Annual Report 20 19 Beiersdorf worldwide 2019 1882 founded in Hamburg > 20,000 employees worldwide > 170 subsidiaries worldwide Beiersdorf products are available in nearly all countries worldwide 98 € 7,653 million patent applications Group sales in the Consumer Business Segment Production Locations Consumer Research & Development Locations Consumer Production Locations and Research & Development Locations Consumer Listed on the tesa Production Locations DAX since Corporate Headquarters 2008 As of: December 31, 2019 We are Beiersdorf At Beiersdorf we have been caring about segment, and LA PRAIRIE at the selective skin since 1882. Beiersdorf’s success is based cosmetics market. With its HANSAPLAST on its strong portfolio of internationally and ELASTOPLAST brands, Beiersdorf also leading brands. It is thanks to them that has a global presence in the field of plasters millions of people around the world choose and wound care. Renowned brands such Beiersdorf day after day. Our brands boast as LABELLO, AQUAPHOR, FLORENA, 8X4, innovative strength, outstanding quality, and HIDROFUGAL, GAMMON, COPPERTONE, exceptional closeness to our consumers. By ATRIX, FLORENA FERMENTED SKINCARE, responding quickly and flexibly to regional SKIN STORIES, and MAESTRO round off our needs, we are winning the hearts of con- extensive portfolio in the Consumer Busi- sumers in nearly all countries worldwide. ness Segment. Through the tesa brand, which Our successful skin and body care brands has been managed since 2001 by Beiersdorf’s form the focus of our successful brand independent tesa subgroup, we also offer portfolio and each brand serves very highly innovative self-adhesive system and different segments: NIVEA is aimed at the product solutions for industry, craft busi- mass market, EUCERIN at the dermocosmetics nesses, and consumers. Our brand portfolio HEALING OINTMENT Beiersdorf 2019 KEY FIGURES – OVERVIEW 2018 2019 Group sales (in € million) 7,233 7,653 Change (organic) (in %) 5.4 4.1 Change (nominal) (in %) 2.5 5.8 Consumer sales (in € million) 5,890 6,274 Change (organic) (in %) 5.0 4.8 Change (nominal) (in %) 1.6 6.5 tesa sales (in € million) 1,343 1,379 Change (organic) (in %) 6.8 0.8 Change (nominal) (in %) 6.8 2.7 Operating result (EBIT, excluding special factors) (in € million) 1,113 1,095 Operating result (EBIT) (in € million) 1,097 1,032 Profit after tax (in € million) 745 736 Return on sales after tax (in %) 10.3 9.6 Earnings per share (in €) 3.21 3.17 Total dividend (in € million) 159 159 Dividend per share (in €) 0.70 0.70 Gross cash flow (in € million) 933 842 Capital expenditure* (in € million) 463 765 Research and development expenses (in € million) 211 236 Employees (as of Dec. 31) 20,059 20,654 * Figures comprise investments in intangible assets and property, plant, and equipment including acquisitions. The Year at a Glance JANUARY Beiersdorf announces the support of the zero-waste platform Loop, which combines e-commerce and sustainability. The initiative, which was launched by TerraCycle, aims to eliminate disposable packaging and offers consumers a convenient and environmentally friendly solution through long-lasting, refillable product packaging and a closed supply chain. During the pilot phase, Beiersdorf adds two products from the NIVEA MEN range. FEBRUARY In February, Beiersdorf launches a multi-year investment offensive with the new C.A.R.E.+ strategy program for the Consumer Business Segment in response to the historical disruptions in the industry. With C.A.R.E.+, Beiersdorf aims to generate competitive, sustainable growth and create added value for consumers. MARCH Beiersdorf AG is building its new Group headquarters in the Eimsbüttel district of Hamburg, thus remaining loyal to the location for more than 135 years. The ceremonial laying of the foundation stone for the future “Beiersdorf Campus” takes place in March with Mayor Dr. Peter Tschentscher. The heart of the new campus will be the new Group headquarters, which will combine a total of around 3,000 state-of-the-art office and laboratory workplaces in new and existing buildings. APRIL 20 19 Beiersdorf selects the five bestbeauty start-ups in Korea for its NIVEA Accelerator “NX.” The winners of this innovation program come from the fields of beauty tech, e-commerce, and indie brands and will be sponsored by Beiersdorf for one year. The NIVEA Accelerator “NX” in Seoul (Korea) is Beiersdorf’s first own accelerator program. MAY Beiersdorf announces the acquisition of the brand icon COPPERTONE. With this acquisition Beiersdorf enters the world’s largest market for sun protection, the United States, and further expands its position as a successful global supplier of sun protection products. In addition to NIVEA, EUCERIN, AQUAPHOR, and LA PRAIRIE, COPPERTONE will become the fifth brand in Beiersdorf’s skin care portfolio in North America. Following the announce- ment, Beiersdorf’s shares have sustainably established themselves above the €100 mark. The acquisition was successfully completed with effect from August 30, 2019. JUNE Beiersdorf is investing €55 million in the expansion of its production plant in Tres Cantos (Spain), thus creating new growth prospects. This is a further step in the implementation of the C.A.R.E.+ strategy. During the business year, we are not only laying the foundation stone in Spain in June 2019, but we also expand our facilities in India, Thailand, and Brazil, and establish two new subsidiaries in Israel and Myanmar. JULY Beiersdorf creates a corporate indie brand unit under the name OSCAR&PAUL. Inspired by the inventive spirit of Beiersdorf’s founding fathers, Oscar Troplowitz and Paul C. Beiersdorf, OSCAR&PAUL brings together new paths for innovation within the company. In addition to strengthening existing brands such as 8X4, FLORENA, LABELLO, and HIDROFUGAL, Beiersdorf is using the unit to focus on new working methods and the creation of new business models. AUGUST Beiersdorf is committed to sustainable packaging in the Consumer Business Segment. By 2025, 100% of our packaging is to be recyclable, compostable, or reusable. At the same time, the Group plans to increase the proportion of recycled material in its plastic packaging in Europe to 25%. The new targets reflect the relevance of sustainability as part of the C.A.R.E.+ Group strategy. SEPTEMBER A further milestone in the C.A.R.E.+ strategy: Beiersdorf introduces a new brand after more than 30 years and opens up a new business segment in the mass market: SKIN STORIES. With this care series for tattooed skin, OSCAR&PAUL has conquered a new skin care category. OCTOBER With the launch of FLORENA FERMENTED SKINCARE, Beiersdorf is entering the 20 19 market for natural cosmetics in France and Italy. The innovative concept of the range is based on fermentation. This new care line is our response to fulfilling the consumers’ desire for natural ingredients and natural cosmetics. NOVEMBER New ways of working in the digital age and innovative work design are a top priority at Beiersdorf. For example, on the initiative of employees, the “Working Out Loud” (WOL) method, designed for active knowledge sharing, was introduced globally within the company. Furthermore, our first“ NEW WORK FESTIVAL” is held at Beiersdorf Group headquarters in November. More than 2,000 employees take part in over 30 sessions covering a wide range of topics, from inspiring presentations and panel discussions to interactive workshop formats. Around 1,200 more employees are taking advantage of the online streaming service. DECEMBER Beiersdorf joins the Global Shea Alliance and supports 10,000 female shea collectors in West Africa over five years. The aim is to train the collectors in the areas of health, safety, quality, and economic know-how. In addition, four Beiersdorf employees initiate the first 100% pure, sustainably sourced shea butter product as part of the “Freedom to Innovate” program. “NIVEA VON HERZEN” is the name of the limited edition, in which €1 per product sold goes to social projects in which the initiators are privately involved. 4 Contents To Our Shareholders Pages 6 – 20 p. 8 Letter from the Chairman p. 10 Beiersdorf’s Shares and Investor Relations p. 12 Report by the Supervisory Board p. 15 Corporate Governance Report Combined Management Report Pages 21 – 70 Foundation of the Group p. 52 Overall Assessment of the Group’s p. 23 Business and Strategy Economic Position p. 27 Research and Development p. 53 Beiersdorf AG p. 32 Sustainability p. 55 Risk Report p. 35 People at Beiersdorf p. 59 Report on Expected Developments Economic Report Remuneration Report and p. 41 Economic Environment Other Disclosures p. 43 Results of Operations p. 61 Remuneration Report p. 50 Net Assets p. 69 Report by the Executive Board on Dealings p. 51 Financial Position among Group Companies p. 69 Disclosures Pursuant to Takeover Laws 5 Contents Consolidated Financial Statements Pages 71 – 114 Consolidated Financial Statements p. 84 Consolidated Group, Acquisitions, p. 72 Income Statement and Divestments p. 72 Statement of Comprehensive Income p. 85 Notes to the Income Statement p. 73 Balance Sheet p. 88 Notes to the Balance Sheet p. 74 Cash Flow Statement p. 103 Other Disclosures p. 75 Statement of Changes in Equity p. 107 Report on Post-Balance Sheet Date Events p. 107 Beiersdorf AG Boards Notes to the Consolidated Financial Statements Attestations p. 109 Independent Auditor’s Report p. 76 Segment Reporting p. 114 Responsibility Statement by the Executive p. 76 Regional Reporting Board p. 77 Significant Accounting Policies Additional Information Pages 115 – 120 p. 116 Ten-year Overview p. 117 Beiersdorf AG’s Shareholdings p. 120 Contact Information Financial Calendar (Cover) 6 To Our Shareholders Beiersdorf’s share price performance Around 85 years after Beiersdorf AG was founded in 1922, the Beiersdorf share proved to be very resilient during the uncertainty of the global financial crisis in 2007/2008, compared with the shares of many other German companies.