Good morning, welcome to Henkel Half-Year 2020 Results Conference Call. With us today are Carsten Knobel, CEO, Marco Swoboda, CFO, and the investor relations team. For the duration of the call, you will be on listen only. If at any time you need assistance, please press star zero on your telephone keypad and you'll be connected to an operator. Please note that there will be a live webcast of today's conference call, including the Q&A session. A replay of the conference call and the Q&A session will be available on our website, henkel.com/ir for a certain period of time. By asking a question during the Q&A session, you agree to both the live broadcasting as well as the recording of your question, including salutation, to be published on our website. Here we will briefly mention your name and the company you are representing.
At this time, I'd like to turn the call over to Mr. Knobel. Please go ahead, sir.
Dear investors and analysts, good morning from Düsseldorf and welcome to our conference call on the first half year of 2020. Thank you for joining us. I hope that you and your loved ones are really doing well, no matter where you are in the world. I'm joined today by Marco, our Chief Financial Officer.
Morning.
Before we start, let me begin this call reminding everyone that this presentation, which contains the usual formal disclaimer to forward-looking statements within the meaning of relevant U.S. legislation, can be accessed via our website at henkel.com/ir. The presentation and discussion are conducted subject to this disclaimer. I will not read the disclaimer, but we take it as read into the records for the purpose of this conference call. What's on our agenda today? I'm going to lead you through the key developments in the first half of this eventful year and the progress update on where we stand in executing our purposeful growth agenda. Marco will comment the detailed financials for the first half of the year, and after the presentation, we are looking forward to answering your questions.
The global COVID-19 pandemic and its implication on economies and societies across the globe have affected our businesses with full force. While we delivered an almost flat top-line development in the first quarter of 2020, the impact of lockdown measures in key markets and at times sharply declines in industrial demand impacted our sales and earnings performance, especially in the second quarter. From the very beginning, the health, safety, and the wellbeing of our employees was our highest priority. Thanks to our effective crisis management approach, the strong commitment of our teams, and the breadth of our portfolio, we could balance the overall effects on the group. All countries, business units, and functions quickly adapted to new market realities and arrived at new levels of speed and efficiency. As one team, we realized group sales in the first six months that amounted to EUR 9.5 billion despite the disruptive environment.
Nominally, 6% below the prior year period. Organically, -5.2%, with a differentiated development by business unit. Adhesive Technologies experienced strong headwinds from significant drops in industrial and automotive production and shutdowns of many customer production sites globally, especially in the second quarter. For Beauty Care, the hair professional business was hit by salon closures in key markets. The retail business experienced both positive and negative effects depending on the categories, overall coming in almost stable in terms of top line. Laundry & Home Care sustained very strong broad-based sales growth in the first half. Nevertheless, we are not blind of our weak market share development in North America. These are extremely challenging times for our employees, our customers and consumers, and our business partners. They require solidarity, team spirit, resilience and courage, and not least entrepreneurial thinking.
I am convinced that the actions we have taken to respond to today's challenges will help us to emerge stronger from the crisis. We have a rock-solid foundation to rely on, including low debt levels, and have shown resilience when it comes to cash flow performance. We did not ask for state support, neither did we send our employees on short-term work. We paid out a dividend on prior year level, and we can build on our purposeful growth agenda, which is confirmed by the current environment. The execution of our targeted initiatives is in full swing. I will give you a detailed run through that a little bit later. Looking into the remainder of the year, our business environment remains volatile and uncertain regarding the further development of the COVID-19 pandemic and its impact on global economy.
In many parts of the world that already experienced the first wave of infections, we see numbers rising again. As per today, we cannot predict our full year performance with sufficient reliability. Thus, we continue to not provide a forecast for the full year 2020 at this point of time. Let me elaborate a little bit more on our business environment in light of the COVID-19. In the first quarter, governmental lockdown decisions in China caused production in many industries to stop and shops to close for some time. Demand dropped significantly in the region. Since March, the global spread of the pandemic affected us in most of our key markets, with a more pronounced picture in the second quarter.
The 2nd quarter was thus clearly more demanding from a business environment perspective, as evidenced by the development of the global industrial production index and the changes in consumer behavior triggered by the COVID-19 outbreak and governmental restrictions implemented in response. COVID impact on each country's economy and society differed in timing and intensity, as you can see on the governmental lockdown heat map on the right side of this chart. However, all regions, with a few country exceptions, were strongly affected by the pandemic, experiencing substantial declines in GDP and consumer demand. In addition, we observed sometimes significant changes in consumer behavior with different impacts from category to category. For us at Henkel, headwinds from COVID-19 on our businesses and sales peaked in April and May.
Hygiene restrictions and lockdown measures are being lifted in many countries, and we are seeing gradual recovery trends in June and also in July. Nevertheless, the overall situation remains uncertain and volatile. Thanks to our broad-based portfolio and our immediate global crisis management, we mitigated overall impacts on our performance. Individual developments of our businesses, however, varied considerably, driven by disruptive industrial and consumer demand changes and the pandemic. This is why I would like to give you some additional insights, focusing on developments in the 2nd quarter, which provide a clearer picture on the COVID-19 impacts. Our industrial business was facing strong headwinds. The automotive business area was hit hardest as a consequence of production shutdowns in many countries. Also, the other adhesives businesses faced significant headwinds from pandemic-related production shutdowns.
A comparably smaller part of our overall Adhesive Technologies portfolio was largely unaffected, such as our adhesives for consumer goods business, that in parts even experienced higher demand, such as for tissues. Our hair professional business has been confronted with very significant pressure from enforced hair salon closures in key regions and countries. In turn, we could capture increased demand for at-home colorations. Laundry care, overall, was influenced to a comparably lesser extent by the pandemic. Besides some country loading and deloading effects in certain weeks, we saw a strong performance in heavy-duty detergents, while some other laundry care segments, like special detergents or laundry sheets, have been negatively impacted by COVID-19 due to a shift in consumer focus.
Our more hygiene-related categories, on the other hand, experienced some tailwind from higher demand due to increased consumer awareness for health and hygiene, particularly in the soap segment and for automated, and examples for surface cleaners. Furthermore, with people staying and cooking more at home, categories such as automated dishwashing saw strong results. In contrast, social distancing negatively affected the styling category. From a channel perspective, COVID-19 for sure accelerated the shift to e-commerce, and it is offering emerging opportunities from stronger hygiene demand, which we are capturing with targeted offerings and a step up in communication, and I will get to that into more detail later.
I would like to use this opportunity to thank all our 52,000 Henkelaner for their dedication and commitment. I would like to thank my board colleagues and the global and regional crisis teams for their tireless efforts to protect the health, the safety, and the wellbeing of every single employee. Thanks to their strong commitment, we managed to safeguard jobs and compensation, launched an extensive global solidarity program, and navigated our businesses successfully through this crisis. I am proud to see how we master the challenges together and respond quickly and decisively. Wherever possible and needed, our people are in home office, which is working extraordinarily well, supported by a strong digital workplace concept. Depending on the situation in individual countries, they are gradually returning on-site. Under the highest hygiene and safety measures, operations continued worldwide to supply our customers and consumers.
As already outlined in our Q1 call, most of our sites remained operational through the first quarter. By the end of March, 90% of our production sites were running. Since, the teams managed to reopen the remaining production sites, with the last ones resuming production by mid-June. As a company with a longstanding tradition as a family business, it is our responsibility to make a contribution to fighting this global crisis. With the launch of our global solidarity program, we engaged in financial aid, product donations, and the production of disinfectants at our sites. So far, we supported 470 COVID-19 related projects in 43 countries, benefiting almost 5 million affected people. This did not come for free. We incurred about EUR 40 million additional costs to manage the situation, for example, for protective equipment or donations.
While we are managing short-term challenges exceptionally well, we have kept sight of the medium and the long term, shaping the company to build on our Purposeful Growth Framework. The last 5 months have shown that we set the right priorities with our New Strategic Framework, and we started to successfully drive future-oriented initiatives along the six pillars. With a Winning Portfolio, Competitive Edge, Future-Ready Operating Models, and a Collaborative Culture with Empowered People at the heart, we want to build on our strong foundation and outgrow our markets through superior customer and consumer value, differentiate ourselves as a leader in sustainability, and develop our people to grow with a sense of belonging. Our commitments stay unchanged, including our first set of actions we defined as a starting point of our journey. Overall, we are well on track in executing the targeted measures.
In some regards, we have to adapt to the current situation, but at the same time, we are also able to leverage emerging opportunities to drive the envisioned changes. Let me give you a bit more color on our key milestones and the achievements. To rigorously shape a Winning Portfolio, we identified brands and categories with a total sales volume of more than EUR 1 billion, predominantly in our consumer businesses and marked half of this amount for divestment or discontinuation by the end of 2021. We are fully committed to execute the announced portfolio measures in the defined timeframe and already divested to or exited businesses with a sales volume of around EUR 80 million in the first half of the year. The majority of these sales were coming from Adhesive Technologies with businesses that were not part of the core of the industrial portfolio anymore.
For both Beauty and Laundry & Home Care, there are small discontinuations up to now. In the current environment, we have mostly focused on setting up divestment processes to be ready when markets come back. M&A is an integral part of our portfolio strategy. In the past days, we signed two compelling acquisitions. In total, we invest about half a billion utilizing our strong balance sheet. We signed an agreement to acquire a 75% stake in a beauty care business comprising three fast-growing premium direct-to-consumer brands. HelloBody, well-known for premium skin, body, and haircare products. Mermaid+Me, strongly positioned with its premium haircare products. Banana Beauty, a frontrunner for decorative cosmetics such as lipsticks and eyeliners. All three brands excite more than 1.5 million active consumers. In the last 12 months, the businesses generated sales of around EUR 100 million.
Adding strong digital capabilities and unique brand-building expertise, the acquisition is a clear strategic fit. We increase the scale of our D2C activities and advance our one-to-one consumer interactions. Hence, we strengthen our competitive edge in the beauty care markets. We signed a second agreement to acquire a portfolio of attractive consumer sealant products, highly complementary to our existing portfolio to strategically strengthen our Adhesive Technologies business. The businesses market under the iconic GE brand with focus on the North American market. It has an excellent and diversified distribution network via home improvement centers, major retailers, hardware stores, as well as professional outlets. In 2019, the business generated sales of around EUR 100 million. With this acquisition, Adhesive Technologies will broaden its position in the region, expanding into silicon sealants. Today, as relevant as ever, it is critical to accelerate with impactful innovations to gain competitive edge.
Let me deep dive into all three business units. In Adhesive Technologies, with a broad industry portfolio for sealing and impregnation technology solutions. In a joint collaboration with one of the major smartphone brands, we launched a new product line to increase the water resistance of high-end smartphones. This is supporting a consumer trend where Henkel is best positioned to leverage innovative materials and processes across end markets and develop new market solutions for true wireless headphones, tablets, and laptops. In Beauty Care, we continuously strive to leverage the key trends such as nature and sustainability. The recent launch of Simply Color is a perfect example. The teams developed an innovation based on the natural trends in the more technological category of hair coloration for the U.S. market.
Simply Color does not contain ammonia, silicones, or alcohol and comes with 100% recyclable packaging and was awarded Brand of the Year 2020, helping accelerate market share gains in the U.S. In Laundry & Home Care, I have highlighted in March how we intend to leverage the strategic capped segment with targeted innovations. Under our iconic mega brand, Persil, we have introduced our breakthrough 4in1 Discs in 2019. To build on their impact, we extended the successful range with targeted variants. For example, Persil Discs Against Bad Odors or our OXI DISC variant in the U.S. Our strategy is proving successful. Persil Discs are by now making up almost 10% of our overall Persil sales and have been winning global market share of roughly 500 basis points year-over-year, especially in our active markets in Europe.
Despite our second follower disadvantage at the beginning, we have been outgrowing the capped market since. We are confident that we will continue our growth story, winning with consumer-relevant innovations. To cater the needs of our consumers during the pandemic, we put increased focus on hygiene-related products across our consumer portfolios. Here, we were able to step up speed and agility to offer fast-track innovations and convince with targeted communication campaigns. Let me stress two impressive beauty care examples. First, building on a strong brand equity promoting hand hygiene, our beauty care brand, Dial, generated more than 25% organic sales growth in the first half year and increasing penetration, reaching around 10 million new household buyers. For sure, we had a tailwind from increased consumer awareness for handwashing and hygiene, while we could also grow distribution and gain market shares.
The new hand sanitizers from our brand, Fa, were born within eight weeks from idea to launch. They are also sold via new channels such as vending machines at the Dubai Airport and public places in the Middle East, Africa region. Our laundry and home care teams quickly replied to the increased demand for hygiene, health, and safety as well, with the development, launch, and the rollout of a strong product pipeline covering disinfection, antibacterial, and hygiene products. For example, the all-purpose cleaner, General Disinfection in Egypt and Lebanon, or Pril Antibacterial that we will roll out in the Middle East, Africa region in the third quarter. We are underlining our product performance, stepping up our hygiene, cleanliness communication across the portfolio and relevant channels, including consumer education and support.
An important element of our innovation strategy is to consistently support our innovations and brands with targeted investments in core categories and regions. For the year 2020, we aim to further step up our growth investments by EUR 200 million compared to 2019, or EUR 350 million compared to 2018. The first six months, despite the macroeconomic challenges, we kept this commitment and stepped up our growth investment in marketing, digital, and IT according to plan by a high double-digit million EUR amount, especially in laundry and home care. We decided to invest in impactful innovations such as the Persil 4in1 Discs, as well as our Bref DeLuxe series with targeted campaigns. This translated into market share gains and an overall significant organic sales growth. In beauty care, we increased, for example, media support for iconic brand Dial, which I mentioned already before.
As part of a new campaign, we strengthened the core brand equity of caring for hands for over 70 years. In digital, we allocated additional investments, among others, to further enhance our digital infrastructure and for cybersecurity, also in light of requirements from the COVID-19 pandemic. Moving to sustainability. To reinforce our leadership in sustainability, we aspire to boost sustainability as a true differentiator, and we are making good progress. For example, in anchoring our new plastic strategy. All Pril bottles in Europe are made of 100% recycled plastic, and our new Pril 5+ actively contributes to less water and energy consumption with its innovative self-degreasing action formula developed to replace the pre-soaking phase of dishwashing. We further built on our Pro Nature range by launching Somat and Bref Pro Nature. Available in 30 countries, all Pro Nature products include up to 99.9% natural ingredients and up to 100% recycled plastic packaging.
The hand dishwash and trigger bottles are even made of 50% Social Plastic. Also in our Beauty Care business, sustainability is a key part of the innovation strategy. The teams launched solid shampoo, body, and face bars under both brands, Nature Box and Nivea, with zero plastic. One shampoo bar, for example, equals the washing performance of two bottles of liquid at 250 ml each. A strong potential to have a lasting impact in the fight against plastic, which is highly valued by our customers. In H1 2020, our nature brands were achieving mid double-digit sales growth. Going forward, we will accelerate our activities to promote a circular economy with clear initiatives. We test, iterate, and scale future shaping projects such as refill stations for selected product categories to reduce packaging waste.
We're not only doubling down on sustainability in operations and innovation, we are setting a benchmark also in financing. I am proud to say that as the first company globally, Henkel concluded a plastic waste reduction bond. The proceeds will be allocated specifically to projects and expenditures related to our activities to reduce plastic waste. Following the syndicated Green Loan, another proof of our ability to combine attractive corporate financing instrument with progress in sustainability. For Adhesive Technologies, sustainability is developing into a key differentiator in global competition. As a leader in adhesives, sealants, and functional coatings, we are setting benchmarks and enable our industrial customers to achieve their sustainability targets with high-impact solutions. Being a partner of choice for the packaging industry, we are actively supporting a circular economy by working closely with partners to develop sustainable, yet functional solutions.
With LOCTITE Liofol, we introduced a certified recyclable heat and coldSeal coating into the market, which enables the replacement of polyethylene with paper, suitable for a wide range of food and non-food packaging. Here, we are setting new standards in terms of recyclability, food safety, and flexibility, and actively contribute to circular economy by enabling new packaging designs with our solutions. With our consumer-centric co-development approach, we successfully combine material expertise and engineering support and help to shape the world's transition to a low-carbon economy. The mass production of electrical vehicles is one of the biggest transformations for the automotive industry in this regard. As a strategic supplier and partner, we developed a silicon-free liquid gap filler for battery packs. Our solution is facilitating larger battery pack designs, improving reach, battery pack recycling, and waste reduction.
Finally, we launched our high impact Bonderite hot sealing additive, a cost-effective anodizing solution which enables doubling of the standard lifespan of sealed parts, an increase in the productivity of single-step hot-sealing by more than 20%, and a reduction of the makeup of the bath by 50% or more, reducing the CO2 footprint. Moving on now to digital, where we are shifting up gears in the current environment. In H1, we recorded a strong increase in digital sales of more than 60% in Beauty Care and Laundry & Home Care combined. For the group, the digital sale in overall sales is approaching now the mid-teens, a strong progress. What are some of the driving forces? In Beauty Care, we are further leveraging eSalon. With consumers often unable to go to their hairdressers, orders of personalized hair coloration for home use significantly increased.
First orders grew more than three times year-over-year. First plus repeated orders led to high double-digit growth. In June, the team extended Easy Along to male coloration, addressing a promising complementary target group. In a test-and-learn approach, we have also launched our first in-house developed D2C retail platform, Schwarzkopf and Friends, in only a few weeks from idea to launch. Also in Laundry & Home Care, we achieved very strong double-digit e-commerce growth, accelerated by COVID, but also driven by increased investments. Our expanding e-commerce-ready product portfolio paired with our agile management and targeted channel investments were the right formula at the right time. Finally, we stepped up our activities in eCRM, consumer relationship management, boosting our one-to-one consumer relationships and realizing notable cross and upselling potential.
Ask Team Clean is the first community on all laundry care and home care-related topics in Germany and now also present in seven additional markets in Eastern Europe via social media. Let me also highlight that our new digital business setup is live, a real step change for us and a strategic game changer in the future. It is compromising our IT organization, business process experts, and our former CDO organization. With this joint forces and unity of effort approach, combining our businesses, functions, and digital, we strive for a new level of digital expertise and exceptional impact in the future. I spent some time on our central three pillars of our strategic framework because in order to win the '20s through purposeful growth, we have to establish a unique position in our target market and develop a competitive edge.
Nevertheless, future-ready operating models across the company are of equal importance because they will determine our ability to execute what we intend to do. We successfully completed the operational model changes for Adhesive Technologies business. In Laundry & Home Care and Beauty Care, we are well on track with a focus to empower the frontline and enhance regional focus to drive customer and consumer proximity and to benefit from leaner structures. We completed the reorganization of our purchasing organization in order to enable an even stronger focus on operations and proximity of business. Every successful transformation begins with a cultural transformation, since the beginning of this year, we really accelerated our cultural journey with our leadership commitments at the core. They were designed from employees for employees. This year, we took action, finalized the rollout, and started to live up to them in a challenging environment.
The crisis created a moment of truth for a great company culture. From the very beginning, me, my board colleagues, and our top leaders took action. We stepped up our communication to our employees, for example, via video messages and virtual town halls, and encouraged grassroots initiatives across the entire company. We took important steps to support our community and affected business partners. We reconnected with our values and looked with pride at how every single employee responded. I was impressed to see that across all countries, levels, business units, and functions. We revived our entrepreneurial spirit, collaborated as strong teams with passion, and owned our results. We aspire to shape a new and better normal and will leverage our learnings. This means to discover new ways to connect, understand the value of our ecosystem, and reach new levels of speed and efficiency.
Culture always mattered, but now it matters more than ever. We will continue our cultural journey with passion and commitment. Wrapping up. We have the right strategic framework in place and successfully started our purposeful growth journey. We started shaping our portfolio with divestments accounting for EUR 80 million sales and two value-enhancing acquisitions for half a billion EUR. We stepped up innovation with new approaches and impactful launches, supported by increased investments. We understood the importance of catering the increased hygiene and cleaning needs of consumers and will closely monitor and respond to market dynamics. We started to reinforce our leadership in sustainability, which is deeply rooted in our DNA and must become a strategic differentiator in the future. We achieved a strong increase in digital sales of more than 60% in our consumer businesses and on group level, a digital sales approach, a share in the mid-teens.
Our new digital business set up is live, the execution of our operating model changes is completed or well on track. We finalized the rollout of our successful leadership commitments, equipped to tackle arising challenges and realize cultural opportunities. Today, we are only five months in execution, we have already made strong progress. While I'm proud to see the powerful start to our journey, relentless execution of our defined measures, incorporating our market realities remains key. This is our aspiration. I'd now like to hand over to Marco, who will lead you through our financial performance in the first six months of the year in more detail.
Thank you very much, Carsten, good morning, everyone. Good morning, everyone, also from my side. Let's dive straight into the financials for the first half year. Organic sales development was negative at -5.2% over the first six months. This was in particular due to declining volumes at -4.4%. Both Adhesive Technologies and Beauty Care were heavily affected by the COVID-19 pandemic and recorded volume reductions in the low double digit and high single digit percentage, respectively. Laundry & Home Care, in contrast, achieved a significant increase in volumes. Pricing was slightly negative at -0.8% on group level. This was driven by lower average pricing in our consumer goods business units. Adhesive Technologies showed a very resilient pricing performance and kept prices stable in a high demanding market environment. The net effect of our acquisitions, divestments, had a positive impact on sales of +0.3%.
Currencies had a negative effect of -1.1%, in total, Henkel recorded a decrease of 6% in nominal sales to EUR 9.5 billion in the first half of 2020. Moving on now to the organic sales development by region. Overall, mature markets were negative with an organic sales development of -6.9%. Our businesses in the emerging markets at -2.6% were also lower than the prior year period. Both North America and Western Europe were lower year-on-year by mid to high single digit percentage. This was due to a substantial decline in industrial demand and widespread shop closures caused by the governmental lockdown decisions in almost all countries of the regions, in particular in the second quarter. Performance in Asia-Pacific overall was negative at -6.4% due to significant and broad-based decline in the region's emerging markets. In most countries outside China, the situation materially worsened in the second quarter.
In China, though, we recorded good organic sales growth in Q2 after a very weak Q1, triggered by the COVID-19 outbreak early in the year. The mature markets of Asia-Pacific overall achieved positive organic sales growth in the first half of the year. Q2, however, was negative. At -11.4%, Latin America recorded the strongest regional decline in half year 1, given the significant headwinds from COVID-19 and a relatively high share of adhesives and professional hair. In the Africa, Middle East, and Eastern Europe regions, we achieved overall strong sales growth, but also here, the development in the second quarter was much weaker compared to the first quarter. Let's have a closer look at the quarterly sales trends. That also gives you more color on the development over the two quarters.
On Henkel Group level, sales declined organically by -9.4% in the second quarter compared to an almost stable development of -0.9% in the first quarter. Both Adhesive Technologies and Beauty Care Professional experienced unprecedented pressures on volumes as most countries were mandating public lockdowns as well as shop and production closures triggered by the COVID-19 pandemic. In many cases, the restrictions were only gradually lifted over the course of the second quarter. As a result, Adhesive Technologies and Beauty Care posted a substantially more pronounced decline of -17.4% and -12.8%, respectively, in Q2 compared to Q1. Nevertheless, it is worth noting that those businesses affected most by the COVID-19 pandemic, we recorded gradual recovery trends towards the end of the second quarter.
Adhesive Technologies ended the quarter with a decline of around -10% in June. Professional hair closed the quarter down in the mid-teens percent, strongly improved compared to high and mid-double-digit declines in April and May. This gradual recovery continued in July. Laundry & Home Care, on the other hand, sustained a very strong gain sales growth in the first half of 2020. As long as this health crisis persists, we will continue to constantly readjust and respond flexibly and swiftly to developments in our markets. We have been implementing concise operational measures and adapt it to the local needs with high agility in supply chain and production. At the same time, Carsten elaborated on this, we also focused on capturing opportunities triggered by changing market dynamics as well as demand and usage patterns. We also put strong focus on costs and net working capital management.
The first half, we realized short-term savings of about EUR 70 million while not compromising on our future growth. We can build on a strong financial foundation. With continued low debt levels and our strong A rating, which was just reconfirmed, we have sufficient financial flexibility and fast access to capital markets at attractive conditions. This is evidenced by our most recent bond placements, including our innovative plastic waste reduction bond, as mentioned by Carsten earlier. In addition, we have substantial short-term flexibility in our financing in case we need it, with cash and cash equivalents of EUR 2 billion, undrawn credit lines and commercial paper facilities of about another EUR 2 billion, and further headroom in our debt issuance program. Our bond maturity profile is very balanced. Let me provide more color on the half-year performance of our business units now, starting with Adhesive Technologies.
Adhesive Technologies was strongly impacted by the COVID-19 pandemic. Driven by significant declines in industrial and automotive production in the first half, the business unit recorded a negative organic sales growth of -10.9%. We faced an overall negative development of demand, with sequential declines from the first to the second quarter. Within Adhesive Technologies, business areas were affected in different ways. Automotive and metals showed the strongest impact, resulting from global production closures in the automotive industry. The crisis peaked at the end of March until end of April, while a slow recovery started thereafter. In China, however, our automotive and markets and metals business stabilized during the second quarter. Our business area, packaging and consumer goods, recorded an only modest impact from COVID-19. Within the business area, the consumer goods business developed positively, driven by organic growth in the second quarter.
Within our electronics and industrials business area, the industrials business was particularly impacted by pandemic-related production stops. Our electronics business, in contrast, recorded a positive development as a result of strong sales initiatives and pandemic-related inventory buildup. Craftsmen, construction, and professional had an overall negative development in the first half year. In particular, our construction business could not continue its strong growth from the first quarter. As a consequence of these trends, the business unit's organic sales development was driven by significantly lower volumes at -11.1%. Pricing was flat in the period under review, with similar developments in the individual quarters. Given the current market environment, this is a very strong achievement. Thanks to the robust pricing and cost efficiency measures, combined with a roughly neutral direct materials impact in the first half, we were able to almost maintain our gross margin despite transactional currency headwinds.
The adjusted EBIT margin of Adhesive Technologies, nevertheless, came in 500 basis points lower, closing the first half 2020 at 13.1%. This was due to lower sales volume and a negative fixed cost absorption related to this. Net working capital increased slightly by 80 basis points to 14.4%, a very competitive level given the current market dynamics. The increase was to a large extent driven by low demand and subsequently high inventories in percent of sales. Beauty Care recorded an organic sales development of -8.5% in the first half, in particular driven by declining volumes. Average prices were slightly negative. This development was driven by the hair professional business, which was significantly affected by governmentally enforced salon closures, especially from March onwards.
After the trough in April, we have seen the business recovering since May as more and more salons reopened and businesses and consumers got accustomed to the new hygiene restrictions. In retail, we recorded mixed developments. More than half of our relevant retail markets were negatively affected by the spread of the COVID-19 pandemic, especially styling, deodorants, as well as skin and hair care. Despite these headwinds, organic sales development in our retail business was almost flat, thanks to a strong performance in hair coloration and body care. This was in particular due to an increased demand for at-home coloration and hygiene-related products, as well as strong product launches and communication, which resulted in global market share gains in both categories. Our U.S. brand, Dial with its antibacterial positioning, recorded an exceptionally strong performance with organic sales growth of more than 25% in the first half year.
Our retail business was able to gain market shares in North America, Middle East, Africa, and Eastern Europe. Nevertheless, organic sales development in retail was negative in Middle East, Africa, Eastern Europe and Western Europe in the first half. In contrast, we recorded double-digit percent growth in North America and positive organic sales growth in Asia-Pacific, mainly driven by China. Driven by online and direct-to-consumer businesses, Beauty Care achieved a strong boost in digital sales by more than 70%, with initiatives across both retail and professional. The adjusted EBIT margin came in at 9.4%, 410 basis points below the prior year period. The key driver of this development was the lower sales volume in professional hair. With both gross margin and the share of fixed costs in this business structurally higher than in the retail business, the effect from lower sales volumes on profitability has been disproportionate.
Some headwinds in direct material prices, unfavorable transactional currency effects, and negative sales mix resulted in a decline in gross margin. Net working capital improved to a level of 3.9%, 210 basis points lower compared to the end of Q2 2019. A good development driven largely by improved accounts receivables, for example, in the Chinese retail business. The significant decline in hair professional sales volumes had a counteracting effect, resulting in higher inventories in percent of lower sales. Let's move to Laundry & Home Care now. The business unit achieved an overall very strong organic sales growth of 4.9% in the first half 2020, predominantly driven by high volumes while pricing was negative. From a category point of view, Home Care was a key driver of this performance, showing a double-digit organic sales growth.
This was thanks to strong product launches, but for sure, also benefiting from the increased demand for hygiene products. Worth noting that our core brands, Pril, Bref, Somat, each recorded double-digit growth. Laundry Care recorded good organic sales growth, in particular driven by a strong performance in heavy-duty detergents. This was to a large extent due to the continued success of our mega brand, Persil, which achieved a double-digit organic sales growth, also thanks to strong demand for our new 4in1 Discs. Laundry & Home Care has been growing organically in each region. Middle East, Africa, Eastern Europe and Asia-Pacific, we even recorded double-digit organic sales growth. Importantly, we were able to grow our market shares in high growth regions as well as in Western Europe, with an especially strong performance in Eastern Europe. In North America, we recorded a positive organic sales growth in the first half.
However, we continued to underperform and lose market share. While demand for our products was strong throughout the period, our regional product offering in Home Care, and especially in bleaches, which is a key driver of market growth, is low. In addition, we face significant challenges in our U.S. production network and missed out growth opportunities. We experienced extraordinary production downtime during earthquake at our production site in Salt Lake City, as well as an extraordinary outage of our St. Louis plant. Availability of production capacity was also impacted by effects related to the intensified spread of the COVID-19 pandemic in the region, in particular at our largest U.S. production facility, Bowling Green. Meanwhile, production is almost back to normal levels.
On a more positive note, Laundry & Home Care delivered a very strong performance in the strategically important e-commerce channel, with digital sales up in the mid double-digit % range. The business unit's adjusted EBIT margin came in at 15.3%, 160 basis points below the prior year period. Our gross margin improved slightly year-over-year. Here, our continued focus on cost management compensated for still persisting headwinds from high direct material prices, transactional currency effects, and negative pricing. The main driver behind the decline in the margin were the high investments in marketing, supporting the continued launch of our impactful innovations. Net working capital in percent of sales improved significantly by 350 basis points to a level of -6.2%, a very strong performance, mainly driven by improvements in accounts receivables and accounts payables. Back to the Henkel Group, taking a closer look at the adjusted income statement.
Henkel recorded an adjusted EBIT margin of 12.6% in the first half of 2020, minus 370 basis points year-over-year. Group adjusted gross margin at 46.4% was almost flat compared to prior year. The most significant driver of the decline in the adjusted EBIT margin was an increase in marketing, selling, and distribution expenses, both in absolute and relative terms. In % of sales, they increased by 280 basis points to a level of 26.7%. About half of the relative increase is due to the lower sales level. The absolute increase is, amongst others, a result of the step-up of growth investments in marketing, digital, and IT by high double-digit million euro amount in the first half, as well as higher transportation costs. R&D and administrative expenses in % of sales also increased in the first half year by 20 and 50 basis points respectively.
The expenses in absolute terms did not materially change. Looking at the detailed bridge from reported to adjusted EBIT now. Our reported EBIT came in at EUR 1.094 billion, 27% below the prior this year. We record one-time gains of EUR 3 million in the first half, one-time charges of EUR 21 million, mainly related to the termination of a long-term IT service contract. The structuring charges amounted to EUR 78 million, EUR 66 million below the prior year period. The main focus areas were on optimizing our structures and administration operations as well as our go-to market models. Let's move further down the P&L. Adjusted EBIT totaled EUR 1.2 billion, 27.5% below the prior year figure. The financial result amounted to minus EUR 52 million in the period under review, compared to minus EUR 41 million in H1 2019. Adjusted taxes on income amounted to minus EUR 290 million.
This corresponds to an adjusted tax rate of 25.5%, 1.2 percentage points higher year-on-year. Adjusted net income after minorities amounted to EUR 847 million, and this translates into adjusted earnings per preferred share of EUR 1.96, down 29.2% compared to the first half 2019, or at constant exchange rates, minus 28.2%. Cash flow performance and financial position for the first half. On group level, the ratio of net working capital to sales reached 4.4%. A strong improvement of 230 basis points year-over-year, driven by our consumer businesses. We reported