination of what La Prairie offers to the consumer, which is not only products, but there's a lot of that, which is treatments and recommendations on top of it. And when we saw our doors reopening in China, we saw, I would say, almost a storm on the outlets of consumers. We see that our most loyal consumers, the demand is absolutely intact.
So yes, there is a supply issue, as we know, but we do not see a consumer demand issue at this point of time and do not really expect that neither to happen. That's why our strategy in continuing strengthening the exclusive character and the exclusive quality of what we do with La Prairie is so extraordinarily important. The sun care phasing, as I said, it is difficult to see. One aspect we always look at is the appetite of retailers to stock up, as we know. That appetite has been extraordinarily low until now. We see slight pickup, but as always in a seasonal product like sun care, we're looking at stocking up, which would happen starting from February, March, April, knowing that then the months May, June, July obviously is a sell-out. That sell-out is massively retarded or delayed, at least, if not, say, hampered.
And that affects the replenishment and the stocking up at a later part in the season. We see it goes up now clearly, but that is one aspect. The second aspect is the, I would say, the mixed effect we look at because the impact of both domestic tourism in countries like Spain and Italy, which is an important part of the market, is reduced for multiple reasons. And we also know that the amount of people from the northern countries like the UK and Germany towards the southern countries is certainly significantly lower than last year, what we see at this moment. So that combination shows that it affects the demand as such. It's picking up, but it is largely under last year for August numbers, which I think they are going to be really the yardstick of where we are.
Before then, we will see what returns look like in the coming months. It's too early to really judge at this moment.
Thank you very much .
The next question comes from the line of Jeremy Fialko with HSBC. Please go ahead.
Hi. Good morning. A couple of questions from me. The first one is on La Prairie. Could you say what percentage of the brand sales are now accounted for by mainland China? And just more generally, how you're looking to, let's say, onshore some of the demand which previously might have gone through other countries or through travel retail. And then the second question is just on the financials. You've got a very large cash pile, and interest rates are now turning negative. So could you talk a little bit about what the returns from your cash pile are likely to be over the coming months?
I mean, could it actually end up costing you money to be holding this EUR four billion-plus cash balance? Thanks.
La Prairie, we are not looking at that point at this moment because the number is very volatile on how much China weighs. I would almost say changes week by week. At this moment, it's not very relevant for us, even as an indicator. We look at like for like. And as far as mitigation is concerned, the data that we are analyzing is obviously in how far is the domestic demand driven by an absence of existing consumers that now go local instead of going via travel as such. So I think the data to give you a more reliable answer at this moment is premature. It's not something that I can really put any conclusions on, as said.
Our focus is on the in-market at this moment, which is strong. We see with the consumers that we identify is very strong, but how the dynamics are between the channels is not that clear.
And the second question on the return of our financial investments, we can confirm that at the moment, it's a net positive return. And depending on the instrument, we are mainly invested at the moment in high-quality bonds. Return is around between 50 and 100 basis points. We do manage that part very carefully, obviously, and so far, we are not incurring any negative interest.
Okay. Thank you very much.
Thank you. Can we move on, please?
The next question comes from the line of Ken Bear with Minecraft . Please go ahead.
Yes. Good morning, everybody. Two questions from my side.
The first one is on your impairment, which you mentioned, of EUR 10 million, which affected Coppertone also in Asia. If I got it right, can you more elaborate on that, please? And then the second question is more on your performance in Nivea. You mentioned there that you faced some negative mixed effect also within some shifts from skin to personal care. But wasn't there also then maybe also a negative mixed effect within your Nivea skincare portfolio from more better-priced skincare products to lower-priced products? Thank you.
So I'll take the two questions. Thank you. First, in view of the COVID-19 crisis, we ran impairment tests across all of our cash-generating units.
Due to the general business developments in China, including of the Coppertone business, the net present value of the estimated future cash flows triggered the impairment of the Coppertone goodwill we had booked in China based on our purchase price allocation, which was just now goodwill is the Coppertone fully impaired. On the second question, in terms of the mix effect, the main drop in terms of market demand was in Nivea, and that has for us, as well as sun care, indeed, are the two categories with highest margins. So beyond just personal care versus skincare, within the skincare categories, we also have a negative impact. Is that right?
Okay. Thank you. Just a follow-up on this Coppertone impairment. I got the background from the impairments. As you mentioned it with the whole procedure, it's clear to me.
But what really went so, let's say, wrong or was so difficult for you in China with Coppertone compared to the remaining business of Coppertone, for which I understood maybe correctly that you exceeded even last year's sales in the second quarter?
This is not the case in China first. So in terms of the China Coppertone sales, they were well below the sales of last year. The other point to mention is that we impaired assets as per our policies. We impaired assets at cash-generating units. So we take the value of the Chinese cosmetics business and then look at the net present value of the future cash flows. That's clear.
Thank you. Okay. Thanks for clarifying. Thank you.
The next question comes from the line of John Ennis with Goldman Sachs. Please go ahead.
Yeah. Good morning, everyone. My first question is on the consumer margin bridge.
You showed that gross margins were only really impacted by 140 basis points of negative mix. I just wondered, why was there not more of a negative volume deleverage impact? Was it just that that was offset by savings? And then if it was offset by savings, I guess, as sales recover, can you keep hold of those, or do they reverse to offset any future positive volume leverage? That's the first question. And then my second question is just on e-commerce. I just wondered, how big is that channel now as a percentage of your total consumer business? And I wondered if you have a picture on whether your market shares are stronger or weaker or broadly the same online versus offline. Thanks.
Yes. Thank you for the questions. I will start with the margin one.
So yes, indeed, we had a very negative impact on the cost side due to the volume decline in our factories. This was fully offset by savings, which we started already last year talking about our value engineering program and other savings across our manufacturing facilities. So we managed to fully offset. Now, for the second half of the year, in case we have a volume uplift, we hopefully could expect that we also have a positive impact on the gross margin. We continue with our cost savings programs. They have not been delayed by the crisis.
As far as the e-commerce side of the business, the development that we mentioned before represents a higher single-digit % of our net sales at this moment. The situation as far as relative strength in the channel is very dependent from country to country and varies a lot.
In countries like Germany, in the US, the market share online is higher than our average market share. Also, in countries, even new countries like India, while for example in China, our market share is under the market share that we have in the total business. So it's a very differentiated picture across the world.
Okay.
The next question comes fr
om the line of Karel Zoete with Kepler Cheuvreux. Please go ahead.
Yes. Good morning. Thanks for taking the question. I have two questions. The first one is on pricing. And the first half of the year, limited price growth. What should we expect for the second half of the year, also given the weakness we see in currencies in emerging markets? And the second question is coming back to the margin.
Given all the launches you've basically delayed, is it basically safe to assume that marketing investments will go up more in the second half of the year, hence the effect on the margin? Thank you. Yeah. Thank you.
Thank you for the questions. I'll take both of them. In terms of pricing, yes, our pricing in the first half was driven mainly in pricing, in being able to put pricing through in developing countries where we had material currency devaluations. For what we do see in the second half, while the devaluations of certain currencies might continue and we might be able to take more pricing there, there is a significantly higher pressure on pricing in developed markets, especially what we are seeing in Western Europe. So our expectation for pricing is to be marginally negative in the second half of the year.
In terms of the marketing spend, yes, indeed, we plan to continue to support our brands and especially the launches which we are planning for the second half of the year. So we can expect to see an increased marketing spend in the second half. Okay.
The next question is from the line of Jeff Stent with Exane BNP Paribas. Please go ahead.
Good morning. Just a sort of point of clarification. I asked you on the Q1 call about the previous comment you've made about saying when you make promises, you deliver, and you reiterated your confidence in the longer-term margin target. But I guess in response to an earlier question, it kind of appeared to me that you are now somewhat backing away from that. So can you just clarify, are you still or do you still believe you'll achieve your 2023 targets or not?
If you could just put some more clarification around that. Thanks.
Well, I will reiterate what I said, I think, 10 minutes ago. The situation is uncertain, and I expect it to remain volatile massively. I think that whoever could predict it in December, how the situation in August this year was, I haven't read a lot about it. We focus on the now. We obviously will, in the focusing now and putting the priorities as we have explained them, we'll look into that, what it means in a more longer outlook as such. So that is the situation where we are, and that is the way I will approach it.
Okay. I mean, just to clarify a little bit, because in April, you were still confident of achieving the 23 margin target, and you're not now.
I guess the evolution of COVID, in a lot of senses, has only been positive since then. So has something kind of happened in the last few months that's really changed your view, or?
I'm honestly doubting what to answer now because I cannot be more clear that the quarter two was a very tough quarter, that we've seen clear signs, and that I cannot predict at this moment anything further down the line. And I'm also not going to be tempted to speculate. So I can only reiterate that we focus on what is happening. And yes, things are happening very dramatically. March feels like an era ago, and I can only reiterate what I said before.
Okay. That's great. Thanks very much.
Thank you.
The final question is from the line of David Hayes with Société Générale.
Please go ahead.
Thank you. Good morning, all.
I have a question on La Prairie, one on just the COVID costs. So on La Prairie, I think you gave the 80% number of stores closed at the beginning of the quarter. I may have missed it, but could you just give us the number as you exited the quarter? And I guess a more broad question on that brand. You talked a couple of times about how it's an experiential brand. It's about recommendation and so forth. I assume that that kind of experience is hindered quite dramatically in those stores now, I guess, in China, as you've talked about. Are there ways that you're getting around that in terms of that consultation changing without people having to sit at close proximity and touch faces and so forth? I just wonder how that plays out in the medium term.
And then the second question was, again, may have missed it, but on the COVID direct costs, could you give a number for what that was in the first half and what you might expect the COVID direct impact to be in the second half in terms of sanitation and so forth? Thank you.
On La Prairie, while in the beginning of the quarter, indeed, we were over 80% of stores closed, I think at the end of June, that was probably reduced to another remaining 20% or something. As far as treatment is concerned, we do not see at this moment, as I mentioned, that we see a high demand there where stores have reopened. We obviously, like everywhere else, have specific hygiene concepts, but we do not see that people are hesitating away from getting the treatments in the stores that are open.
Direct costs from the COVID-19 crisis, we have isolated those in special factors. They are linked to first financial support to many of the affected communities, as well as donations of products to help certain communities. So this came to EUR 12 million in total. There have clearly been other costs, especially linked to the top line underutilization of factories, certain increases in cost of distribution, which are part of our operating expenses. They are very difficult to spell out separately.
Okay. Thank you so much.
Okay. Thank you. I don't see any further questions.
Yep. At this time, there are no further questions.
Okay. So, well, then we conclude the Q&A. Thank you for having joined our conference call. Beiersdorf's next investor relations event will be the publication of our nine-month results on the 28th of October. 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.