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Good morning, ladies and gentlemen. Thank you for standing by. I am Franzi, your Chorus Call operator. Welcome, and thank you for joining the Q1 Results 2022 Conference Call of Beiersdorf AG. [Operator Instructions] I would like now to turn the conference over to Mr. Jens Geißler, Head of Investor Relations of Beiersdorf AG. Please go ahead.
Thank you. Good morning to all of you. I would like to welcome you to Beiersdorf's first quarter conference call. Here with me this morning is our CEO, Vincent Warnery; and our CFO, Astrid Hermann. We would like to share with you Beiersdorf's business results of the first 3 months of 2022. Due to ad-hoc regulations, we already pre-released our main sales figures on April 8. So for today, we have organized a combined call for analysts and journalists. We will start with the presentation and the business review. But before we get going, let me make some technical remarks. [Operator Instructions] And with that, I now hand over to Vincent Warnery.
Thank you, Jens. Good morning, ladies and gentlemen. I would like also to welcome you to our conference call. Today, we are taking a look at our business development in the first quarter of 2022. Currently, we are facing a period of economic uncertainty due to the war in Ukraine and inflationary pressure on raw material and logistic costs. The pandemic is also far from over. This is most evident in the lockdowns currently taking place in China. That said, we are also seeing significant improvements in other regions and hope for a return to normal life. In fact, we are seeing a strong comeback in the so-called COVID categories. By then, we mean those categories that suffered most from the pandemic restrictions. These are, in particular, face cleansing products, deodorants and lip care. Men's care categories are once again in strong demand. And on top of that, we are also seeing encouraging results in the sun care business across our global brand portfolio. This brings me to our excellent business development in the Americas. Our Coppertone products were again very popular in the first quarter. The recent launch of sun products at Eucerin is also showing promising results. Our Derma brands, as is also the case with our NIVEA products, continued to enjoy strong demand in North and Latin America. And La Prairie is coming back strongly in the U.S. At the same time, we are working on the successful integration of our recently acquired Chantecaille brand. This growth resulted in broad-based market share gains. Looking at our NIVEA market share development this year, we can see that we are overall gaining market shares in most areas. I will come back to this in detail later. With our Derma brands, we gained market shares consistently in the last 3 years by outperforming markets with outstanding results in 2021 where we grew twice as fast as the market. We gained in many geographies and across all our categories and had a fast start in 2022. This gives us confidence looking ahead. All those developments impacted the figures of the first quarter. All in all, we clearly had an excellent start to the year. The Consumer division grew by plus 11.6% year-on-year. It is pleasing to note that all brands contributed to this growth. I will elaborate on this in a moment. Our e-commerce business in the Consumer division grew even faster and delivered another quarter of strong growth of plus 14%. This growth rate was significantly ahead of market and peers. This performance is notable especially due to the tough comparable from the prior year quarter and because off-line trade is benefiting in 2022 from less restrictive COVID lockdowns. The tesa division grew by plus 5.1%. This is a very good result in view of continuing semiconductor shortages and a strong prior year quarter. Overall, this resulted in growth of plus 10.3% for the group. The pace of growth at NIVEA accelerated further in the first quarter of 2022, and we were able to outperform key competitors. The online channel was one of the strong drivers of this outperformance. Broad-based growth was particularly driven by the recovering COVID categories. The easing of pandemic-related restrictions has led to a significant rebound in demand for deodorants as well as for products in the areas of facial cleansing, men's care and lip care. The first quarter also marks a promising start to the sun care season. As we already mentioned before, we are seeing strong market share gains throughout all regions. This applies to emerging markets where we are outperforming all major competitors, particularly in Latin America, and also applies to Europe where we have been systematically gaining market shares since the summer of 2021, especially in body, face and sun. On top, we are also seeing a convincing development in Northeast Asia where we grew market shares in China and Korea for the first time in recent years. We already saw excellent progress in our Eucerin and Aquaphor businesses in the previous financial year. Sales of these products were up by plus 95% in 2021. This growth momentum continues. In the first 3 months of 2022, sales rose by an exceptional plus 27.5% comparing to an already very good first quarter 2021. This result is growth significantly above market, and it is the first time that we are outperforming all key competitors with double-digit sales growth in niche and every region in the quarter. We were once again able to expand our market share in all geographic regions and important growth markets such as Mexico as well as in our key markets, including the U.S., Germany and all Western European markets despite a very competitive environment. Overall, e-commerce was again a strong growth driver. Eucerin continues to be the brand within our portfolio that has the highest e-commerce growth and at the same time, the highest e-commerce share of sales. Apart from that, we recorded significant sales growth in the U.S. and Latin America, in particular. In the U.S., the level of demand for the more cosmetic products remain high. In addition, Eucerin Sun, which we launched in the U.S. market this year, is off to a very good start. In Latin America, we are seeing particularly strong growth in our face and sun products. We have also been able to expand our e-commerce business in the region. A particular focus was on Brazil where we are fully on track with our expansion strategy. Our product innovations remain important growth drivers, especially our Eucerin DERMOPURE series against acne marks, with our patented active ingredient, Thiamidol, have already made a significant contribution to the growth. We started the global launch of these products in August 2021. We also achieved strong double-digit growth of plus 11.1% with our selective skincare brand, La Prairie. North America proved to be an important growth driver. We saw a pronounced increase of sales, particularly in the brick-and-mortar retail. Our new data collection and customer activation systems have already made significant contribution to the success. China is a very important market for La Prairie. In this market, we achieved a 40% increase in our travel retail business driven by another strong quarter in Hainan. At the same time, we strengthened our online business and increased sales at Tmall by plus 44%. La Prairie in China is an ongoing success story, success that spans all channels, driver of recent growth, including Chinese New Year, as well as promising results from our most recent launch and extension of the White Caviar product range. Given the current lockdown situation in Shanghai, however, we expect the second quarter to be weaker than the first. In the second half of the year, we anticipate a strong rebound again based on our experience with the first wave of COVID in China in 2020. Despite increasing input costs, we will continue to invest as planned in our capital strategy. We are putting particular focus on the topics of digitalization and skin care. These topics are crucial to our medium and long-term success. We can see in our results that investments are already paying off, first and foremost, in the growth of our e-commerce business and in the NIVEA LUMINOUS success story. The superior execution of the capital strategy leverages our margin drivers. We have taken various measures in recent quarters to achieve our goals. Steps include significant price increases; the positive mix effect with an even stronger focus on skin and face care in NIVEA, but also in Derma and La Prairie; and major efficiency improvements in areas such as nonworking media and in our general expenses. The results are promising so far, and we are managing the external challenges well so that we reiterate our expectation of the consumer EBIT margin to be slightly above previous year. I very much look forward to meeting you at our Capital Markets Day here in Hamburg on June 9. And with that, I now hand over to Astrid.
Thank you, Vincent. Welcome to our Q1 '22 results presentation also from my side. As already preannounced at the beginning of April, we achieved very strong sales growth in the first quarter of this year. In the Consumer business, we recorded EUR 1.8 billion of sales, which is an organic growth of 11.6% year-on-year. Foreign exchange and structural effects led to nominal growth of 15.6%. This is also the first time that Chantecaille sales are included in our nominal sales. In the tesa business, total sales were EUR 426 million, up 7.4% in nominal terms and 5.1% organic growth. All in all, this leads to total sales for the group of EUR 2.2 billion and double-digit growth of 10.3%. Let's now turn to the regional sales development. We are pleased to report positive growth in all regions of the Consumer business. Organic growth in both Western and Eastern Europe is 7% in the first 3 months. From a country perspective, we see strong momentum in Southern European countries such as Italy and Spain where face care performed particularly well due to the extension of the LUMINOUS630 range. We are proud that we successfully established ourselves as a market leader in the anti-spot serum throughout Europe. Our NIVEA LUMINOUS serum is #1 in Europe. The Americas regions delivered once again the strongest sales growth. North American sales were driven by very strong performance in Derma. Additionally, we recorded strong growth with La Prairie and Coppertone businesses. All in all, this led to organic growth of 23.1%. The growth in Latin America was even stronger with 25.5% like-for-like. Mexico, Argentina and Brazil stood out in their performance. We were able to report growth in personal care categories like deodorant and shower, but also the skin care categories, face and body, performed well. In our Africa, Asia, Australia region, we also achieved double-digit growth with 10.0%. India showed a strong recovery with broad-based growth throughout the NIVEA portfolio. Malaysia benefited from the easing of lockdowns with good growth in deodorants, face and body care, both for NIVEA and Eucerin. As mentioned earlier, La Prairie, Eucerin and, for the first time, NIVEA had a strong quarter in China despite the restrictions implemented in late March. tesa was able to deliver another quarter of growth despite a very strong prior year quarter driven by the industry division with growth of 6.8%. Despite disruptions in supply chains, the automotive business grew slightly in the quarter. We were able to achieve strong growth in the electronics business in Asia, which was once again the growth driver of the tesa performance despite already starting to face restrictions due to the lockdowns in China. Let's now turn to the guidance for the full year 2022. Consumer had a strong start to the year. However, given the ongoing volatility and limited visibility, we made no change to our Consumer sales guidance and reiterate our expectation of organic sales growth to be in the mid-single-digit range. Regarding the Consumer EBIT margin for the full year, we believe we are managing the challenging geopolitical situation well, although China adds a significant component of risk and unpredictability. We're taking the right pricing actions, driving mix and efficiency initiatives and, therefore, reiterate our expectation of the Consumer EBIT margin to be slightly above previous year. Turning to our tesa business. In light of the recent lockdowns in China, one of the most important markets for tesa, and the ongoing supply chain issues in the automotive industry, we now expect tesa to deliver low to mid-single-digit growth in the full year 2022. The EBIT margin outlook for tesa remains at noticeably below previous year's level. As Vincent said, we are looking forward to seeing you at our Capital Markets Day on June 9 here in Hamburg. And now I hand over to Jens for the question-and-answer session.
[Operator Instructions] So I can see here, first question comes from Fulvio Cazzol, Berenberg.
My first one is on pricing and how that impacts your outlook for the year. So after the very strong quarter, particularly in the Consumer business, which was very broad-based, I imagine, although you don't disclose it, that pricing has become a bigger contributor to your top line, which is probably going to stick around for the rest of the year. So I was just wondering why you haven't tweaked up your guidance for Consumer. Are you just factoring in an added level of risk on the outlook? Or is it just conservatism for things that may not have happened yet but could be happening in terms of elasticity and all the rest of that? So yes, a comment on that, please. And then my second one is online because you mentioned that probably more than in the past in terms of the growth contribution also from online despite the reopening of bricks and mortar. Can you just remind us how big online is of your total sales?
So Astrid will take the first question, and I will answer the second one.
Yes. So we are very happy with how we started the year from a pricing perspective. Like-for-like sales are 11.6%, as we've already mentioned, and the pricing component of that has increased significantly versus where it was previous year. We see about 2 to 3x the level of the previous year, so we're quite happy with how we started. We also expect more pricing impact in to go. In fact, we see most of our sales this year to be really driven by pricing. In terms of our guidance and why we have not taken it up from a top line perspective, as we mentioned, we do see risk related to China, really, volatility and unpredictability. And therefore, we for now stay with the guidance we provided.
On your second question regarding e-commerce. So this is a very important growth driver for the company, and we grew in the first quarter at plus 14%, which is pretty high when we know that last year, in the same quarter, we grew by 71%. And we know also that we are significantly ahead of market and peer growth. We are doing between 1.5 or 2x faster than competition. This is particularly strong in the Derma business. Derma is by far the business with the biggest share of e-commerce and the biggest growth of e-commerce, and we are -- it's representing a big part of the growth, and it's really happening across the world, not only in the U.S. with customers like Amazon, but also in the pharmacy, in the more traditional markets like Germany with shop-apotheke. But also what is new in the sense that we are growing also much faster on NIVEA, growing double digits in online and also gaining share in each and every region. And what is interesting when you look at the portfolio, the 40% of the growth in e-commerce is coming from those valorized franchises, the Thiamidol franchise of Eucerin, the LUMINOUS franchise of NIVEA. So making also this business more profitable. So we will continue to invest, and we are -- clearly, the objective is to become really best-in-class in the coming months.
Thank you. Thank you, Fulvio. We move on to the next caller. Next would be Guillaume Delmas of UBS.
A couple of questions for me, please. First, going back to China, so as you've indicated in your prepared remarks, with the growing number of lockdowns in recent weeks, you've seen a slowdown in category growth. So I was wondering, what was your exit rate in China for your Consumer division and specifically? And how did the second quarter start again for Consumer in China? And at this stage, I appreciate all the uncertainties, but do you anticipate a marked sequential slowdown in Q2 in China for Consumer? Or do you have some mitigating structures in place that would allow you to still offset part of this category weakness? And also from a margin standpoint, what are the implications from a slower China, particularly from a mix point of view? And then my second question is on the price elasticity. Have you seen some early evidence of price elasticity being high in some of your categories? Particularly curious to hear what you've seen in Latin America where I would expect some strong pricing contribution, so whether you've seen volumes being a bit weaker sequentially. And also in Western Europe, appreciate that the pricing actions are probably lending as we speak on the shelves. But any early indication there and also whether we've seen some private label momentum building up?
Thank you, Guillaume. I will take the first question on China, and Astrid will deal with the second one. So the Consumer division, so it's mostly NIVEA in China. As I said in my introductory speech, we had an extremely strong quarter. We grew double digit on NIVEA, plus 14%. And what is very interesting is that we benefited mostly from the -- not only the launch of LUMINOUS, China might become this year the biggest country in the world for LUMINOUS, which is obviously a very important milestone for us, but also by the fact that we are strongly valorizing our existing offer, increasing strongly the price of our main range, increasing the price of our body range. So moving into this premiumization of the brand that I described before. We had a difficult end of the quarter just by the fact that our factory and also our offices are located in Shanghai, but we found a way, in fact, to deliver a good figures, and April should be okay. We are not expecting a big decrease of our sales because also we are a consumer brand, and also we're adding a lot on Tmall and JD.com. So we believe we will manage the situation in the Q2. Regarding the margin, obviously, the big question is about La Prairie. La Prairie is a very strong brand in China and has been growing double digit again. Here, we were hit by the lockdown in Shanghai, which impacted 22% of our stores. And obviously, we had a difficult end of the month of March. But we are not worried. I was looking at the figures of 2020, the first time there was the lockdown. In Q2 2020, we did plus 45%. Q3, we did plus 57%. So we know that there will be a rebound. Will the rebound come during the Q2 or more at the beginning of the Q3? We don't know yet. It's largely depending on Beijing. Obviously, Beijing is getting lockdown. It will be an additional pressure on our margin. But overall, a difficult quarter, yes, but we believe that Q3 and Q4 should allow us to rebound and deliver our figures. On the pricing?
In terms of your question on pricing elasticity, Q1 sales did not show that our pricing actions led to any market volume decline, not in any of the regions. In fact, we have positive pricing in all regions as well as also positive volume growth. You mentioned the regions of LatAm and Western Europe. Both of those, again, not impacted. And Western Europe, really, for the first time, providing positive pricing impact here, and we do not see elasticity impacting us.
Thank you. We move on. I can see Iain Simpson on the line.
Two questions from me, please. Firstly, I wonder if we could just sort of step up a little bit and talk about what's driven that turnaround in NIVEA market share performance. And I know that when you came in, Vincent, you said that sort of turning around NIVEA was pretty much a key strategic priority. Getting on for a year after that, there appears to be good progress. Is that because of better innovation? Or is it because of more targeted marketing spend? Or is it kind of a combination of those things? To what do you attribute the improvement in NIVEA performance from a market share perspective? And then my second question would be if we think about the sun care season and the kind of sell-in associated with that, should we be thinking about potentially more kind of sun care sales flowing in, in Q2? Or is there a risk of stock coming back if there isn't a good sun care season? Just any color as to how we think about the quarterly phasing of sell-in and sell-out for sun care would be very helpful.
Thank you, Iain, for your question. The turnaround of NIVEA, yes, I would say you're exactly -- you're spot on, on the reasons. The first one, I would say the overall big reason is clearly the focus on skin care. So really, we are investing on skin care, which includes face care, body care, sun care, because they are the categories which are more valorized. They are the categories where our R&D investment can bring added value. And this focus is happening across the world, and this is where we see results, in markets where we used to grow market share, like emerging market, but even more now in markets like Europe, in markets like China, in markets like U.S. and Korea. And together with this skin care focus, which is really happening across the world, there is this mix of stronger innovations. I was mentioning LUMINOUS. LUMINOUS is the best ever launch of NIVEA already over the last 10 years. And gaining market share everywhere, again, including China, but also the fact that we dramatically changed the way we were investing in media. Only -- I would say, only 2 years ago, we were still overinvesting in traditional media, in TV. Now we have moved dramatically into not only digital media but also within digital media into precision marketing. It means that for the same euro we invested in 2019, we are doubling the efficiency, relying on this precision marketing, which is the fact that we are targeting specific customers with specific execution and delivering the right message to those people. So this is happening across the world. We are increasing the number of precision marketing campaign. We are expanding the range of LUMINOUS, moving into the hand business, moving in body, men, and this is really what is driving the growth across the world. On your second question about sun care, we are very optimistic. We are already very strong in terms of net sales growth in Q1 but also sellout. We are gaining market shares, not only with NIVEA across the world but also Coppertone and Eucerin Sun. This is just the start. The first quarter is something like 10% to 15% of the yearly sales. So the consumption is coming after. But all the feedback we got in terms of listing, in terms of the number of display are making us pretty optimistic. To give you a flavor, in the U.S., for example, we are getting the full listing of all our innovation. It is the first time in the history. We are increasing number of display by 12%. So we are really everywhere. And we see that the relaunch of Coppertone that I was presenting last time is already delivering a much stronger sellout than the previous range. So all in all, yes, we believe that sun will be a game changer for us in 2022.
It's a combined call today. So we have a journalist, [ Kristoff Kapaczinski ] of Die Welt.
It's again about pricing. Can you elaborate a bit more how you increase prices? Do you do this even in the rural portfolio? Do you increase prices more for your very expensive products like Eucerin? Or is it even across the [ assortment ]?
I would take this question. So we are differentiating where we're taking pricing. It's not a one size fit all. We are really looking where we have the opportunity to obviously impact pricing and are strategically doing so. What we're seeing certainly in the beginning of the year, we're starting off with strong pricing in cosmetics in La Prairie, but there will be pricing on all brands and, again, differentiated approach depending on the category.
So the next caller will then be Emma Letheren of RBC.
I had a question on your outlook for the Consumer. You mentioned you're seeing the Consumer holding up. You're not seeing any issues with elasticity yet. Given some of your peers are talking about how the cost environment has worsened and the consumers are not yet feeling the effects of all the price hikes that are going to come, is this a view you share? Do you see the consumer environment worsening? Or are you quite comfortable with some of your outlook for the Consumer?
Emma, so obviously, it's really hard in the current environment to predict what will happen. What we can tell you is what we see happening in Q1, which is elasticity not having an impact. We're already seeing a significant portion of the costs certainly hitting us. And for the period to go, we have very strong plans in place and obviously have been working with our customers on pricing. So we expect that execution to come through, but it's really hard to give you a very concrete answer as the situation is quite unpredictable.
And just a follow-up question. You mentioned that for now, most of your pricing has been around La Prairie. So have you taken much pricing on NIVEA? Or is that still to come?
Actually, I was mentioning that it was in cosmetics. I should have probably clarified that when we talk about cosmetics, it is NIVEA primarily. There's a few other mass market brands we have as well. But we are seeing really pricing coming through on NIVEA, again, across all regions as well as La Prairie, year-to-date. And all brands will deliver pricing throughout the year. And again, pricing is positive in the quarter on all brands as well.
Next on my list would be Celine Pannuti.
Apologies, I hope I am going to ask a question that have not been asked, but I joined late. The first one, on pricing, I saw that you said that it was 2 to 3x the level that you did before. So what are we talking about, 4%, 6%? Is it more than that? Today, your competitor, Unilever, is having 8%. Is it as high as that? So if you could comment on the pricing level. And then I would like to understand the visibility on costs, on the cost side for the year. Can you talk about -- I mean, how much do you have already covered? What kind of inflation are you seeing? And I mean it's quite good today, you are reiterating your guidance for margin improvement in Consumer, which would be a very good feast compared to others who are seeing high cost inflation. So could you tell us what are the building blocks to offset what I think is like a 30% acceleration in cost from what people were seeing at the beginning of the year?
Celine, I will take both of those questions. In terms of pricing, while we don't share the specific pricing component in our sales growth, what I can tell you, I can confirm that, yes, it is 2 to 3x as strong as what we've seen in the prior year. What you need to also consider is how much mix essentially is flowing into that. I think our competition tends to put a lot of the mix significantly into pricing, but we are going to be quite competitive in our pricing for the year. And as I've mentioned in the previous answer, I'm not sure that you heard it, most of our sales growth we expect to be driven by pricing. In terms of the cost inflation and the building blocks to offset there, we have mentioned that, obviously, we started to see costs really accelerate at the end of Q4 and into this year. And what we have done is really plans in place to drive significant pricing. It's our #1 building block by far. Drive mix, which is the second strongest building blocks. Between those 2, it obviously all depends on what happens with cost inflation into the future and especially related to obviously the unpredictability of China, but we expect pricing and mix to offset somewhere around 80% of the cost inflation. And then the remainder will really be driving efficiencies both in terms of our marketing spend and Vincent just mentioned what we're doing in terms of driving digital media and precision marketing and then also efficiencies in our overhead spend.
Can I just ask how much -- I mean, are you covered for H2 in terms of the cost line?
So we are covered currently over 60% of cost. That said, it isn't -- the market environment is not easy and there are situations where we have to buy at spot. We even have -- beyond the 60%, we have some coverage even for other particular raw materials in the remainder of the year, but again, really unpredictable environment. So far with what we know is what we obviously have built into our guidance and are reflecting here.
We move on, Societe Generale, David Hayes.
Like Celine, I may have missed some of this at the beginning, so apologies. So just to follow up, I guess, on some of those questions. So from a balance perspective, in terms of A&P plans at the beginning of the year, are they not changed? Or maybe are you planning to [ show ] some of the investment through the second half to offset some of that extra input cost inflation? I guess related to that, you said before, I think, gross margin in Consumer you think will be up. Is that still the case? Or is the shape of the business now slightly different because of what we've seen in the last few weeks in terms of input costs? And then I guess a broader question still on NIVEA. Grita as Head of NIVEA has been a few months now. Has she presented to the ExCo on her plans and strategy? And is there any new direction that's coming out of that for NIVEA in terms of plans for the brand and, again, maybe investment levels over the medium term? And then I guess -- sorry, still on NIVEA, last question, just in terms of the quarter, but was there some pantry loading at all in Europe? We kind of heard pockets of people buying because of supply chain concerns and the Ukraine situation in the middle of the quarter. Is there some element of volume benefit in the first quarter that you think may be unwinding a little bit through the second because of that timing of buying?
Thanks, David. I will take the first part of the first question and then the last 2 questions. On A&P, no, we didn't change anything in the plan. We are -- what we've been able to do, thanks to the move to digital media, is to make our nonworking media more efficient. But the working media, so the money we are spending to hit -- to touch consumers has not been touched and we'll absolutely protect that because we have also a lot of launches coming in the months to come, including, for example, the sun season, and it will come from May and onwards. So no change in the A&P. On gross margin, Astrid, do you want to answer?
Sure. So on gross margin, I just mentioned, obviously, an answer to Celine. We do have strong plans in place on pricing. We're going to drive mix. We don't expect, though, that to offset 100% of the costing impact. So margins will likely not be up. That said, we are driving efficiencies in other parts of our P&L that will hopefully allow us to deliver our guidance as we've described it today.
Regarding your other 2 questions, David. So Grita is indeed with us since 3 months. She will present a vision of NIVEA in our Capital Markets Day on June 9. So stay tuned. Be happy to have you here to listen to her. Well, I can tell you that the history of Grita that she has been managing the skin care businesses of our 2 biggest competitors. So you will not be surprised if I tell you that she absolutely is aligned on the fact that skin care is the future of NIVEA and that we have to go in this direction. She is also working on digital. She has a great expertise in digital. So moving even further ahead of not doing precision marketing. So she will also introduce also a vision. So stay tuned.
On your last question, no, there was no volume benefit in the first quarter. We didn't see any impact of people willing to buy some stocks of product before because of the Ukraine war. So no effect like this one.
[Operator Instructions] Thank you. So we move on to another journalist question, [ Jacqueline Gurbell ] of [indiscernible], please.
I have some questions on the situation of raw materials. Can you elaborate a little bit how the situation has changed there now with the impact of the Ukraine, also the impact maybe of China lockdown, what is the situation in your supply chain? And then also Indonesia announced that they want to stop export of palm oil from today. So how is that going to affect you?
Thank you so much. I will take that question. So obviously, we do expect, unfortunately, continued disruption in the supply chain going forward. Clearly, the events that you've mentioned are contributing to these short-term issues for sure, and we need to see how far they last. What we have done is we've really very intensely worked on this with our suppliers. We do the best we can in terms of forward planning, building inventory, looking for alternative supplies. And so far, we've managed the situation quite well with very strong service levels in the first quarter. In terms of your specific question on the export -- partial export ban of palm oil in Indonesia, Beiersdorf has not been impacted to date. We've not seen any bottlenecks from that. We are sourcing palm oil derivatives on the world market. And they come from various countries, not just Indonesia, and this part has not yet been banned. So palm oil derivatives are still allowed to be exported in Indonesia. What we are seeing, though, is some impact on pricing volatility is there because of this event. So we're obviously monitoring the already very high price levels of palm oil.
Okay. So we have the next online is Tom Sykes of Deutsche Bank.
Yes. Just 2 quick questions, please. One, hopefully, hasn't been asked before. Just did you give a view on the H1, H2 relative COGS inflation, where the toughest point for you is in terms of the rate of inflation? And then secondly, just on FX. Is there a greater FX benefit at gross or EBIT margin than there was at the full year? And can you give some view as to the impact of FX translationally, please?
Tom, I will take those 2 questions. So we are already seeing high levels of cost increases in the first quarter and in the first half. There is essentially the second half will be at that high level throughout the second half. So not a huge difference between the 2 halves, sustained at a very high level, obviously, the incremental costs that we are seeing. In terms of FX benefit, yes, the first quarter obviously has been better than what we expected certainly in our plans. Year to go, we are a bit more conservative in our planning just because there is obviously extreme amount of volatility, and it's really hard to predict what will happen. So a good Q1, we'll have to see what happens in the quarters to go.
Okay. Sorry, is that fair to say that, that's in part of the gross margin sort of make up the gap, the missing part between pricing and mix to help offset margin as part of that is coming from FX?
It's helping in the quarter -- first quarter a bit. It's not in to go. We have not planned for it to help.
Okay. Next, we have Rogerio Fujimori.
I have just a quick question about Hainan for La Prairie. I think you previously said you had a very good Chinese New Year. So could you talk about most recent trends given the mobility restrictions for domestic travel and share your expectations for Hainan for the balance of the year for La Prairie?
Thanks, Rogerio, for your question. So Hainan is a big growth driver for La Prairie, and we grew in Q1 double digit. But doing that, we had also huge growth versus 2020 and versus 2019. We are also growing in sellout at plus 27%, which is extremely good. We are really running the same kind of strategy that we always had, was to open a very limited number of doors. We opened 2 doors in Q1. So now we have 9 counters, which is, of course, very selective, and we continue to benefit from the fact that Chinese tourists are traveling to Hainan and not to the rest of the world. So this is participating to the very good figures for the first quarter, together also with the strong increase in Tmall, allowing us to compensate the sluggish of the brick-and-mortar market due to the lockdown in Shanghai. So all in all, a good quarter, a good perspective. But again, we have to see also the way lockdowns are evolving and if Beijing will be also impacted in the coming days.
Thank you. We have 2 more callers. I can see Karel Zoete, Kepler.
I have a question on tesa. Can you provide a bit more granularity on price increases in the tesa business as well as the outlook for the near term? I understand it's difficult to plan far ahead with this business, but any color, much welcome.
Sure. I will take that question. So tesa, obviously, very happy with the start of the year, strong growth, 5.1% on top of a very strong quarter prior year, 23.7%. And we are, in tesa as well, obviously, dealing with the cost inflation and are also taking pricing in both the industrial as well as the consumer business.
And can you say anything on the second quarter trends given the lockdowns in China? You already provided some comments, of course, but...
Yes. So obviously, second quarter will be difficult because the -- especially the electronics business in Asia, so much of it is really centered around Shanghai. So reading the news, you will see that a lot of the electronics business there is impacted. We have to see how we weather that and how we see a rebound in the second half. The team is managing well under the circumstances, but it's certainly not easy. I think second quarter will be a challenging quarter.
So we move to the last caller. We have Jeremy Fialko of HSBC.
A couple of small ones for me. First one is on La Prairie in China. Could you give us what the percentage of sales online is currently within La Prairie in China? That will be quite useful given the restrictions in brick-and-mortar. And then secondly, can you just elaborate on this point on currency? I think kind of thinking back, for example, to the second half of 2020, I think your margins were actually quite penalized because of a transactional currency effect. So could you talk about effectively kind of how much you're producing locally and how much you are sort of exporting from, say, Europe into markets where, like I say, the dollar is stronger or the yuan is stronger or basically markets where you would be benefiting from the fact that the euro has actually depreciating, you get that sort of transactional benefit within your margins? So a bit more color on that would be quite useful.
Thanks, Jeremy. I will take the first question. We are currently doing 25% of our sales in China online. And as you might remember, we have a very unique operating model. We are not doing promotions. This is why you will never see the highs and lows that you might find with other competitive luxury brands. So it's growing, particularly Tmall, which we entered 2 years ago, so growing plus 44%. So this is something we'll continue to invest on, but again, with an extremely strong dogmatism in terms of execution. And you're right, it is helping us, together with Hainan, mitigating the sluggishness of the brick-and-mortar market.
In terms of the question on the FX impact second half last year, in fact, the first half was significantly more impacted, and we saw a reduction of the impact into the second half of last year. In terms of this year and what you're asking on production, one is obviously production. The other is what commodities and the indexing of commodities, which are -- which tend to be your dollar denominated, so do have an impact still on our production. We might have a benefit from Europe production and the cost of conversion there, but in terms of commodities, they are mostly linked to the dollar.
Okay. That concludes my list of callers. So we can close the question and answer. So thank you very much then for having joined our conference call. Beiersdorf's next Investor Relations event will be our Capital Markets Day on June 9, and our 6 months results call will be on August 4. So we appreciate your interest in Beiersdorf. Thank you, and goodbye.
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