Kenvue (KVUE) 6 Aug 24 2024 Q2 Earnings call transcript

Kenvue, a leading consumer health company, recently held its second-quarter 2024 earnings call, revealing a positive financial performance and strategic initiatives aimed at driving growth and enhancing shareholder value. The call, led by Interim Head of Investor Relations Jim Giannakouros, featured insights from CEO Thibaut Mongon and CFO Paul Ruh, offering a comprehensive overview of the company's financial health and strategic direction.

Financial Performance and Strategic Priorities

Kenvue reported a strong financial performance for the second quarter of 2024, with a 1.5% year-over-year organic growth and a 410 basis points increase in adjusted gross profit margin. The company's focus on productivity and cost reduction has enabled it to invest more in its brands, while maintaining its earnings per share (EPS) guidance. Thibaut Mongon highlighted the company's strategic priorities, including reaching more consumers effectively, investing further behind its brands, and building a culture of performance and impact.

Investment in Brands and Innovation

Kenvue is investing more in its brands, with a 20% increase in marketing spend compared to the previous year. This investment is aimed at amplifying consumer engagement, health care professional engagement, and in-store presence. The company is also focusing on innovation, with the successful launch of Collagen Bank, a new pre-agent platform, and the expansion of Listerine Clinical Solutions, which is now the 1 mass wash line innovation in the U.S.

Skin Health and Beauty Segment

The Skin Health and Beauty segment showed a 2.4% decline in organic growth year-over-year, but the company is optimistic about the future, with plans to stabilize the business and resume consumption growth in 2025. The company's focus on reaching more consumers and engaging with dermatologists and consumers on social media is expected to drive growth in this segment.

Essential Health Segment

The Essential Health segment has been a significant contributor to Kenvue's growth, with a 7.6% organic growth in the second quarter of 2024. The company's strategy of value realization and innovation, including the launch of Bonded Pro Hill in the U.S. and Aveeno Kids in India, has been successful in expanding the categories and bringing new users to the market.

Market Outlook and Challenges

Kenvue is facing challenges in certain markets, particularly in the Skin Health and Beauty segment in China, where consumer preferences are evolving and the category is soft. However, the company remains optimistic about its position in the market, with a strong portfolio of brands and a focus on local brands like Dabao. The company is also facing challenges in the promotional environment in the U.S., but is managing promotional intensity carefully to maintain gross profit margins.

Conclusion

Kenvue's second-quarter earnings call provided a positive outlook for the company, with a focus on strategic investments, innovation, and consumer engagement. Despite challenges in certain markets and segments, the company is confident in its ability to deliver on its financial targets and build a culture of performance and impact. With a strong portfolio of brands and a commitment to reaching more consumers, Kenvue is well positioned for future growth and shareholder value creation.