Increasing Market Shares Despite Macroeconomic Challenges

The start of the first quarter of the fiscal year 2025 was challenging for the company, as expected. Organic sales fell by 5%, which is at the lower end of forecasts. This decline was caused by double-digit sales decreases in China, in the global travel segment, particularly in Asia and Hong Kong. Excluding these areas, sales increased by 1%, while retail growth accelerated from 2% to 3%. The markets in Japan developed particularly positively, where the company was able to gain market share in the prestigious beauty sector. There was also organic growth in developed markets in the EMEA region and in emerging markets. Despite the challenges, early results from the strategic realignment announced in August are promising. The adjusted gross profit increased by over 300 basis points. The strategic increase in spending on advertising and communication as a percentage of sales supported the innovation pipeline and led to an expansion of the adjusted operating margin despite significant pressures. The company recorded an adjusted earnings per share of $0.14, exceeding expectations. Looking forward, companies increasingly face macro-resistance, particularly in the luxury beauty market in China and retail in travel hubs in Asia. While the market in the USA continues to show growth, growth has also slowed here, though the company is working to regain market share. With regard to changes in company leadership, including the announcement of upcoming retirements, only a short-term outlook for the second quarter is provided. A revision of the dividend ratio creates financial flexibility for the leadership of the next generation.