Kenvue (US:KVUE)2025-05-08 13:00Financial Data and Key Metrics Changes - Organic sales declined by 1.2% compared to Q1 last year, consistent with the full-year outlook [10][26] - Adjusted gross margin was 60%, down 20 basis points year-over-year [30] - Adjusted operating margin contracted by 220 basis points to 19.8% due to increased brand support investments [30][37] - Adjusted net income was $465 million, with adjusted diluted EPS of $0.24, reflecting a $0.02 headwind from currency [31] Business Line Data and Key Metrics Changes - In Self Care, organic sales grew by 0.3%, driven by allergy, digestive health, and smoking cessation franchises [11][27] - Skin Health and Beauty saw organic sales decline by 4.8%, impacted by destocking in China and a soft sun season in Latin America [14][28] - Essential Health's organic sales were flat, with growth in Wound Care offset by declines in Women's Health and Oral Care [19][29] Market Data and Key Metrics Changes - EMEA region showed strength with organic sales growth for the twelfth consecutive quarter, driven by double-digit growth in the Avino brand [16] - In the U.S., sequential consumption improved in Q1 compared to Q4, particularly for Neutrogena and Aveeno brands [17][18] - The U.S. market experienced destocking in April, affecting sales performance [52] Company Strategy and Development Direction - The company is focused on accelerating profitable growth through a new operating model, optimizing cost structures, and enhancing performance culture [8][9] - Strategic priorities include leveraging superior science, launching insights-led innovation, and driving seamless commerce [8] - The company plans to maintain its organic sales growth outlook for 2025 in the range of 2% to 4% despite macroeconomic challenges [32][33] Management's Comments on Operating Environment and Future Outlook - Management acknowledged significant macro shifts and seasonal variability but expressed confidence in navigating the complex environment [7] - The company expects to see stronger top-line performance in the second half of the year as headwinds dissipate [32][37] - Management remains focused on increasing household penetration and gaining market share despite external pressures [55][60] Other Important Information - A CFO transition was announced, with Amit Banati set to join as the new Chief Financial Officer [23][24] - The company is implementing measures to mitigate the impact of tariffs, estimating a gross impact of $150 million for 2025 [36][94] Q&A Session Summary Question: Innovation plans in the current environment - Management confirmed strong innovation plans for 2025, with adjustments to ensure value and presence in stores [41][45] Question: Phasing of organic growth in Q2 - Management indicated that Q2 organic sales growth will continue to be burdened by destocking and strategic price investments [48][52] Question: Confidence in skin health and beauty initiatives - Management expressed optimism about consumption trends and the effectiveness of marketing campaigns, though acknowledging more work is needed [62][65] Question: Balancing promotional activity with marketing investment - Management plans to continue investing in marketing while monitoring ROI closely [68][70] Question: Impact of tariffs and supply chain concerns - Management discussed the relatively small exposure to China and ongoing efforts to enhance supply chain resilience [82][86]