Kenvue (KVUE) 8 Feb 242023 Q4 Earnings call transcript

Hello, and welcome to the Kenvue Fourth Quarter and Full Year 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Tina Romani, Head of Investor Relations for Kenvue.

Good morning, everyone. I'm pleased to be joined today by Thibaut Mongon, Chief Executive Officer; and Paul Ruh, Chief Financial Officer.

and I'd statements remind our regarding, financial market started, call that operating get performance, forward-looking includes among opportunities we like you to today's and Before growth. other things, beliefs These statements are to to cause risks, various differ expectations could future and that actual events subject assumptions or uncertainties our represent and about materially. current our results

on For with related to materials to our information earnings filings regarding these our call risks our posted and the and uncertainties, SEC. please refer website this

measure. financial non-GAAP to certain The referenced isolation also with GAAP we've of nearest call, our A These to financial the measures information release can morning's financial the intended this this measure items IR reconciliation website. U.S. the be of not or for should in non-GAAP financial financial conjunction accordance be information. non-GAAP presented these U.S. viewed subject found available on and with press During presentation in in in information be presentation GAAP. this GAAP most as comparable is a considered

I'll it Thibaut. to turn over that, With

Thank to joining today. everyone you you, and us for Tina, thank

year a for world. our company was Kenvuers around XXXX transformational the change XX,XXX of for and

a standing as independent drive up company, Our amount, an to teams profitable while Kenvue continuing tremendous public growth. accomplished successfully

lot know increase where we our While in need XXXX, we we accomplished to focus a we have areas and improve.

continuing that enter So while identified the our grow enable will priorities transition we continued as an key XXXX, company, to we X business. as independent have

culture cash performance value centered stronger impact. free on and resources our delivered profitable up creation we brands foster capital allocation. year, behind generation reach This long-term with that growth, and around our XX our to we will rewards brands, durable disciplined priority algorithm XXXX, consumers, a flow focus In on more invest a and

several gross and built year less continuing our realization grew years, Health X expectations seeing, to give growth sustaining past while have execute enhancement all ahead and was Beauty, Skin of organic momentum the organic X.X% and in again, strong we long-term to delivered banner in-store we through we value which details that X resulting, about organic just and another initiatives. specific Self X actively revenue premiumization share margin expected, mostly I'll In across are regions execution X.X% X% our strategy growth a was Health the successful around over X.X% than all missteps growth, Essential of organic in moment. and you more product growth broad-based categories. segments, the Care Our once with due U.S., in to growth, drive gain.

We points in growth strategies continued our revenue free place that XX have in even supply of initiate strong to expand our chain in And utilize profitable basis management successful uncertain our and of and with a cash to commitment the capabilities and shareholders. expansion program, delivering the dynamic further macro dividend to program XXXX initiatives we cash to we returning our backdrop. drive finally, flow relentless margins gross optimization. This through thoughtful demonstrates multiyear

segments, both now disappointing fell of on top performance start let's the focus as and have specifically, a QX clearly at of of each our one and to Beauty and Pivoting our look short line, performance Health ours. expectations, Skin with I'll us

the year. in the organic EMEA, improve. ahead to region, we launched ended we leverage year category. it In strong. consumer earlier growth positive example, Neutrogena growth for and on strength have Germany, innovation fueled to evident the America EMEA and Hydro response where to sequentially quarter-over-quarter improved Latin Boost In by Looking where is of has need

overall consumer faced to of the weaker our successful pressure demand Hydro the Boost skin In double digits, launch brands. continued In the doubled Latin refills. in Neutrogena America, China, care in by sales quarter, category continued grow we to where supported

However, our meet expectations. is in the our not it did that U.S. performance

we talked to the we priority the U.S., of brand growth, plan we capable had level about, me of of but team. for quarter Neutrogena for ambitious frankly, was recovery for know fourth with this you plan the Restoring the have is disappointing. is As the a and execution

So a I our drive past marketing with our is with and team brand our the months, support healthy demand value finally, improve U.S. brands our our are customers to several for equities level as our in the our better We to successfully and products in-store with execution with time in spent resonate over category, proposition know consumers, of the however, investments. the communicate consumers and significant diagnosis brands, our stronger engage we robust innovation must capabilities launch clear.

shared we they Growth capabilities strategy, and are strengthen of he Meurer, to has Officer, knowledge December, stabilize already executing that the road Head position will With Chief growth Jan's our their portfolio assume Jan that deep with our early In focused America. North previously and the of the map his business. team of our outlined

recently strengthening and that we is customers, presence better redesigned enhanced areas: articulate dermatological prominent clearly America benefits Health in-store through Skin in are in-store and First, prominence the Beauty team Specifically, X packaging brand activation. action leadership and North with more taking planning

frequency brand are and with third, of mapping revamped Second, level experiences supported are bolstered enhancing engagements reach activities we care consumers demand a distinct we through the consumer delivered innovations through and professionals. and by health generation And with [indiscernible] amplifying effort. and appropriate

overnight changes. confident shift. weaknesses making actions this for results, the and our take we year, will are will half to on to these of but have we expect occur an are our necessary It in we diagnosed the second time which be correctly not impact the generate So

strong in our our a stronger precision and execution, stabilize level coupled partnerships enable in retailers, the increased investment higher believe of with growth to in the we deliver with and Additionally, us will U.S. XXXX. business

our X.X% in on XXXX. in of delivering to our very largest XXXX, the In with expectations, XX.X% different Care, growth is ended turning of growth line segment, of now the So rest We top portfolio. the Self a organic picture. year in

We leadership our the demonstrate activating with the reading in season fourth and quarter, accurately continue precision. our brands to

consecutive with of XX% our this even as compared incidence flu share XX endorsement. we quarter, and Adult season again, category positions the leading strengthened and with innovation, to Tylenol lower roughly growth care continued cold declined weeks to with And XXXX. levels volumes health expected leadership this premiumization gain U.S., share in relevant as professional

intend looking XXXX, to to formula winning around world. we So to deploy this continue the

Women's despite Health, in regions, in most productive Oral Health, and led finally, Care competitor, the brand Care all Essential were Baby grew organic And now Xx U.S., the by double-digit around robust where the while delivered this growth category being performance in next less including Listerine, than weeks growth. Oral shipments Care has X%, of bigger with and XX our remains was quarter. consumption

launch The as X in point well for of just Listerine this months reaching great therapy share innovation done gum the largest the in and has XXXX, XXXX. more in we in of XX U.S. plan have call, category extremely mouthwash innovation

me our bring have will year. our independent unleash our will be as for we the priorities will operate of portfolio. which us year starting than the an first this XXXX to what potential company. Which differently to in full to past, you see enable us full And

consumers, going As I focus XX First, are we our more shared reach X earlier, a to priority on with strong have priorities: we brands.

retailer which build growth. when strengthening experiences we strong consistent represent for segments, X/X consumers bring brand need driving availability brands, attractive, XX but We priority of our our and innovation are availability, us. relevant With to market will our partnership, also ensuring across plans our clinical all mental to where

in bar of our terms our raising also with are starting We excellence activation focus markets, the U.S. in

our brands level as see are with activation of growth. higher top you going to we in fuel a XXXX So

In meet care needs drive consumers, professional plans Self continued recommendation and category-leading gains. health Care, maintain to category-leading bring forward innovations we have to share of strong the science-based ultimately,

of the plan And XXXX, This in the calibrate today. have we while consumers both consumer Health, we rest health and U.S., in in U.S. investment Europe more America. our requires professionals. outlined monitor thoughtfully with with invest a in will with business sentiment the Latin in to to the and and brand will see and China, growth we the in world, in activation our accordingly, investment, I where Skin we plans care Outside stabilize continue

across this Continued investment. efficiencies the fuel margin business will and expansion

to me resources to and in brings second priority, brands. free up our our which Which invest is

We in our at investment fund margins an expand brands. to which XXXX, expect accelerated increased gross will pace compared to

driving heard me revenue on years, gym You've the that supply efficiency past management margin. and gross work, muscle, we we several thoughtful over this to going to say implementing our chain, our mix across this have strengthen the through will initiatives. continue And managing been

modern reinventing base. and systems needs In cost we includes agility, processes, are specifically addition, exit of meet with enable working. to but implementing this speed, and Johnson, new our agreement Johnson company as not simply of legacy lower replicating services a And accuracy our intentionally transition our ways we rather the designed &

new we quarters, occurring that are example, This the business data service will plan be forecasting process better For automating a our integrating demand throughout with through will implemented improve next implementing and and levels this capabilities sensing. demand and planning retailer the X integrated year. majority

a In our XXXX, And of and to which heightened priority, performance all Kenvuer. for sense and leads with deploying of final rewards world, goals every impact. fostering our this plan, will clear me we teams culture Kenvue our be enabled around by management that new the performance a are accountability

my on impact growth, values X creating for has streamlining cash and new incentive sense everyone own Further, belonging, an Kenvue importantly, of the line most on introduces are a impact. of for in where culture top we expansion, shareholder encouraging across rewarding rewarded leadership grow flow. drivers are to and we growth the margin organization, all opportunity including and plan The based earnings return: and purpose is free programs team. our leaders, decision-making And a strong

Kenvuers as company. to purpose, realize the I into we have our ability the future. are of me see us, helping power clear to year. while build of give passion they made everyday in our know and confidence our I'm progress our their is XXXX people in together behind to teams successful of will priorities care, year we the deliver closing, our one one energy make in for It significant team work extraordinary and to plan still XXXX. inspiring a grateful talented and and to this And ahead in new work for deeply So lot us XX,XXX rally

turn I'll it to Paul. that, over with And

everyone. Thank and morning, Thibaut, good you,

was line, the even transformational XXXX XXXX. and and backdrop for for close with outlook face delivered dynamic the robust overview the cash we headwinds. a cost fourth gross macro year, our start a significant of with of quarter top and results margin then will strong expansion year, generation, I in an where

quarter in and fell short Skin execution Thibaut, in-store expectations you fourth plan Beauty did As from Health performance business. of as U.S. meet our heard not the

the what the action in leadership by While encouraged couple issue of putting already team and has past new that months, accomplished is recovery place we in diagnosing don't expect overnight, I'm the underway. an plan

this X.X% quarter volume It's where decline to in organic of of growth OTC quarter performance X.X%. our basis. for getting quarter Care, growth, last consider outsized our Value experienced Fourth growth contributed Self offset quarter fourth important X-year to driven demand to a fourth Now X.X% growth in unprecedented declined X.X products. points points. results. by stack year, organic on the sales primarily context In context, X.X a was fourth realization by we

deconstruct me of the not drivers unique reflect volume are impacting there several do the brands. our that as volume Let strength underlying decline

Further, double-digit cold, start organic First, drove XX% incidence X season the and approximately combined year early growth an saw this strong flu a lapping points later season, to from with lower cough levels. about that year. come last and

As in levels. to down incidence can any characteristically business, in is go We or season. previously, parts volume OTC our shared we have linked given of up

us is focus is what consumers, share, to saw our to from while of you the to season bring, quarter. our Kenvue, what and For serve regardless continuing may prepared be gain that this

impacted negatively have any product Of as about the the discontinuations expect point. see next fourth X discontinuations by impact lapped of product fully we and quarter, quarter XXXX not year. the to Second, note, do

reduction X point, as for levels. accounted tighten inventory inventory trade Lastly, retailers about their

is we of mainly points decline Beauty, little attributed our the a remaining sum, X idiosyncratic underperformance U.S. fourth in in China points and over volume and continued quarter, the X softness to attributed with discussed. have elements to Skin of In Health

of we reflects full to X.X%, points billion. suspension all the is products the half. XXXX which of to X and grew X% discussed year, net approximately of first X.X% value Organic year personal in of sales volume For of a care Russia realization discontinuations X.X% the product attributed through decrease growth the the $XX.X and have

the on nearly value distinct realization, slightly down volume low When normalizing items, demonstrating X exclude to elasticity of volume points these brands. of was X our

down also look penetration throughout improve give portfolio categories. label year, to XXXX. see the through flat we even the us to consumers of the as our growth other remained fact be relatively trending You in confidence as the private ability power dynamics and that These progress in volume

margins. Fourth expanded margin gross XXX points to adjusted gross year to basis quarter Moving margin points full basis XX.X%. to gross increased and XX.X% XX

As our Impacts in more there refine we points you to XX nonrecurring methodologies refinements previously, and comparable have for with from basis these with reporting year. our some our accounting in basis a full of benefit are be discussed we XX quarter as peers. the results, items were points approximately the fourth and

the X during for as year. logistics inflation, the quarter, and while in positive trends full gross continued by point ongoing pressure about Inflationary wage during FX to quarter headwinds the moderated energy fourth and in offset pressures margin

operating Turning income flat. I to margin and benefited for the year adjusted basis XXX basis XXX nonrecurring margin margin points about the Fourth income adjusted Adjusted adjusted by about was from items basis points and XX expanded just quarter operating spoke operating for year. quarter full points the operating income.

adjusted expiring tax The benefits full rate effective the tax primarily The year release adjusted from due effective was law is of tax The reserves. prior primarily rate due to XXXX, rate prior changes that XX.X%. to negatively year result of tax decrease XX.X%. and For was year impacted statue fourth quarter limitations of tax our release decrease versus mostly planning. is taxes, of effective in effective versus the reserves, tax the adjusted tax

approximate And from adjusted the Adjusted the for was was spoke and and for an $XXX items year. for income million about. the for the diluted nonrecurring $X.XX quarter earnings $X.X quarter per $X.XX net finally, share billion I the year, benefit $X.XX including

allocation. Now and cash turning to capital

separation-related in cash worth flow. of year. and of we free the the It flow items that the at the $X.X billion from is generated free For year, end working cash capital timing the noting benefited

demonstrated allocation, cash our our to returned During reduced strengthened the shareholders. during we outlined disciplined We IPO. year, as and sheet, capital commitment our balance our to leverage

We have leverage our and reducing dividend including from priorities, X.Xx to executed payout on our allocation gross XX% X.X. a ratio capital

which for XXXX. the the as year important of a consider me working to retaining you XXXX of will interest model it XXXX, that timing be the as full As dividends year we're a to full capital well benefit fact have in expense, brings and outlook

our have First, I want to ability our for strong echo Thibaut's point plan conviction the year. in that execute to we

invest a consumers, and are have XXXX, impact. in place. clear We way strategy in and And work, rewarding the optimizing we focused our brands on to more performance we behind reaching

We in implemented will recently business and planning further investments supply drive a technology efficiencies process. chain, through integrated

independent incremental particular the as these will new finally, growth Volume this and that We a establishing efficiencies share redeploy into needs market focus meets for brand operating company. will dollars the of operating support. our an from generated TSAs, then of be capture accelerate will infrastructure investment. consumer-facing we And exits

while we on focused to to year XXXX, a be range expect a to enhanced In in will organic continuing it truly transition the stand-alone growth X% of engagement summary, entity. our X%. In achieve with consumers,

year organic through we We strategic quarterly compared as that on materialize. this, improve initiatives as growth expect progress and sales Thibaut and to outlined sequentially impacts to begin to the the

We last lower XXXX, headwinds in a versus the year. first season such to as continue flu expect of half certain

with and issues portfolio. persistent in impact Beauty and in-store our of Softness China Skin Health

particularly half more impact on actions consumer expect to as the year. amplifying accelerate However, accelerate in as investment growth see brands, and begin we behind prominence, the focused we of of our and innovation, engagement an enhancing to have second presence in-store these

impact potential consumer geopolitical prudent could year volatile acknowledge the of as businesses. to end lower for We another and weaker be our reflects confidence. The knowns a headlines that guidance all in economic our for also it's the consumer XXXX think seasonal possibility and

the to organic growth to be flat. Looking quarter, we first about expect

XXXX, QX. nonrecurring perspective with quarterly don't to quarter first flu be practice, would cough from in and of we provide thought guide strong outsized retailer to benefited on inventory combined While the a normal part helpful performance plan of the cold, rebuilds, as we season, it our given which

P&L. Moving the down

a closer expected margin We levels. expect to profit XXXX to adjusted maintain profile, gross margin be to with healthy gross

below operating We margin income year. slightly adjusted last expect to be

efficiency in we in increased our XX% marketing brands investment materialize, spend as operating that approximately offsetting spoke begin the the absorption year our includes an While company about to the as full partially increase a well of public of costs.

to translational items foreign currency reported point Regarding and other guidance expect about of sales. we net spot X current At rates, impact EPS.

We expense expect across be split net interest approximately orders. $XXX to evenly million,

XX.X% the XX.X%, primarily tax. an adjusted Pillar to loss, adopting X rate the changes We of global tax expect enactment reflects in which minimum the of tax OECD's legislation

a count assumes current Regarding $X.XX $X.XX. per on average to we exchange $X.XX of assuming about range X.XX the rates. earnings range share full expect to This year a XXXX EPS, headwind in of adjusted shares, weighted be billion share foreign based

To have words, XXXX. show for of XXXX. rebased rebased a view across that comparable included view point like-for-like view a a starting slide in other been presentation a public entirety full year normalized earnings public expense per a and outlines a we've as In a XXXX This we the for to company when our the costs, share midpoint, rebased comparing count. year interest At tax includes guidance and of of company EPS. our flat adjusted about full is diluted rate share the years, a

as and plans improve. have acknowledging closing, Beauty of also are In challenges Health to our place that our while in business first achieved we we in year have proud in what Kenvue, Skin we

resources freeing and invest and As behind brands Thank culture performance rewards for XXXX, our priorities that our are impact. consumers, reaching fostering to a more up you.

your that, we'll questions. with And take

Bank. the of from of comes question Deutsche Stephen [Operator Instructions] line first Our Powers

[indiscernible]. on I start, just Maybe can the

for the year given quarter, could 'XX, some given momentum full first organic in the the exiting people to at the potentially have comparisons I think X% look I ambitious is ambitious. the call think the X% as and also flat just for we

on organic a little building visibility looking blocks forecast So color for as to and maybe more that that we the just your of get year. into the should we bit some be

and sure. top line Yes, on ambitions your Steve, our XXXX. Regarding the question for

We continue to categories see X% our and 'XX to in growing X% beyond.

as the expect of we that for the the sequential the a outlined we It does in a half that also plans increased XXXX impact, I we we embed the the investment guidance but range as through of that reflects lap year. generate about, improvement move earlier, especially year XXXX unusual second talked our compares and Our fact of scenarios. and

materialize our that's in us we play So prudent that's to the acknowledge But in XXXX, dynamics why the what could confident think contemplates certain suggest for the makes plan and for are also our guidance in-store the also for at enough it that year. as headwinds Skin take some in as in in it's But well time plans of seasonal will the China, businesses. reiterate softness year. execution further that possibility I to we our confident improve

Very this The it I margin talked about but of just XX good, minutes -- good. outlook very basis just guess gross margin for points Okay. you Paul clarifications. talked well. And some headwinds. press that ago as forecast. then on strong FX the about is maybe release then the And a few contemplates

I'm maybe can year-over-year all you clarify, number give I'm as within basis is we just transactional I some And where wanted a guess finished in of little that in headwind talked advertising. one? just number about drivers SG&A, I 'XX. points two, that rates to -- to of to the you And color as curious increase SG&A? XX if

the trend a little and as to I'm if it's can expect into 'XX to of where I just a but finished in on you sales in percentage give -- don't going K, color how 'XX? know you that be maybe sure advertising

first the we very trajectory. In regards your pleased are of with question, margin to part our gross yes,

And gross you in muscle but embedded I As that margin and a in Thibaut also mentioned, enhancement. developed is of talked SG&A, sustained know, in and gross terms we continued profit about have FX margin margin. primarily in gross the

I strong of that advertising. year-over-year approximately question, slightly plans was advertising, talked growth in will you that progressive Thibault rates year-over-year I where 'XX To enhancement mentioned we advertising down. Advetising about. our XX%, that the your we to can But $XXX very versus more tell increase have [indiscernible]. million disclose will second seal

next the Lizzul question of Our America. Anna comes Bank of of from line

on be are guidance? said you driven the this QX and weakness I of specific wanted the can expecting know by And by was I you Skin on you mostly weakness U.S. driven how China ask QX Dr. to your recover the of Health terms in Beauty. volume on to more much in But was [indiscernible]?

QX, also in in QX. Health a on had quarter saw which deceleration U.S., that in highlighted last some volumes Care in innovation then you here Sun significant Beauty, Skin the for and Neutrogena, And helped

So at retailers? in you in terms where of with your disruption, the recovery are in conversations

answer where me let question So in U.S. China what see on we skin and the do -- your and health

So due a to PR in [indiscernible], are Dr. China, saw demand especially familiar for weak we brands, our that with. you issues

categories are We dissipating Care But we while these our the to gradual especially the we first our the are of in are in monitor we recovery, as are in consumer recovery continuing contemplating strong brands guidance are half in how not the China. a be we Skin going year PR thoughtful China. is how about believe 'XX, see doing, going speak. going in in And sentiment that to to issues

our that portfolio China, company, in X% a represented is the China. our but we total largest you about as not in Skin remind China part and of revenue total have our portfolio I of is Health

what Regarding exactly had is we the remarks, was not in expected. my outcome plan -- good is we recovery understand I What's ambitious said the U.S., going on. this we in of we as And an what QX. that prepared plan

a -- very Amazon on like sales double the with grew brand well. example. We penetration in U.S. example, for doing for has high are Neutrogena, Online is Our Neutrogena, brands are healthy. a digit

his need is Jan and execution, we what execution. really So and laser-focused improving are to this improve team on

displays, for And execution, and to on with the everywhere making fixtures, consumers our here, about easier our better updating goes -- range make sure needs. distribution, be in-store it to or going architecture that presence starts but making to increasing prominence. packaging ultimately, I'm increasing where it It share we for needed easier And their our in-store shop broad-based. just customers the our it's talking shop, and back to have beyond for

way in It's what did XXXX. also we bigger engaging a about than with consumers in

ROI industry-leading the on have advertising. We

is 'XX the really about consumer So activation activities increasing our frequency professionals. and reach both engagement health and with activities care brand of --

more that because We are about to once hands, know product, going put their in we try products our they think samples, they'll love them.

And scale, deploy plan XXXX a we innovation lastly, XXXX what about it programs, about will in we have at excited And are bigger are in amplifying innovation. well. and as for of our we retailers the excited terms

So -- amplified heightened in nutshell, more around execution, more focus, it's innovation. a consumers, it's -- presence precision heightened with a a focus

be expect to it's precision execution, will level a to As going the of not business. higher ahead confident to again, overnight. this The with, are will linear, 'XX but And in that I not in help 'XX. definitely we happen growth said, we recovery be stronger plan -- stabilize of

QX, had some you mentioned and seeing helpful. your gains outside cold, categories. you of Great. can on think In last if super That's rest were just you care. ask of I I on quarter health the follow-up portfolio? cough a the comment flu, And other in could

spots bright a drag if the also somewhat there So there? quarter? of were they in if some I Or are wondering was

pleased performance leadership are but season Paul season, very our dynamics the the and cessation. Yes, doesn't the digestive described because an also position accident. great of a for during entire portfolio, the analgesics, how lot but with permits strength work a and well the smoking it's a lot of talk allergy, we by question it's It's our health, true about there that outcome and Self for happen throughout of for that's Care for true we

lower other performance. performance or had these smoking digestive areas good cessation, are well. like in Allergy, see continued we in And with We incidences, do very strong performance of health. continues innovation gains very while chewables to in our [indiscernible] share business, the pleased we

portfolio. across Care Self in the performance strong our is broad-based So

comes next JPMorgan. Our question of Andrea of the line from Teixeira

in the of the spring a and have ahead probably is elaborate and I follow-up. space time of mentioned [indiscernible] some the particular, on Thibaut, displays? can just recovery question a a of beauty large into you shelf fixtures moving the the in that U.S., You retailer the heard I more summer. the the

had with your is that which to one? assume impacting also two, you're fair expectations, the And has to progress year, you to the number flat comps. do But obviously it seeing mentioned number negative QX Is like year organic on of is potential positive to see we the QX? slightly of half where or in should first year half inflecting the significant then that? second able be turning progress the And for throughout

see and see first half the And a consumption investors really and will follow-up, expect that, June can terms towards that July, POS, what should reset? the the of of the in terms of but Should in to hard to trends of start I year it's better on track that's know channel data remain we Nielsen, weak unfortunately, shipments consumption. most against on for given focus

you equal? better slightly you is fourth Are should probably have look than simplifications, innovation seeing called all the tailwind, to first the that a to you also those which simplify be So else be all SKUs and upon with that that quarter confident progress the against SKU work going as lapping quarter? you we in done the

big a Andrea. question, That's

an important it's So one.

-- we me the would unfolding So of we question your year. to what Beauty for Skin Health plan phasing unpack in and in in what terms see let

directionally the all, correct. is you year have of think I First described the way

it. I by correct describe we quarter. year is phasing not way But to way think the the We segment, directionally and the throughout the by guiding with are see in line

retailer in [indiscernible], once headwind large going be inventory chain in we the a sales -- of in of the have year, 'XX. suspension majority got saw of for for like, replenishments the the our That's the of noise be talked Given you are comps, of the these the you terms in going but the discontinuation, example, the half back for rate, have we us. to headwinds supply about of out first Russia tailwinds of in we growth half our to impact in in issue

exclude the laser-focused the precision. we is So as just amplifying health care if dynamics, That consumers include plan an making organization highlighted, professionals. with these -- if presence comp our does execute reach we are but that sure that deploying to I stronger and what includes also you that but and in-store,

where different as media executing investment different that's aspects I we phasing the of plan plan in of so you terms our higher these year. you of the have January. that throughout are impact tell of will the can And of

see, the has. has as that we will and consumption So already you advertising [indiscernible] know, all spend in each between the retailer

we on these executing are laser-focused blocks. So building

that You strong, track, Neutrogena, very brand like you to easy online, where but a something grew for be source for that and doing brand, the experience of not continues is strength us. also that to That's well digit. mentioned we we very double are is the

tracked And what the which have you see is where we and for area improvement. channel, if are so laser-focused the we on will, biggest you which is

helpful. then for like terms for can I If And the margin. question that's squeeze cadence of one gross Paul in

being the impacted You part potentially in and million about investments this that Is it's about, half? second the fully of it you're Should understand think in did all that be I $XXX TSA/TMA making? savings. call for phasing, operating out margin okay, flattish potential given the outlook included we

year the the way still Is to XXXX. So is other in this more called reinvested And thinking? A&P. have be that gain you benefit words, and should out going we marketing, to then that be you're in whatever going into you into XX%

Yes, your question. directionally you Thank for correct, Andrea.

of know, elements, is margin realization. value several including result gross the you As

addition value realization a will We have and to XX%. from about the last as year, we pricing take XX% surgical in carryover of another

premiumization to mix, efficiency we addition about. in one and that's talked and the that also So

inflation and ForEx you have it's still impact. of Inflation positive, but In course, the coming is down. addition,

income contribution will inflation. right see and exiting our spread and throughout about is the seeing we enhancement terms both also where to TSAs starting and our profit progression as will of talking TSAs, are the impact Day you in a gross gross to that margin those speak. of line out day, of that be operating gate. So year, We're you we're hundreds line, the by investment

advertising equity shorter later, -- or take will promotional spend fruits Some if will benefits more bear deliver of that the it's in term. will the

the how cadence. So see that's we

towards a into So continue intend more XXXX. investment to When that into -- of that of second but beyond going 'XX. 'XX, we philosophy it's the should it's an definitely balance half, with and a heightened continue enhancement

Filippo Our from of the line next Citi. Falorni comes of question

I to question marketing wanted back go the investment. on to

to I XXXX. XXXX. I initial But down in advertising spend slightly you Paul, think plan the said was more was in think,

So the maybe what I drove, decline? guess,

and your investment then of ROI XXXX, you those more the a give think into And investments? on bit product, about spending you by concrete the you're expected us where by advertising can category little as examples

Yes.

I'll start me over part question, turn your first one. the for of the maybe it Let Thibaut with and to second

was the Particularly, down advertising, that investable propositions we year. of half result in Pacific, a the in slightly towards the see not did year-over-year, where the and of yes, primarily in investment was reduction Asia back

of out start is more. But add? want We see of philosophy across we about key looking brand long Thibaut, that the a growth. mentioned applied what maximize going XX% as we our into you important investable to million after. the is XXXX, And is to categories thing want those most will is ROI fulfill the as to it anything gate. be $XXX all ROI our portfolio. propositions, And to priority we're the maximizing investing in the I approximately and

-- health with consumers brands is And overall broad-based professionals. our care with this to Yes. investment Filippo, and activate this additional

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of Our final the Grom question for comes day UBS. from Peter

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Thank you.

like for session. We to I of our the Mongon, question-and-answer end would over have back to remarks. concluding reached floor Thibaut turn the

right. All

we XXXX about, was, a So thank Kenvue. you today's for participating as all for call. on transformation talked

impact. I been and consumers, brands clear XXXX, think our more in priorities reaching our rewards and we foster have investing performance for that culture about a very

So updating have year forward a to And we throughout for the thank and you as continue advance day, again. we nice to efforts. now, these look you

thank concludes This you. conference a Have We wonderful participation. today's you for your call. Thank day.

You at may disconnect your lines this time.