Good morning, and welcome to the Henkel Conference Call. With us today are Hans Van Bylen, CEO, Carsten Knobel, CFO and the Investor Relations team. For the duration of the call, you. Please note that there will be a live webcast of today's conference call including the Q And A session. In addition, a replay of the conference call and the Q And A session will be available on our website www.hankoe.com/ir.
For a certain period as well as the recording of your At this time, I'd like to turn the call over to Mr. Van Bylen. Please go ahead, sir.
Analysts. Good morning. From Dusseldorf and welcome to our earnings call for the first quarter of 2019. I'd like to begin by reminding everyone that the presentation, which contains the usual formal disclaimer to forward looking statements within the meaning of U. S.
Legislation can be accessed via our website at henkel.com/ir. The presentation and discussion are conducted subject to the disclaimer. We will not eat the disclaimer proposite data set into the records for the purpose of this conference call. Today, I'm going to lead you firstly through the key developments in the first quarter of 2019. Then Carsten will comment the detailed financials for the quarter.
After that, I will close my presentation with the guidance fiscal year 2019 and our focus areas for the remainder of the year. And finally, Carsten and I will take your questions. Let me start with an overview on the key macroeconomic developments impacting our businesses in the first quarter 2019. The market environment we are operating in continued to be challenging. Geopolitical and economic risks remain high with great tensions persisting.
Growth dynamics of the industrial production further slowed in the first quarter 2019. Some key industry segments even displayed negative rates on a global basis such as, for example, automotive or electronics. In the consumer goods market developments were mixed. Overall, we continue to face an intense environment with high price and promotional pressure and challenging retail conditions in key mature markets, especially in Western Europe Looking at currencies, we quarter as evidenced by the stronger U. S.
Dollar. However, pressure from some key emerging market currencies persisted such as the Turkish lira or the Russian ruble. Concerning raw materials, we continue to feel the pressure from past year's price inflation. In general, the market continues to be volatile as evidenced I will now give you a brief overview of the results of the 1st 3 months 2019 overall, a mixed quarter. Our sales amounted to 1,000,000,000, nominally 2.8% higher year on year.
Both currencies and M and A contributed positive due to this development. We recorded a positive organic sales growth of 0.7%. As expected, our Athesives Technology business was impacted by the deceleration of industrial production in some industries. Beauty Care recorded a weak start into the year, which was clearly below our expectations. On the other hand, Laundry And Home Care had a good start in the year.
Adjusted EBIT came in at 1,000,000 corresponding to an adjusted EBIT margin of 16% down 100 and 40 basis points versus the prior year. This was mainly due to lower sales, direct material price pressure and our additional investments. We were able to tactically compensate for this, thanks to pricing initiatives and our strong cost focus mentioned. At constant currencies, adjusted earnings per preferred share decreased by 6.3%, which is in line with our full year guidance of a mid single digit percent development below previous year. Let's take a closer look at the performance of our business units starting with Adhesive Technologies.
As expected, the business unit was impacted by the deceleration of industrial production growth. In particular, our automotive and electronics businesses China and North America have been impacted and thus recorded negative growth. Overall sales in the first quarter of 2019 displayed slightly negative organic development of minus 0.8 percent. The adjusted EBIT margin came in at 16.8%. 130 basis points below the prior year level.
While the business unit continued to implement strong pricing measures to lower volumes transactional FX effects negatively affected profitability. Despite these short term headwinds and in line year. While the Adhesives Technology Business Unit faced an increasingly difficult market environment, some important business areas achieved a strong performance. Let me highlight some examples. In our Packaging And Consumer Goods per business, we achieved very strong growth with our customer across the food and beverage markets.
This was in particular driven by our growing portfolio enabling the highest standards of food safety as well as increased sustainability for the new packaging applications. The Aerospace business achieved double digit growth driven by our high performance solutions for aircraft manufacturing. These enabled an increased use of lightweight materials supporting more economic and sustainable operations. Our Metal Packaging business achieved very strong growth, driven by high impact solutions for cans Our unique portfolio for every stage of the manufacturing process, which we had complemented with the acquisition of Direct helps our customers to enhance sustainability while Moving on to Beauty Care. Overall, organic sales came in at minus 2.2%.
While we saw 1st positive effects from newly launched brands and innovations and continued successfully developed our Hair Professional business, our retail business was clearly below expectations. This was mainly due to weak start in Western Europe and in China. In contrast, our North American business, which had a difficult start into the previous year due to logistics difficulties achieved strong growth. In Professional, we achieved another quarter with strong organic sales growth outperforming market The adjusted EBIT margin of Beauty Care came in at 15%, 170 basis points below the prior year, mainly impacted by continued direct material price pressure and lower volumes. We are clearly not satisfied with this performance.
Our team put high emphasis on returning to the growth part with our announced initiatives in retail, while continuing the momentum in our professional business. Let me highlight some Beauty Care categories, which were contributed with a good performance despite the overall challenging staff into the year. In Hair Professional, we continued our strong growth momentum across mature and emerging markets, outperforming key markets and further strengthening our position. With Body Care, we achieved strong growth mainly driven by Dial in North America. Within Hair Retail, got to be achieved double digit growth with a successful base business and innovative new products such as 10 steining products co created with bloggers and influencers.
Concluding the business unit overview with Laundry And Homecare. In a continuously high competitive environment, the business unit that a very strong organic sales growth of 4.7 percent, driven by both Laundry Care And Home Care Carriers. This compares to first quarter in the last year, which was impacted by the delivery difficulties. Emerging Markets again contributed with a significant growth while North America returned to positive territory with a very strong increase. Laundry And Home Care continued to face own direct material headwinds, negatively impacting profitability.
As a result, the adjusted EBIT margin came in at 17.1%, 40 basis points below the first quarter of 2018. Let me come to the highlights in our Laundry And Home Care business units. With our leading premium detergents, we recorded significant growth, driven by the core portfolio and strong innovation the new personal premium liquid relaunch. The automatic dish washing category achieved a very strong growth, thanks to successful global innovations like the new Somat all in one gel and strong local innovation. Middle East Africa, we achieved a double digit growth, thanks to the ongoing momentum of our portfolio and key innovations like personal premium and Priel 5 in 1.
As announced in the beginning of this year, we are sustainably stepping up our investments to support our leading brands and technologies, innovations and key markets as well as digitalization. In the course of the first quarter, we have already started with implementation of multiple growth initiatives. In Beauty Care, we focused on our core brands in North America and successfully expanded the portfolio of our Dial brands. In Europe, we focused on the hair category relaunching, for example, our tail styling brand got2b. In professional, we launched our new premium brand authentic beauty concept with pure formulas for authentic hairstyles.
In Laundry And Home Care, we started our growth initiatives with major relaunches of all in the U. S. And Persil Deep Clean in first markets. With our 4 chamber discs in Laundry and our Somad all in one gel, we introduced new innovative product formats. With these innovations, we are executing along the priorities we have set in January.
Also in the area of digitization, we increased our activities during various eras such as data analytics, digital ready infrastructure cybersecurity as well as e Commerce. While these initiatives still had a limited effect on the top and bottom line in Q1, we expect the momentum to accelerate in the course of the coming quarters. And with this signed over to Carsten to comment the detailed financials of the first quarter 2019.
Thank you very much Hans and also a good morning to everyone from my side. Let us now have a closer look at the financials of the first quarter 2019. And like always, start with our key performance indicators. Our sales amounted to 1,000,000,000 and with that, we are normally 2.8 percent above the prior year. In the quarter, both currencies and acquisitions provided us with slight tailwinds, and our organic sales growth was positive at 0.7 percent.
The adjusted gross margin reached 46.2 percent after 47.5 percent in the prior year quarter. Thanks to the successful pricing initiatives in Adhesives, as well as our efficiency measures, we could partially compensate for continued direct material headwinds in our P and L. In addition, the lower volumes in the quarter left their marks and resulted in a lower fixed cost absorption As a consequence, we recorded an adjusted EBIT margin of 16.0 percent 40 basis points below the prior year level where we reached 17.4%. And we recorded adjusted earnings per preferred share of a corresponding to a decline of minus 6.7 percent both normally and also at constant currencies. Looking at our cash KPIs, the ratio of network capital to sales increased to 6.6 percent, 40 basis points up versus the prior year quarter.
And here, this is driven by higher inventories and account receivables as well as effects from past acquisitions and the integration of that. The free cash flow was significantly higher at 1000000, mainly driven by an improved operating cash flow and lower CapEx. And lastly, our net financial position increased by more than 1,000,000 ending the quarter at the robust number of -1000000000. With that, let's take a closer look at our sales bridge in the first quarter of 2019. Organically, as already said, we recorded a positive growth of 0.7% driven by pricing of 2.4%, while volume was negative at -1.7%.
The net effect of inorganic growth, this amounted in the first quarter to a plus of 1.3%. Currency displayed a mixed picture in the first quarter. Many key currencies turned positive compared to the prior year quarter and there and here, most important, the U. S. Dollar appreciated versus the euro.
However, pressure from some key emerging market currencies persisted in particular, the Turkish lira and the Russian ruble. So overall, currencies constituted a slight tailwind of 1.5 percent in quarter 1. As a result, sales amounted to 1,000,000,000 and that's normally an increase of 2.8% above the first quarter of 2018. With this now moving to the organic sales performance by region. Organic growth of 0.7% on group level continued to be driven by the emerging markets with a growth rate of 2.2% and very heterogeneous development in the different regions.
Emerging market sales amounted to 1,000,000,000, representing about 40% of the Henkel Group sales. Looking first to the mature markets. Sales came in at 1,000,000,000 organically slightly below the prior year. This was due to a negative organic sales development in Western Europe of -1.3 held back by ongoing price and promotion pressure and an intense competitive environment. In contrast, North America recorded a positive organic sales growth of 1.1%, while our consumer businesses overall recorded a very strong growth in the region Adhesives was below the prior year quarter due to a softer demand across some key customer segments.
Asia Pacific overall at minus 8.8 percent was significantly below the prior year, driven by weaker volumes of adhesives and Beauty Care especially in China. All other regions in the emerging markets contributed strongly to our organic sales performance, Looking at Eastern Europe And Latin America both recorded significant sales growth, organic sales growth of 6.5%, respectively, 8%. In Africa, Middle East, we achieved another double digit organic sales growth of 13.5% in Q1. And with this now, let me move to the business unit and here as always or as you are used to starting with Adhesive Technologies. The business unit posted a slightly negative organic sales growth of minus 0 point 7% while pricing again was strong at 2.9%.
And thanks to the continued implementation of price increases, I have always shown you over the last couple of quarters how this development has been. We reached a peak in quarter 4 of 2018. Of a price component of 3.8 percent, but also in Q1, a very strong and high price component of 2.9% and We had also on top cost efficiency measures. With that, we could offset the pressure from direct materials, resulting in a broadly flat gross margin in quarter 1, 2019. Acquisitions contributed 0.66% to sales while currency effects had an impact of 1.9% positive.
As a result, net sales normally increased by 1.7% to an absolute level of EUR 2,300,000,000 for quarter 1. The performance of the business areas was mixed. Packaging and Consumer Goods business achieved a good organic sales growth, general industry contributed with a positive growth while the Consumer Craftsman business was roughly flat. The overall slightly negative organic performance was mainly driven by two parts our electronic business, which was significantly below the prior year quarter and transport and metal recorded a slightly negative organic sales development. From a regional perspective, Adhesive Technology achieved continued strong growth in the emerging markets outside China.
Key drivers were a significant growth in Eastern Europe and a double digit development in Latin America. China in contrast, recorded a negative development, mainly driven by the weak demand in automotive and electronics as already alluded to. In the mature markets, sales organically remained below the prior year. This was driven by a negative development in North America And Asia Pacific, while Western Europe was slightly lower. Moving now also to the profit of Adhesives.
At 16.8%, The adjusted EBIT margin decreased by 130 basis points compared to the prior year, while the gross margin was roughly stable the lower volumes and mix effects negatively affected the profitability in quarter 1. Moving on to Beauty Care. Which had a difficult first quarter. Organic sales development was negative at -2.2percent with almost stable pricing, but volumes declining, at a level with minus 2.0%. Currency effects for the divisions were positive with plus 2.0 percent, acquisitions and divestments did not have a material impact on sales in the quarter 1.
As a result, sales in nominal terms came in at 1,000,000 and by that being almost on par with the prior year quarter. The Hair Professional business continued its positive momentum and achieved another quarter with strong organic sales growth. In retail, sales were organically below the prior year, especially with organic sales development in Western Europe and China below expectations. In contrast, North America posted a strong organic sales growth. Overall, the mature markets displayed a slightly negative development.
The performance in Western Europe was negative, mainly due to a very challenging retail conditions. The emerging markets also posted negative growth here driven by a weak performance in the Chinese retail business, which was negatively impacted by destocking effects. In contrast, we achieved good organic sales growth in Eastern Europe and a very strong performance in the Middle East Africa region. Also having a look on profitability, Beauty Care recorded an adjusted EBIT margin of 15.0 percent and this corresponds to a reduction of 170 basis points compared to Q1 2018. With pricing roughly stable, the continued direct material pressure and lower volumes had a negative effect, which we could partially compensate by our fund growth initiatives.
And finally, now move on, moving on to our Laundry And Home Care business. The business unit showed a very strong top line performance with organic sales up by 4.7% and this was driven both by pricing of 3.3% and volume of 1.4%. Acquisitions contributed 1.1% to the growth currency, a slight tailwind of 0.5%. So that in total, nominal sales were up 6.3% compared to the prior year. In terms of business areas both Laundry And Home Care achieved a very strong organic sales growth.
Looking here also to the regions, starting with the mature markets, our business activities in North America were recovering and generated a very strong top line improvement. On the other hand, Western Europe and the mature markets of Asia Pacific organically were slightly below the prior year. Looking at the emerging markets, here we recorded a significant organic sales growth driven by another quarter with double digit performance in Africa, Middle East. Both Eastern Europe and Latin America achieved a very strong growth while Asia, excluding Yapan, Japan was negative. Onto the margin development, a continuously high competitive environment, pressures from direct material pricing and the transactional currency effects persisted in the We were able to partially compensate with positive pricing and our fund growth initiatives.
However, the adjusted EBIT margin was 140 basis points lower on a year over year at 17.1%. Let's now move back to the Henkel Group and in particular to our adjusted income statement. The adjusted gross margin, as already pointed out, came in at 46.2 percent, and this was down by 130 basis points compared to prior year's level. Despite the continued headwinds from direct material prices. Adhesives, as already commented, was able to keep the gross margins roughly stable thanks to further pricing initiatives and the continued savings from positive pricing and we continued our strong cost management in both consumer goods businesses.
However, we could only partially offset the continued pressures from the direct material prices and the transactional currency effects. Based on the current raw material price trends, we anticipate that the headwind to turn into a tailwind in in our P and L. In the first quarter, marketing selling and distribution in percent of sales came in at 23.8 percent and this increased then by 20 basis points versus the prior year quarter. Our R and D and administrative expenses as well as the balance of our other operating income and expenses remained roughly stable. Overall, our adjusted EBIT came in at 1000000 corresponding to an adjusted EBIT margin of 16.0 percent 140 basis points below the prior year.
Let me now share with you the detailed bridge from reported adjusted EBIT. Our reported EBIT came in at 1000000, almost on par with the previous year. We did not recur record any one time gains in the quarter and only small one time charges of 1,000,000. Restructuring charges amounted to 1,000,000 in quarter 1. The main focus here was on further adapting our go to market approach notably in the emerging markets as well as optimizing our structures in administration and operations.
For example, by reducing the number of layers in the organization or adapting our production and logistics footprint. For the full year 2019, we continue to expect restructuring expenses, as already told you, beginning of the year of 1000000 to 1000000. Moving now on to our adjusted EPS development. Overall, the adjusted earnings per preferred share came in at in the first quarter and in nominal terms, 6.3% below the prior year level. As mentioned earlier, we recorded a small tailwind from currencies on our top line.
Due to counteracting FX effects on cost positions, the impact on the bottom line reduced to 0. As a result, adjusted earnings per preferred share at constant currencies, which is the basis of our full year guidance also reduced by 6.3% in quarter 1. Moving now on to our cash KPIs and starting with the net working capital. Net working capital of Adhesives Technologies came in at 13.8%. That's an increase of 190 basis This is mainly the result of higher inventory levels and account receivables, and this is mainly related to the weaker demand in key customer segments.
Also acquisitions impacted the networking capital levels slightly negative. In Beauty Care, networking capital increased by 100 basis points to 6.8 percent, lower volumes at the higher share of the professional, by then having a mix effect have been driving this development. Laundry And Home Care recorded a significant improvement of 190 basis points now to a level of minus 3.1 percent, resulting from the strong operating performance and lower inventories and account receivable levels. As a result, the group recorded a net working capital increase of 40 basis points to a level of 6.6% in quarter 1. While we believe that our networking capital in the respective businesses is on competitive levels, we see room for improvement.
We have shown in the course of the last year that we were able to improve our net working capital levels and we will increase again our focus on reducing these at the corresponding capital commitments throughout the year. On to the free cash flow, which increased significantly to 1,000,000 in the first quarter, being up from 1,000,000 in the previous year. A key driver of this strong performance was an improved operating cash flow, which increased by 1,000,000 to more than 1,000,000 as a result of lower working capital movements. While we continue to invest in our businesses and spend 1,000,000 capital expenditure, this corresponds to a materially reduction versus the prior year. Just to remind you, in Q1 of 2018, we had booked around 1,000,000 for the acquisition of a technology against in the area of CapEx.
Thanks to our strong free cash versus the year end of 2018. With this, we continue to have a very strong balance sheet. It's important to note that the first time adoption on IFRS 16 accounting, effective from the beginning of the year 2019, per Henkel's definition, this did not have any effect on our free cash flow or the net financial position. The new IFRS 16 lease standards had an impact on our balance sheet since we recognized new assets relating to operating leases of about 1,000,000,000. As you can see on the chart, the key KPIs in our P and L statement were not materially impacted by the accounting change.
In the first quarter, we recorded a slightly positive effect of 1,000,000 on our EBIT and the corresponding negative effect on our as a result of the recognized assets while our operating expenses were lower. For the full year, we expect an improvement in the operating profit in the high single digit or low double digit millions, together with a corresponding adverse effect on the financial result. We don't expect a material impact on
Thank you very much, Carsten. Let me now conclude with our outlook for 2019 and our priorities for the remainder of the year before we move on to the Q and A. Our business environment is as well as high and increasing volatility and uncertainty. In the short term, growth of global GDP and industrial production is expected to remain soft. However, in line with market consensus, we anticipate industrial growth momentum to pick up again in the second half of the year, especially in some key industries.
Challenges in the consumer goods environment are expected to prevail. Developments of both exchange rates and direct material prices are expected to remain volatile with a high level of uncertainty. We will focus on the implementation of our growth initiatives and increased investments in brands and technologies and innovation and digitalization in the coming quarters. While we expect to realize 1st benefits on the top line already in 2019, both the adjusted EBIT as well as the adjusted EPS will be affected by the increased spending levels as announced earlier this year. Based on the results in the first quarter and our expectations for the remainder of the year, we confirm our guidance for 2019.
We have set clear business priorities for the remainder of the year. We aim to return to growth in Adhesive Technologies, supported by the anticipated improved growth dynamics, especially in the electronics and automotive industries. We will build on the good start in Laundry And Home Care, executing our strong innovation strategy, and we focus on reinforcing growth in beauty retail continue the outperformance in Professional. We will continue to drive digitalization in all aspects. At the same time, we will keep our strong focus on cost supreme further drive efficiency and adapt our structures.
We will implement extra measures to improve our net working capital and further focus on free cash flow expansion. And we will enhance the value proposition of our portfolio organically and via acquisitions. Let us now move on to the Q
Thank you, Mr.
You.
You. Questions. The first question comes from the line of Christian Faitz from Kepler Cheuvreux. Please go ahead.
Thanks for taking my two questions. First of all, Laundry apparently saw a handsome sales increase in North America. Is that you fighting back against P and C on the premium brand side? Or is it also your Sun product range improving? And then second, Asia is down some 9% year on year on a group level as you elucidated.
And it is down in all three divisions. Can you please, be specific on the weaknesses Ig's vision, that would be helpful to understand what's going on there. Thank you.
Thank you, Christian, for both questions. Let me start with the lounge and home care indeed. We see a very good growth in U. S. Being well aware that the comparable is low because of last year's issues wet in our logistics.
But this being said, what we do see it across the board, so it's across the different segments because we're also taking activities across the different segments. We have in fact, as we announced in general, we have relaunches on all our of 4 brands, which are now getting full into the market. So here, we talk about the different price segments in which we are. So at the moment, we see the growth uptaking, in fact, across the portfolio. Asia, Carson?
Yes, Christian, good morning. So looking at Asia Pacific, as you pointed out, and also, as I said, negative of minus eight 0.8% in the region. This was mainly driven by a softer development in Asia, especially in China. And looking into the 3 divisions, Adhesives Technology was negatively affected by a softer demand within China and especially here of 2 important industries, the automotive and the electronics, apart, which I alluded to, Beauty Care also recorded a negative sales development in China, mainly as a result of a destocking effect the sellout in the quarter nevertheless was up double digit, especially here driven by our business in the online channel. It's And for laundry and home care, you know that we are not so prominent in Asia Pacific, the negative development was here.
Within Korea. But yeah, that's, I would say, giving you the details on the development of the 3 divisions in the in this area. Hope that helps.
The next question comes from the line of Richard Taylor from Morgan Stanley. Please go ahead.
Good
morning, everyone. Just two very quick ones from me. Firstly on adhesives, what gives you the confidence that adhesives will pick up in the second half? And I think, previously you've given the latest reading of the IPX index. It would be helpful if you could give us that.
And then secondly, just on the Consumer business, What's the underlying growth in Laundry and the Beauty Home Care Businesses, ex those launches that you've been making? And ex obviously the the easy comp from last year?
Thank you, Richard, for both questions. Me answer the question also on the T Ziff Technologies. So, we do indeed anticipate as a general consensus that in some keenest to this in the coming quarters, industrial production will pick up and here we talk specifically on automotive and electronics. On IPX facing, we do see that IPX generally is still around 2 growth with the first quarter, which was around 1.8% and picking up to the end of the year towards 2.2%. So that's somewhere how the official forecast also industrial productions look like.
And on top, I mean, if you then take the total mix of adhesives, looking at the total forecast, we also expect the pressure front of raw materials to ease also in the second half of the year. Concerning consumer.
Yes. Richard, I think to understand your question rightly, Looking at Laundry And Home Care, we achieved, as we pointed out, a growth of 4.7%, which was driven by a very growth also supported by North America. Excluding the North America topic, we would still have seen a very strong development also across the other regions. And, we had to, for sure, selectively we see first positive effects in the first quarter of the initiatives, which we have pointed out in detail in February in both in Beauty Care and in Laundry And Home Care. For example, the successful LON of the Brazil for chamber disc or the deep clean in the markets or the introduction of smart all in one and that's where we see the positive things on the other hand, especially Now this is relevant for the Beauty Care business.
We have seen also some areas where we are not happy with especially in Western Europe in hair Europe, so hair care Europe, and this is what we can allude to.
The next question comes from the line of Ian Simpson from Barclays. Please go ahead.
Thank you very much. Good morning. So just going into that North American Laundry again, are you seeing underlying brand growth there in addition to the easy comp? And if so, which brands are driving the U. S.
Laundry performance. And then just more generally thinking about the various brand re launches that you're spending the money on in the first half of this year, could you talk a little bit about which brands you're seeing this working really well, perhaps anywhere it hasn't gone as well as you'd expect. Just give us a bit of a color on how your brand progress is going? Thank you.
Thank you. Again, as I indicated before, we see it across the portfolio can be a little bit more specific also if we see what's next to our sales development, what we also see happening in our share development, which compared to if you take Jan Feb compared to November, December or 1st in the same period last year, we see some dynamics When we see very good dynamics is on the band all in which also we are putting in our complete relaunch in the market where we see a strong pickup. Persil is doing continues to do quite well, but also snuggle. Snuggle Also, first, it's one of the top brands which we have, out of the 4, which we have in the U. S.
And PUREIX, there we see a quite stable development. So, which means, I mean, overall, we see shares coming back. And on top then, we see on our comprehensive deck where we take initiatives that we see some positive take off. Hope this helps to give some clarity on the different portfolio parts. In U.
S. Maybe to add Ian, I think it's also a little bit too early to make
a judgment on all the initiatives. As we pointed it out last time, we brought these launches and re launches in within the first quarter and partly also to the end of the first quarter. So to give you a judgment, if these things are working, not working, I think we need a little bit more but overall, as sunset, I think we see good signs and good development in both beauty and laundry.
Thank you.
The next question comes from the line of Philip Frey from Babcock Research. Please go ahead.
Hello, gentlemen. Just a little bit on Beauty Care again. Can you comment a bit also on the development of shelf space that you had in the first quarter. Does it actually your weak performance already induce a loss of shares per space. And, well, you also had quite some launches last year.
And could you comment on how this 2018 launches, like for example, NatureBox City actually improved performance? Or is it fair say that these launches not have not really fully lift up to your expectations?
Thank you, Philip, for your question on beauty. And important, the beauty development is that we do see that, as we are disappointed in our sales development, linked to the especially deviations, which we see in West Europe and in China, sell out also in both regions, looks up to good and okay. So in China, as we said, we see a double digit growth in sellout. But also our market shares in Western Europe look okay in the way that we've seen overall stable development with clear wins in hair color. Entering hair styling.
And this of course, I mean, also leads to the fact that our market shares are okay. It also means that overall also our shelf space, I mean, it's not not touched, at the moment, on the contrary with our new launches, of course, we also are getting in shelves with the new initiatives. Venishes of last year, I mean, one which you mentioned, NatureBox, last year was at test launch with, for us, with positive results and now we're in the rollout of NatureBox. So, this is one of our growth initiatives. We also do see that last year, the initiatives, which were started on the brand fly got to be or in coloration that they had quite good take off we continue to build on that momentum.
So all in all, I would say in beauty of what we do, what gives us also the encouragement and also confirming our guidance is that we see market shifts looks overall quite healthy.
Okay. Thanks a lot.
The next question comes from the line of Ian Simpson from Barclays. Please go ahead,
Thank you very much for allowing me a follow-up. Just pulling back a bit, I suppose, your guidance for the full year of of 2% to 4% organic sales growth. Broadly speaking, you've obviously came in below that in the first quarter. Broadly speaking, we see tougher comparisons as the year goes on for your HPC business. And then people have their own view as to what the macro will be, but it feels like the macro decelerated in the first quarter.
So I suppose your full year guidance, we either need we either need further help from HPC launches to kind of kick in or we need a macro improvement. How much is your guidance dependent on seeing a second half macro pickup in adhesives? Or do you feel confident enough about your HPC launch pipeline that that will be enough to get you into the 2 4% for the year? Thank you.
Thank you, Ian, for your question. As we have indicated, so we confirm our total guidance and also within the different business units. And as you're right to indicate, of course, this is also built on a general consensus that industrial production, especially as we mentioned in the 2 segments, electronic and automobile will pick up On the other end, I mean, what we do see is that in Laundry And Home Care having a fairly good start. I mean, we're confident that we will build on that momentum. And of course, I mean, as we indicated in Beauty Care, we put our full emphasis on the coming back growth momentum.
This being said here professional had another good quarter. So this will further strengthen our quite optimistic that this performance will continue. And as we indicated on our retail, I mean, that's where we really have to come back to growth in the way that based on market sales, which globally look quite okay, ish. I mean, taking all the initiatives now, I mean, our ambition is indeed and This is why we have some confidence that we will also make for beauty, our guidance.
And maybe to add, Ian, it's not only hope. It's also fact For example, if you look at the forecast for light vehicles based on IHS, which is data source, which is providing us, yeah, forecast for that. We see for the second half of the year positive growth rates compared to the first half based also. It's not only hope. It's also really facts.
And secondly, you will refer to easier comps in HPC, for example, for the first quarter, which is right. But on the other side, we have also in adhesives, easier comps for Q3 and Q4. So a combination of a lot of facts and that makes us confident, as Hans pointed out, that we are confident stay in the range of 2 to 4, which we originally guided and which we are confirming today.
The next question is a follow-up question from the line of Christian Faitz from Kepler Cheuvreux. Please go ahead.
Yes, just quickly on CapEx, your 1,000,000 in Q1, I believe at the historical conference call, you indicated to 1,000,000 CapEx for fiscal 2019. So do we still assume much higher CapEx in the remainder of the year?
Answers, yes, very clear. We have, we are confident and we have clear measures in place for all 3 divisions and also based on infrastructural topics that we will say in this guidance, what we have brought at the beginning the 750 to 850. But it's always about the projects when we execute to bring them into execution. And therefore, you cannot plan it 750 to 850 Divided by 4. It's really depending on projects.
And Therefore, we confirmed today and there is no indication that this CapEx number or guidance will change within the year. Thanks, Hassan.
Next question is a follow-up question from the line of Philip Frey from Babcock Research. Please go ahead.
Questions. Quickly housekeeping wise on the million extra growth expenses, if you've labeled for the year. Can you comment on how much of that was already spent in Q1? And secondly, regarding Adhesives, Is it correct? You always comment on the second half pickup that, to read into debt that you don't see any pickup so far in the second quarter or some light on that one.
So the first to your first question, I have to disappoint you, we will not disclose a detailed on that, to the second part or to your second question, yes, on the one side, it's definitely Second half of the year in Adhesives will be definitely significant stronger, but we will also what we currently see is also that Q2 will be better than Q1. Yes.
Thank you. This was the last question. Thank you, ladies and gentlemen. I will now hand over to Mr. Van Beynen for his closing remarks.
Please go ahead.
Thank you. Dear Vincent and Analyst, thank you again very much for your questions. Let me summarize the key takeaways we wanted to convey to you today. In a difficult market environment, Henkel recorded positive organic sales growth with a heterogeneous performance in the different business units. Both the adjusted EBIT margin and EPS came in below the previous year's quarter, but within the corridor of the full year guidance.
Based on these results and our expectation of recovery in our industrial business, as well as our clear growth path our consumer businesses, we confirmed the outlook for the full year 2019. Henkel significantly improved free cash flow in the first quarter and our balance sheet continues to be very strong. We have set clear priorities to reinforce our growth momentum and we'll fully focus on the execution of our growth initiatives and investments in the upcoming quarters. As always, please be reminded of our upcoming events. At our next event, Carsten Yandirik, together with his management team, we'll be pleased to welcome you to the Investor and Analyst Day of adhesive technologies on July 2 at our headquarters in Dusseldorf.
Please get in touch with the Investor Relations team to register for this event. Thanks again for listening in and goodbye.
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