Good morning, everyone, and welcome to our quarterly statements conference call. This is Jens Geissler. Here with me this morning is our CFO, Dessi Temperley. And we are, of course, joined by our CEO, Stefan de Luecker, who dials in remotely. We would like to share with you Beiersdorf's business results of the 1st 9 months of 2020.
As usual, we will first present our numbers and the business review. We will be happy to take your questions after that. When you register for the Q and A, please remember that there is a limit of 2 questions per caller. And with that, I will now hand over to Stefan de Luecker.
Thank you, Jens, and good morning, ladies and gentlemen. The COVID-nineteen pandemic has large parts of the world firmly in its grip. The number of reported cases has recently begun to rise sharply again around the world and has resulted in new lockdowns in several countries. We have to assume that the pandemic's impact will to make itself clearly felt in the Q4. It is currently impossible to predict when the situation will sustainably improve.
Yet, despite the uncertain times we are experiencing, we saw significant improvement in our financial results in the Q3 compared to the first half of the year when COVID-nineteen resulted in a distinct and sharp decline in business. We held our ground well in this difficult market environment, and won market share in all skincare categories, particularly in the emerging markets. The coronavirus is changing consumer behavior. We see fundamental trends such as sustainability and responsible consumption will not disappear, while the importance of digital consumer engagement and online shopping has ever even grown stronger. Our capital strategy addresses precisely these topics, while we continually exploit our growth potential.
Beiersdorf is strategically on course. Let's look at sales during the 1st 9 months of the year and the Q1. We had group sales of €5,241,000,000 and this saw negative organic growth of €7,100,000,000 year on year in the 1st 9 months of the year. However, our performance in the 3rd quarter was much stronger. At group level, we reported positive organic sales growth of 0.2% during this period.
The Consumer business segment had sales of €4,267,000,000 and thus saw negative organic growth of 7.7% year on year. Sales in our tesa business segment suffered 4.6% decline in organic growth to €974,000,000 year on year in the 1st 9 months. Nonetheless, the segment generated a strong organic gain of 6.2% in the 3rd quarter. In this challenging market environment, OMIVIA decreased by 6.2% during the 1st 9 months of 2020 year on year. It significantly picked up sales in the 3rd quarter compared with the first half of the year.
Without the specifically smart hit sun care business, NIVEA achieved a growth of 0.5% in the Q3. Our BERLA brands, Eucerin and Icon 4 are continuing to grow with a strong increase of 9.2% during the reporting period. During the Q3, they achieved an even stronger growth of 15.5%. In comparison with last year, our healthcare brands are showing a 4.8% decrease in sales. However, when we look at the 3rd quarter and sales growth of 1.1%, we also see significant improvement over the 1st 6 months of the year.
The market environment for La Prairie remains difficult. The downturn of the travel retail business resulted in a 34.5% decline in sales, well below the previous year's level. However, our luxury brand achieved a sequential improvement, recording a 16.9% foreign sales in the 3rd quarter. I would now like to give you a detailed view of how our consumer brands developed under the dynamic market conditions of the past few months. Let's start by looking at how the market has developed.
Since the crisis began, demand for personal care products such as shower gel, shampoo and hand soap has exceeded that of skin care products such as face care. While the personal care market has generated renewed positive results in recent months, the skincare market reported downward trend and remains challenging. The Indian market remains particularly weak and European markets such as Germany, France and Italy recover slowly. Brazil, in contrast, was very resilient. Nonetheless, Omega held up well in this difficult environment in the Q3.
Since the COVID-nineteen pandemic began, we have gained market shares in all skincare categories, particularly in face care and sun protection. Priorities of this trend were above all Australia and the emerging markets Brazil, India and Indonesia, but also in Germany, the United Kingdom, Benelux and Switzerland, NIVEA continued to trend from the first half of the year with further gains in market share. Our goal is to continuously expand our innovative strength, steadily develop our brands and product portfolio. We will remain committed to even during times of crisis like the ones we face today and we will also bring strong innovations during the Q4. The additions that we have made to our successful series, NIVEA Q10 and NIVEA Naturally Good are two examples of this approach.
In our new product, NIVEA Naturally Good Body Lotion, we also have achieved a milestone in our efforts to reduce the amount of plastic used in our packaging. Thanks to an innovative packaging technology, we have succeeded in using 50% less material in the bottle, significantly reduces the thickness of the bottle wall and making the top smaller and lighter. This is an enormous improvement that saves valuable resources and avoids large quantities of waste. Beginning of October, we began to set new standards for innovations in skin care with our new NIVEA face care, Luminous 630. The line is currently available only in Germany.
We are now introducing step by step in Europe and it will be available worldwide starting in January 2021. In more than a decade of intensive research, we have developed a new highly effective ingredient for reducing frequent spots with Luminess 630. It demonstrably reduces melanin production and helps to prevent the appearance of new pigment spots. The derma cosmetics market has proven to be particularly resilient during the crisis as sales channels such as pharmacies were less or not affected by the lockdown and consumers' continued need to address real skin problems. The product portfolio and the innovations of our Derma Cosmetics, Syucerin and Aquaphor meet these needs precisely.
We generated a strong increase in sales once again during the Q3, thanks in particular to strong demand in North America and Brazil. We've gained market share across all regions in key markets like Germany and Thailand as well as in newer markets like Brazil, China and Russia. Powerful innovations such as the successful Tia Medall range drive our business and make our brand one of the leading providers of medical cosmetics for skin care. We will not rest on our laurels. Indeed, we constantly strive to continue our success story.
With Usurine Hyaluron filler and Elasticity 3 d serum, a product that went on sale in August, we have introduced the 1st antiaging product that is a holistic solution for pure skin as of the age of 50 thanks to the patented ingredient, tiametol. We come to our selective cosmetics brand, La Prairie. Business here continues to be very adversely affected by lockdowns and travel restrictions. Compared with previous quarters, however, there has been a sequential improvement in the 3rd quarter, a recovery that was caused by domestic travel in China. Strong growth in our reopened stores, particularly in Mainland China and e commerce is continuing strong growth that offset some of the lost travel retail business.
The online share of sales for 2020 to date is now 8%. Even in this crisis, we're holding true to our cause of safeguarding the exclusivity of La Prairie. Therefore, notwithstanding the short term competitive pressure, we decided to forego discounts. Moreover, as part of the strategic positioning of La Prairie Europe, we have initiated the closing of more than 1,000 doors that failed to meet the brand's exclusive standards. The process will be completed in 2021 and is designed to provide consumers with the most intensive highest quality brand experience in selected stores.
Also, LaFurique continues to bring innovation in the Q4. The new serum Skin Caviar Liquid Lift, an enhancement to the successful Skin Caviar collection. The 2 effective and innovative caviar ingredients are combined here in a unique serum for improving the appearance of elasticity and tone. We also have good news to report about our largest subsidiary, Tesa. After a challenging first half of the year, a period in which TESA was also hard hit by the pandemic restrictions and a difficult market environment, we generated new sales growth of 6.2% in the 3rd quarter.
While Tesa's automotive business continues to face a challenging market environment, the electronics business has developed very positively. The Consumer and Craftsman segment in which Tesa develops innovative product solutions for households and craftsmen has proven to be extremely robust. Do yourself products in particular were in demand. The TESAR foldable insect screen font, which went on sale this year, also the well known problem with its unique mechanism. It can be adjusted to exactly fit the dimensions of all standard window frames.
Unfolded and telescoped to the right size, the insect of foldable aluminum frame is easy to hang in a window requiring drilling. Ladies and gentlemen, this historic crisis is once highlighted again the essence of Beiersdorf and what we stand for. To us, caring for skin means caring for people and we go beyond that. We care beyond skin. We understand our responsibility as a company holistically and this includes in times of crisis.
Therefore, Beiersdorf, we have concentrated since the beginning of the crisis on these three priorities. We remain firmly committed to something that we stated at the start of the crisis. The health and safety of our employees are among our top priorities. A key aspect of this is also securing jobs in the long term. Another consideration has emerged in the recently announced is flexible way of working.
We're constantly adapting the situation to the new normality. As part of this effort, we enable our employees to turn to their office locations in a flexible manner in adding to working remotely. At this point, I would like to say a special thanks to our employees around the world who have great dedication, hard work and solidarity under these difficult circumstances are making a decisive contribution to our ability to emerge strengthened from the crisis. Another priority is to stay close to our consumers during these difficult times and to support them as well as possible. We have adapted agilely to changing consumer needs over the last few months and modified our product assortments.
In the process, we have safeguarded our business and ensured its continuation. At the same time, we have not lost sight of what is happening around us. In these times of the coronavirus, we have initiated the largest global humanitarian aid project in our corporate history with an investment of around €50,000,000 utterly in the spirit of care beyond skin. It will combine uncomplicated emergency aid with measures that have a long term orientation. All of this is one goal, to support our company around the globe in its fight against COVID-nineteen and the spread of the virus.
The relevance and long term orientation of our Care plus strategy have never been so tangible as they are right now in these times of crisis. This is why we will all continue to invest in our initiatives under Care plus and to pursue our strategic priorities even amidst these huge economic challenges. More than ever, consumers are using digital media by searching for suitable skincare products and buying them online. The COVID-nineteen pandemic has given a strong boost to e commerce worldwide. During the 1st 9 months of the year, we achieved a growth rate of more than 45% in e commerce.
Long before the pandemic set in, the digital transformation is a key success factor. We are systemically expanding our digital capabilities and technology. This effort has also been a goal to expand our reach and digital interaction with our consumers around the world to provide them with a tremendous brand experience in every sales channel they use. We are where consumers expect our sales to be and are systematically expanding our presence in countries where growth opportunities exist. Our tapping of the Chinese market is an important example of this work.
China offers enormous potential, particularly for brands such as NIVEA and Eucerin. The China will require us to be very patient. As part of this, we initiated the transformation process last year with the divestment of our sleek hair care business. This has enabled us to focus more intensely in our core expertise in the area of skincare and OMNIVIA and to ensure the sustainability of our Chinese business. We, therefore, also recently opened our new innovation center in Shanghai.
It's the 2nd largest such center around the world and ranks only behind our headquarters here in Hamburg. The significant investment in R and D represents a clear competitive growth in China and Asia, a strategically important region for us. We will not permit coronavirus to diminish our commitment to sustainability. On the contrary, we intend to make a substantial long range contribution to people, society and environment. We've underscored this determination in recent months with our sustainability agenda and our clear commitments.
At this point, I would like to hand over to my colleague, Desi Temperley. She will present the financial results in detail.
Thank you, Stefan, and also good morning from my side. As already mentioned, we reported improved growth performance in the Q3. And starting with the sales figures for the Beiersdorf Group, on a year to date basis, sales decreased organically by 7.1%. Foreign exchange movements of minus 2.9% and structural effects of +1.5% led to the nominal growth in euros of minus 8.5%. Sales in the consumer business decreased by 7.7%.
The nominal growth of 8.9 percent negative is impacted by foreign exchange movements of minus 3.1% and positive net structural impact of 1.9% positive. Tesa had a strong third quarter growth, which reduced the organic sales decrease year to date to minus 4.6%. Negative foreign exchange effects of 1.9% led to a nominal sales decrease of 6.5% in the 1st 9 months of this year. Now taking a closer look at the sales development of our consumer business. The Q2 was heavily impacted by the pandemic outbreak and ended with sales decreasing by minus 18.7%, just as a reminder.
The Q3, however, saw a strong recovery of our consumer business with a sales decline of just 1 point 2% despite the La Prairie and NIVEA San businesses still being significantly impacted by the travel restrictions in place. Moving to the growth performance of our major brands for the 1st 9 months as well as for the single Q3 of this year as we usually present it on this slide. Overall, you can see that all of our brands performed better in the Q3. While NIVE recorded a sales decline of minus 6.2% for the 1st 9 months, the development in the single third quarter was more positive at minus 1%. Shower and Body Care are the main growth drivers in the mass market.
The skincare categories recovered at a slower pace with sun still being the most affected category in the NIVEA portfolio. Our derma brands, Yustirene and Aquaphor, delivered strong growth of 9.2% in the 1st 9 months of the year and an even higher one of 15.5% in the 3rd quarter. This growth is mostly driven by strong double digit growth in North America as well as by the ongoing success of Thiamidol, our formula for skin pigmentation treatment. After volatile first half of twenty twenty and the strong decrease in the second quarter, Healthcare is now back to growth in the 3rd quarter with sales increasing by 1.1%, as Stefan mentioned already. The growth in the quarter was fueled by an increasing demand in the Oons and Sports categories.
Coming now to La Prairie. While we continue to report a double digit decline in the Q3 being at minus 16.9%, La Prairie's performance tangibly improved compared to the previous quarters. On a 9 month basis, sales decreased by 34.5%, and we continued with the execution of rationalizing our dose in Europe, purposefully positioning Clapiree as the most exclusive skincare brand on the market. Looking at single regions, La Prairie's recovery in the 3rd quarter is led by a double digit growth in Asia, while international travel retail remains still very weak. On the next slide, I will give you more color on our regional performance, starting with Europe, where our sales decreased by 9.8% on a 9 month basis.
Western Europe decreased by 10.8%. This is a slight improvement over the first half year results, with sales still significantly impacted by the pandemic, especially in countries such as Germany, France, Spain and the UK. Additionally, the very weak international travel retail results of La Prairie have a strong impact here as these are reported under Western Europe. At minus 5.5%, the decline in Eastern Europe was less pronounced. The largest sales decreases in this region are reported in Russia, Serbia and Croatia, whereas Hungary and Ukraine had a resilient demand with only very slight negative sales growth.
Next is the Americas, our region with the strongest performance. We had a double digit growth in the 3rd quarter in both continents, which brought the year to date growth of the region to 5.1%. Adjusted for Argentina at constant foreign exchange rates, as we report the rest of the countries, the growth rate would have been at 7.3%. North America reported strong growth in the 3rd quarter, in particular, in the derma segment, with our Aquaphor brand being the major growth driver here. After delivering positive growth of 2.8 percent in the first half of the year, Latin America accelerated even further the momentum to 5.9% on a 9 month basis.
Adjusted for Argentina at constant FX, this would be at 9 0.6% growth for the 1st 9 months. On the country level, our businesses in Brazil and Chile reached strong double digit growth. Mexico sales were below last year's level, but also here, we're seeing very positive signs of recovery in the Q3. Moving to the Africa, Asia and Australia region, where we reported an organic sales decrease of minus 11.4 percent year to date and the mid single digit decrease in the single quarter. So a bit more color here.
We see significant sales decreases in India, Indonesia and Japan due to the sharp decline in demand caused by numerous lockdowns and restrictions. La Prairie sales were also significantly affected by the lockdowns and travel restrictions in this region. But in our reopened stores and in particular in Mainland China, we are back to strong growth. The recovery of the Healthcare segment in the 3rd quarter was significantly influenced by Australia, where sports are matures and professionals back to action, leading to increased demand in both UnCare and Sports Care. Now looking at the Tesa business.
As we already mentioned earlier, Tesa recorded a strong 3rd quarter with 6.2% growth despite the pandemic's economic impact weighing down on our Adhesives business. The Direct Industry segment with a minus 6.8% decrease in sales in the 1st 9 months of 2020 continued to be impacted by the significant demand slowdown from the automotive industry. In Q3, we reported, however, strong growth with our electronics customers, specifically from China, also boosted by the innovative adhesive solutions developed for the electronics sector and launched in the Q3. The Trade Market segment has shown a resilient development throughout the crisis. The Consumer and Craftsman segment continued to report good growth rates throughout Europe, driven by the demand from the DIY stores.
The last slide in terms of our performance is just to reiterate also our commitment on some of the key financial objectives, which we communicated at the start of 2019 as part of our CARE plus strategy. Working capital management had been a focused area before the start of the pandemic, but its importance became even more relevant during the crisis in terms of safeguarding our liquidity. Despite the crisis headwinds, particularly in trade receivables, we managed to achieve a continuous reduction of working capital levels throughout 2020, and we expect to report an improvement of our working capital as a percentage of sales at the end of the year. We continued to build on the opportunities of our value engineering initiative with new projects being kicked off this year, and we're on a solid track to deliver the savings we set forward as part of the CARE plus strategic pillars. We aim at maximizing the value for consumers in all of our products while taking out any costs, which bring no consumer benefits.
A good example is the light weighting of our packaging materials for the new naturally good body lotion. Another one is taking out all physical leaflets from our derma products going forward. These projects drive not only cost savings, but are also aligned with our strategic sustainability goals. Our effective tax rate, the 3rd commitment here continues to be a point of focus. We already indicated in our last call that we are on a good track to bring the ATR down to 29% by end of 2020, and we are confident to reconfirm our 2021 target of 28%, a result of a strong execution of our tax road map even during this challenging period.
Now going to our 2020 guidance. Given the continuous uncertain environment we operate in, we expect sales growth of the Beiersdorf Group for the full year to be at year to date level or slightly better. EBIT margins of the group and of the Consumer business segment are expected to be significantly below prior year level. For Tezza, we expect an EBIT margin at around prior year level. And now back over to
Jens. Thank you. We will now start the Q and A session, and are happy to take your questions. Please remember that we have a limit of 2 questions per caller.
Ladies and gentlemen, at this time, we'll begin the question and answer session. And the first question comes from the line of David Hayes of Societe Generale. Please go ahead.
Thank you. Good morning also. So it's 3 for me. The first one on Adesis, the second one on the margin guidance. So just on the adhesives side, obviously, a strong recovery in the Q3, which we've seen indications of from some of your peers in the last couple of weeks.
Some of those peers have talked about they were very strong July and then a weakening through August, September maybe related to the electronics launch phasing. I just wonder whether you can talk about how the quarter played out or whether you suspect that it will slow down quite notably from that trend in the 4th quarter. And then the second question just on the margin outlook, slightly pedantic, I guess, so apologies. But you obviously be very specific about the TASER margin being relatively flat year on year, but you've used it significantly below term for the consumer business. Just trying to understand whether you can be a little bit more specific about what significantly below would mean.
Are we sort of talking over 200 basis points because of some of the extra spending and the La Prairie margin mix effect? Or would that be seem to be too aggressive in terms of assumptions? Thanks so much.
Thank you. Good morning. Thank you for the questions. I will take both of them. First, on the Adhesives growth.
Yes, there were some we did see very strong growth in Adhesives in the Q3, and some of this growth was driven first by our very strong innovation pipeline, specifically for some customers in Asia. So obviously, we have a pipeline filling effect here in the Q3. But we do continue to see strong demand in electronics, again, in China in particular. The other positive impact, which we will see how things develop further in the Q4, but in the Q3, we had some, what I would call, pipeline replenishment from some of the automotive customers. Specifically, we had again, we have had negative growth with automotive customers.
But specifically in Europe, some orders started to come through to also replenish their stock. So these are the 2 impacts so far that we see more pronounced in the 3rd quarter, which might not repeat to the same extent in the Q4. Also, it's we will see how things go in the with the with our customers in the trade segment. Today, we do not expect the same DEI activity during the autumn and winter months as we've had during the summer. On the margin, it's a very good question.
I we do have many moving blocks, in fact, still on the margin. You rightly pointed out that and we have also continued to talk about investing behind our brands. And in fact, in the second half of the year, we are increasing marketing investments also because we have some delays of launches from the first half of the year into the second half. So we will continue to invest. We do have the negative mix of specifically from La Prairie despite the fact that the rest of the business in fact, we are driving there a slightly positive mix despite the pandemic.
We also have some negative FX impacts from weaker currencies now, especially in some emerging markets such as Russia, Brazil, Turkey, South Africa. Having said all of that, just to give you slightly more perhaps direction in terms of how we see our underlying EBIT margin for the full year, we expect it to be largely at a similar level as the development of the underlying EBIT margin for the half year for Consumer.
Great. Thank you very much.
Thank you. We move to the next caller, please.
The next question is from the line of Celine Panuti of JPMorgan. Please go ahead.
Good morning. So my first question will be understanding as well the guide for the Consumer segment because your guidance for the full year implies as well some slowdown in Q4 in Consumer. So like you did for Adhesive, is it possible to understand whether there were any sell in benefits? And if you could quantify that in Q3? I'm also wondering whether you could specify what happened in the Americas, where both LatAm and North America seems to have seen quite a strong recovery there.
Just and then the second question will be on online and e commerce. You said that it's high single digit of sales for La Prairie. For consumer as a whole, what is the percentage of your sales online? And in China, what percentage of your business is online? And what was the growth year to date, please?
Thank you for your questions. So for 1, we didn't see specific selling benefit in Q3
versus Q4. But what do
we do see in Q4 is that the impact, continuation impact and we see that in a number of countries already going forward, that we do expect that with more restrictions, specifically in Europe, regarding the COVID-nineteen crisis, will have an impact on simply the possibility to market. We've seen how dramatic the impact can be in quarter 2 in which, for example, drugstores were particularly hit in Germany. And going forward, we have to assume that this impact will also come back. So there is it's not a particular Q3, Q4 impact, but the development of in consumer, in the part of the consumer where we are working in that we expect this. Americas has been very resilient.
We see that in Brazil, even relatively hard hit by COVID. The normalization of, I would say, public life has driven a continuous very resilient market, the de facto, and our performance in Brazil relatively, specifically in the skincare categories, has been very strong. The same applies for the market being less hit in the United States in the combination of strong with a strong U Sirene mainly, Therma Cosmetics brand has given us a very strong performance. Dermocosmetics in U. S.
A, skincare in and dermocosmetics in Brazil. E commerce share after in the total consumer part is around 8% as well. As such, in China, you know that in China, we are, I would say, almost a typical represented. I cannot give you the number specifically, but it is certainly higher than that. But obviously, it has does not have the huge impact on our global percentage of e commerce.
Okay. And just a clarification on the commentary that was made earlier on the margin. When you said that the if I understood well, so the margin for Consumer at a full year level will be the same absolute level as in H1? Or you expect the same delta of margin decline?
We expect around the same delta of margin decline, Celine.
All right. Thank you so much.
The next question is from the line of Bruno Morteinor of Bernstein. Please go ahead.
Hi, good morning. Basically following up on some of the previous discussions. On the automotive sector, listening to most of the car companies, they're clearly talking about things getting quite a bit better and sort of the return of people using private cars over public transport. Are you seeing none of that, sort of the improvement that like Volkswagen and others are talking about in car volumes in the last few months? That would be my first question.
And the second one is, just coming back to the last question, you're seeing the same size of margin drop in consumer in the second half. I think the first half was 200. Now in the first half, you had a terrible quarter 2 with really, really big declines. Surely, that must have been very painful. And if we don't have any such sharp declines in the quarter 3 and quarter 4, I'm just struggling to see how we can have the same 200 basis points adverse in the second half as in the first half.
Thank you.
Yes. So first on the thanks for the questions. And I'm happy to clarify on the automotive sector demand. Yes, we do see a slight improvement in demand in particularly from the European producers manufacturers. Having said that, we are coming from indeed a very negative strong demand in the Q2 of the year.
So there is some improvement, but the demand is still well below last year's level despite the fact that the European demand is slightly better than the one from the U. S. On the margins, we still continue to have a negative mix despite the fact that indeed the growth rates are better. The other significant impact for us are the weaker currencies in a number of markets where we actually have a fairly strong presence in our portfolio. Russia, Turkey, Brazil are the countries that point South Africa as well.
We're in fact overweight in terms of our shares there. And we can continuously see these currencies weakening even in the Q4 and specifically in the Q3 as well. So that is a significant there is a significant impact from this. We also see trade promotional pressure, as we've seen that some of our peers are also commenting on. And we continue to be competitive when it comes to trade promotions as well as when it comes to marketing investments.
So the marketing investments are increased in the second half of the year. That's also obviously impacting our underlying EBIT margin.
Thank you. Just following up on the currency declines you mentioned in Turkey, Russia and the like. Is it because these countries are more profitable for you as well? And so the currency declines you have a mix impact? Or am I missing something on the currency point you're making?
No, they are not necessarily more profitable for us so that you have a negative mix. The point here is that we do not have manufacturing facilities in those countries. So all of our cost base is more exposed
to
normally euro cost based products.
Okay. Thank you.
The next question is from the line of Guillaume Delmas of UBS. Please go ahead.
Good morning all. A couple of questions for me. The first one, it's Dessi, on the slide you showed on your CarePlus financial commitments. And apologies if I missed it, but I don't think you mentioned the 16% to 17% margin target by 2023 for Consumer on this slide. So just wondering why you've left this guidance you said last year out of the slide.
And then my second question sorry, sorry.
No, no, it's okay. I apologize. I thought that you're
And then my second question, it's more generally on your exposure to China, because I think the current pandemic is even more evidencing the need for all large beauty multinationals to have sizable operations in China, which is putting quite resilient and fast growing. You've been underweight in China for many, many years compared to your global peers. So my question here is, is becoming bigger in China in a relatively short term horizon a clear priority of your Care plus strategy? And if so, is it down to improved execution? You've opened a new R and D center?
Or it's also down to expanding your portfolio of brands there? Thank you.
So I'll take the first question, and then I will let Stefan talk about our strategy in China. Yes, we haven't missed anything. Indeed, we have not reiterated our midterm guidance as we are experiencing an unprecedented period of volatility and uncertainty. Not only the 2020 is not complete yet, but we also are currently seeing a second wave of infections. And we are we, at the moment, are also looking at what at various simulations of what 2021 might look like.
So at this point of time, we're really not in a position to reconfirm our margin midterm guidance.
Thank you, Dessi. Going back to China, it is an essential part of the Care Strategy exactly for the reasons you say. The Chinese market, both in size and growth dynamics, makes that being underweight is for us is a critical issue. And that's why we are focusing a lot of our attention and efforts there. The first one is we are happy obviously with performance of La Prairie in the luxury segment in China.
It's a major growth driver for La Prairie and the position is very strong in the country itself. Last year, we started the end of last year, beginning this year, started with cross border activities with Eucerin over Tmall, which is going extremely well and reintroducing, I would say, the brand on the Chinese market. We've divested Slick in order to be able to focus on NIVEA and also the Maestro business, the hair signing business, which is the leader in the Chinese market. However, there's still a lot to do in the I would say, the legacy business of NIVEA there in order to reposition and make also relevant assortment on the market for China. And that is the reason indeed that we put our efforts in building a specific innovation center in China to be able to do what we've been what we've done in, for example, India and South Africa with relevant assortments and with the right position of the brand have been able to accelerate our presence dramatically.
That is work in progress at this moment in China, but the determination to make sure that our brands have a relevant position in China is absolutely critical for our growth ambition of CarePlus.
Thank you very much.
We move on, please.
The next question is from the line of Karel Zoeti of Kepler. Please go ahead.
Yes, good morning and thanks for taking the questions. The first one is coming back to your e commerce strategy. You've clearly improved the percentage of sales here and you see good momentum. But we hear similar things of competitors. So overall, if you look back since the launch of CarePlus, do you think you've gained ground versus competitors or it's more or less a state's qual?
That's the first question. And then the second question, yes, coming back still on the 2020 3 commitments for the margin in Consumer. Do you think that the fundamentals of your margin structure, your margins have really changed? Or is that too early to tell? In other words, do you still need more investments in costs and capabilities to achieve what you want to achieve by 2020?
On the e commerce question before handing to Dessi, Yes, we are accelerating quite dramatically. I think it's very to be honest, very difficult to or let's put it like this, the reality is very diversified and augmented to really make a comparison. If I see in generally, we are in line with what grossly our competitors are doing in the skincare business, but there are obviously a number of competitors where I think they are ahead of us. A couple of them are weaker than us, all depending also on the geography where we are. What I do know is that we have to accelerate a lot further.
I think that is the key issue. I think we've done very well in a very short area of time to get in all areas of the world and in all channels with all the brands accelerating our e commerce presence, our e commerce drive. But it's only I think we're only really at the beginning of that development.
And thank you for the question on the midterm margin guidance. What we can say at this point is that we are fully committed to the CARE plus strategy. It's working, and its main pillars, we can reconfirm, our investments are the right one. We will continue to invest behind digital, in skin care categories, in the white spots, in sustainability. These pillars remain as we've already spelled them out in the past.
What we do see, however, at the moment from the pandemic is that things are changing dramatically in terms of the market. And we do not have sufficient visibility today to confirm midterm targets or midterm guidance. What I can reiterate is that the fundamentals are intact, and we will continue to drive the same initiatives. And we do believe that with that, we will deliver superior results. But right now, we're really not in a position to quantify further our margin guidance in the midterm.
Thank you.
We'll move to the next caller, please.
The next question is from the line of Jeremy Fialco of HSBC. Please go ahead.
Hi, good morning.
Jeremy So a couple from me. First one is just can you talk about your market share performance outside of skincare? So you obviously highlighted gains in skincare, but didn't really talk about the other categories. And then the other thing is you've had markets like in Asia. So particularly you highlighted India, Indonesia as being particularly weak.
Are there any signs of hope in those markets that things might get better in the final quarter? Or do you expect this to remain very difficult in the final parts of the year? Thanks.
So market share, we gained share in skin care categories and are, I would say, stable in the personal care categories, stronger in Dao than we are in shower where we are very we focus there where we have an attractive business as such. So therefore, the stability in Personal Care we gain in skincare. Markets like Indonesia, markets like India, it's very hard to predict in how far it really goes together with the environment and the development of the lockdown decisions they take in these markets. And if you see India is particularly hard hit this year, it's great to see that we gain share or continue to gain share quite significantly. But I honestly am unable to predict if in the quarter in quarter 4, we can expect an uplift.
These markets obviously will come out of that crisis, but in a relatively short distance of 3 months, it's not possible to predict.
Okay. Thanks.
Thank you. We have the next caller, please. Go ahead.
The next question is from the line of Richard Taylor of Morgan Stanley. Please go ahead.
Good morning, everyone.
First question I'd like to ask is about the changes at Max Invest and the retirement of Michael Hertz. Obviously, in the past, I'm seen as a very hands on Chairman, perhaps one of the reasons why Beiersdorf's dividend has been flat for 13 years. So can you give us a bit of commentary around if there'll be any changes as a result of that change in chairmanship at Max Invest, particularly around the dividend? And then secondly, on Coppertone, you've owned the business now for 12 months. Obviously, this year has been somewhat challenging.
But maybe you could give us an update on your plans there and the progress that you've made there. And just one clarification, I'm sorry for all these questions on margins, but just one clarification on the margins. If I take this year's guidance to be full year margins in Consumer to be around 12.1%. And then obviously, your guidance previously for Consumer margins to get to 16% to 17% by 2023. Are your comments today and I completely understand it's difficult to give guidance on margins, but should we assume that this is a withdrawal of guidance on those margins?
Because I mean, it certainly seems pretty tough to get from 12.1% to 16% to 17% by 2023.
Thank you for your questions. The 3 questions, Richard. The first one on Maxentes, things that's hard to comment as such. I think the change from Michael to Wolfgang in the Supervisory Board is probably these are 2 people with different characters, but part of one environment. The most careful I can say is that I have until this moment no indications that the thinking around dividend would be different compared to the past.
On Comercone, yes, obviously, unfortunately, this is, I will say, a year that we obviously wanted to make more progress than we effectively have been able to do due to the COVID crisis. What we see at this moment, we've integrated Coppertone very well operationally, getting our hands on it. We have worked hard on how to bring Coppertone to rejuvenate the brand and bring significant innovation to the brand over the coming years, of which you're going to see the first effect in the 2021 season. But even that, obviously, the impact of the week 2020 season on the 2021 season will be noticeable as well. So we have some delay in stepping up compared to what we wanted to do originally.
And yes, I think that summarizes where we are as such. I hope that by beginning of 2021, the first half of twenty twenty one, we will get clear on the rhythm and the progress we will make over the years to come. On the margin guidance, I can only reiterate what has been said a couple of times now. Already in half year and now again, is that the focus is on now and what we need to do now to win in the market. Secondly, it's an incredibly volatile and uncertain environment in which we operate.
So it's not even the right moment, in my opinion, to start thinking about how this might work out because also within the company, I've not focused on simulation over simulation to see where this year might land and what it does for the other years. So the point is, as Dessi already said, that is, at this moment, not a point where we are focusing on. And we will obviously look at that once we've landed this year. We see how 'twenty one is developing as such.
That's very clear. Thanks for that. And if I can just slip one more in. Stefan, I think in the past, you said that some of the incentive plans for the top managers in the firm may evolve. Is there any update that you can give us on incentive plans, particularly the long term ones?
No. There is it's on the agenda, but it has there's nothing that I can comment at this moment.
Thanks very much.
All right.
The next question is from the line of Ian Simpson of Barclays. Please go ahead.
Thanks very much. A couple of questions for me, please. You talked about expecting innovation to step up in Q4. Are you able to give us any sign as to what might be in the pipeline, just high level particular brands or categories we should keep an eye out on? Secondly, can you comment a bit about what's driven the broad based share gain in Q3?
Is it that you were able to maintain on shelf availability better than smaller competitors? Or are there specific bits of execution you'd point to? And then a very quick housekeeping question, if I may. Did I hear you correctly on the FX margin question that you don't have any manufacturing in Brazil? I'm just a bit surprised given how big a market that is for you.
Thank you.
So in the quarter for innovation, we what we've seen is that in quarter 2, it was very difficult to get the innovation de facto out in the market because in a lot of cases, we couldn't activate or part of the distribution was closed down. So a number of these planned innovations have come to the market in quarter 3, and that is certainly one of the reasons why market share has been driven. In quarter 4, we continue with a number of innovations that we still bring. As I already said or in my speech, there is a part of the further development of the Naturally Good segment and the Naturally Good range in the body range. We launched the Luminous 630 and start to roll out in Europe is one that comes to the market as such and the further expansion of Thiam Adol and Eucerin.
So these are the major launches that are still going to happen and we introducing SVK. Market share has been driven, I think, by 3 elements. First of all, indeed, the continuation of good service levels throughout the crisis. We've been able to continue to deliver what was demanded. Secondly, we've been very agile in changing our activation, adapting it to the assortments and the parts of the assortments that are had a demand and making them relevant for that demand per se.
And certainly, the continuation of the introduction of new products and the support given to these launches because we believe that, that is the right way to go forward. And that obviously driven also not only online, but also offline, as we already said. And the I'm sorry.
Sorry, Stefan.
On your housekeeping question, we do have a factory in Brazil. As such, we which we expanded last year, where we started producing aerosol DAOs in Brazil.
The reference in the previous comment was on Russia, Turkey and South Africa.
The next question is from Gianmarco Vero of MainFirst. Please go ahead.
Yes, thank you. Good day, everybody. My first question is on the dermatology business. So it looks if I look at competitors, the dermatologic segment seems to experience an increase in competition on a global scale. So how do you see this?
And also how do you react on this intensified competition? And then the second one on the current turbulences in the market and on smaller brands out there. So do you see potential M and A targets which are suffering at the moment due to the pandemic? And maybe they are now reaching out to a strong partner such as Beiersdorf? Thank you.
On derma Cosmetics, the market is very is in these times, as we already said, very resilient and very attractive. I think that it's a different kind of intensity of competitiveness than we have in other ones. The Eucerin brand, the Aquaphor brand play in a different way in this market than other ones, and it's very innovation driven. So our key is to be able to really bring, I would say, skin issue relief products on the market and that is what is driving very much our business such as not an intensity that comes at an immediate price erosion, which you have in some of the more mainstream markets as such. So we believe that the market itself continues to outgrow mainstream.
We see a clear switch upgrading for of a number of consumers going from more premium mainstream products to derma cosmetic products, specifically in areas like anti age or sun. On smaller brands, at this moment, in general, those smaller brands that have a strong part in the market or a specific selling point, we do not see that much at this moment, people suffering in a way that there would be a lot more interesting opportunities coming up in the short term. But we obviously continue to monitor the market to see what is happening because I might expect I said this already, I think, in the half year that as the crisis continues, that we might see indeed more smaller producers and smaller brands suffering and opportunities might occur.
Many thanks.
Next caller, please.
The next question is from Philip Frey of Baughburg Research. Please go ahead.
Hello, guys. Well, basically just one question. I'm still struggling with your 200 basis points margin decline for the second half comment. And well, I'm trying to get if it's just a typical over conservative Beiersdorf statement or am I missing something. So basically, you disposed slack last year, which was loss making.
At least you had it for more than 2 months in your figures. The negative mix effect, if I just look at the meltdown of La Brevis business in the first half, while you need to assume a complete catastrophe in the Q4 to have a similar negative mix effect. Well, and you are telling me that you are winning market share in all skin care categories. So are you basically telling us that you are buying market shares in a big effort in the second half? Or are copper tone losses really skyrocketing even significantly more than in the first half?
What just what am I missing?
So good morning. First, we are not guiding at a deterioration of exactly 200 basis points. What I said is at a largely similar level, which still leaves some margin for better performance than 200 basis points. Now in terms of the moving blocks, yes, La Prairie has improved in the 3rd quarter, but we do see new travel restrictions, and it's very difficult to predict how much the impact is going to be in the Q4 in terms of the mix. The mix, however, from La Prairie, the impact on the mix is very significant, as we've said before.
In comparison, the disposal of SLEK, given its size by the time we dispose it as a business, had significantly less weight on the mix compared to the La Prairie impact.
And on
again, I would reiterate that we do continue and, in fact, intensify investments in the second half of the year, both in trade promotions and investments in our brands, specifically and behind launches. And we do see headwinds from the FX impact in many of our emerging markets. So there are many moving blocks. This is where we are today, and this is what we feel comfortable to guide you in terms of closing of 2020.
May I just to get it, well, if you just look at just to assess if it's your conservatism regarding Q4 or if you look now in the Q3 with basically just 1% sales decline and a significantly better, well, mix effect with La Prairie just down 16%. Is it fair to assume that your margin decline is now substantially reduced compared to this minus 200 basis points you had in the first half?
We are guiding at the moment prudently given all the uncertainties. And again, it might be slightly better than the 200 basis points movement. But in view of the fact that we still have many headwinds, both potential headwinds on the top line and in terms of our costs on the P and L, we believe that this is the prudent way to go.
Okay. So thank you and hope for the
better. Thank
you. We move on to the next caller, please.
The next question is from the line of Eva Karroga of Bank of America. Please go ahead.
Yes, good morning. I would like to come back to the skincare market, please. On your NIVEA slide, you said the skincare market continues to be challenging. Can you maybe talk a little bit about this? Is this, as you just described, partly due to the fact that people are going towards the more damaged segment of the market?
Or why do you see the mass market as challenging? You've obviously put a lot of focus on face care versus body care. How is that developing? And can you maybe give us a glimpse of how you think about 2021, given that the economies are weakening and we are probably going to face a demand crisis? Is the NIVEA brand one that should do well in that context?
And then secondly, still on skin, can you maybe talk about some of your smaller brands and give us an update how the FLORINA launch in Italy and France has been doing? Thanks very much.
Thank you for your questions. What normally and it all depends skincare markets, we've always seen in the past that the premium segments were outpacing the mainstream segments as a market. Therefore, brands like La Perine and Luxury did very well. We do see that derma Cosmetics is a growing part of the market, but also mainstream segments were growing as such. What you see in this crisis specifically without being really to as I said, it's very different sometimes from country to country.
But A, the fact that in 2019, people have gone less out, less much more home office, much more home working has influenced the usage of skincare products. There is certainly also an impact on the activation, what we can do and specifically in the online in the offline world. Less shopping, bigger shopping baskets, less shopping trips, less time in store, all effects that do not really are an advantage for skincare categories, particularly not the more sophisticated categories like face care. What we do see going well is body care, probably more linked to the fact that if you're at home to take care and have a good, I would say, self indulgence moment, but the ones that are really driving face care, lip care are impacted by the trends that we know in COVID-nineteen behavior de facto. And that we see and it's all depending a lot from country to country.
As said in Brazil, we do not see that impact in Germany. However, the market is very slow in recovering, specifically notwithstanding certain measures that have been taken. If you then look and maybe also linking to the previous question, if you look Q4 ahead and maybe we are careful, but we are seeing where what is happening in France, what is happening in Germany, what is happening in a number of countries. We can only but be careful that a number of these factors will come back. If there is a restriction of going out, there is a restriction in shopping.
We will see again people more at home, more working from home. That all will not have a positive influence on the market itself. The intensity is a lot higher. It's clear as well. As Odessi already mentioned, the promotion intensity and the pricing intensity in the skincare market being under pressure here, you see that, that intensity is going up significantly.
And therefore the price to sell is coming down in a number of these segments. If you look at the smaller brands, it's very diverse. As such, I think the first one is the FLORENA launch in France and Italy has been very promising. Unfortunately, also here with COVID-nineteen, basically the introduction, the acceptance by consumers, the acceptance by customers has been very good. As such, products have been listed, have been tried.
But then unfortunately, when the repeat purchase should come, has been delayed for the reasons we already mentioned, specifically Italy and France. So we see the development promising in line even slightly above what we expected, but it's too early now to say how it will and what speed it can take up considering all the elements that I just mentioned before. On the other smaller brands, usually during COVID massively impacted much more than NIVEA. NIVEA is there, much more resilient than the rest of these brands. And we see them when things pick up, they also pick up because they have their specific public things like, for example, the tattoo care that we launched on the skin stories are very impacted in the crisis and then picking up fairly rapidly.
Thank you very much.
Thank you. So we're moving to the last caller, please.
And the final question comes
from the line
of Tom Sykes of Deutsche Bank. Please go ahead.
Yes. Good morning, everybody. It was just on La Prairie, please. Could you maybe talk about how you are evolving your customer acquisition strategy now? Presumably, you can't just wait for travel retail to improve.
So what are you doing to evolve the model there? And with regards to the level of reordering from existing Lapa re users, can you maybe give us a view of what proportion of those people on the database that you have for LAPA and you're actually or have actually reordered since the crisis hit, please?
Well, the a very important factor in La Prairie, as we said the last time, is the physical stores. At the end of the day, the La Prairie brand goes more and beyond the product experience. So the fact that we could reopen the stores, they see a very, very strong rebound once stores are opened again. And that is both from existing consumers who went back to stores and also the normal or I would say the way of attracting and being able to reach out to new consumers. On top of that, that's where we specifically have put in our efforts online with the online engagement that has been important both in mainly in China and North America, the case.
So it's a combination with the store acquisition and the online acquisition as such. We do not see at this moment a significant fall off, if you can call it like this, of existing and loyal consumers from La Prairie. We've been able to continue to service them in difficult circumstances. They're usually related to an online I'm sorry, an offline store. From that offline store has been able to continue to service them as good as possible if we knew them.
But those who are there have come back.
Okay. So I mean, are you able to say sorry, in a normal year or in 2019, say, what proportion of the revenues come from first time customers, please? And what proportion come from repeat?
I'm unable to name these numbers like this. The majority comes from certainly from repeat consumers more than from new consumers as such, but I can't put you the exact numbers.
Okay. Thank you.
Thank you.
And this concludes our question and answer session. I hand back to Mr. Jens Geisler for closing comments.
Yes. Thanks.
Well, thank you all for having joined our conference call. Of course, we appreciate your interest in Beiersdorf. So thank you, and goodbye.