11. Intangible Assets

Goodwill and Intangible Assets

The carrying amounts of goodwill decreased by €17 million compared with the previous year to €569 million (previous year: €585 million).

The change compared to the previous year is mainly due to the impairment in the amount of €38 million for the Chantecaille group of cash-generating units. The reduction in goodwill and intangible assets is also due to the write-off of nie wieder bohren in the amount of €8 million and the impairment of trademark rights in the amount of €6 million. The other goodwill of the cash-generating units or groups of cash-generating units, as well as the growth rates and the cost of capital, are shown in the following overview:

In the course of the realignment of the China business, minor write-downs were also recognized on property, plant and equipment; in this context, brand rights amounting to €6 million and minor assets under property, plant and equipment were also written down as they are no longer used. The impairment resulting from the impairment test is recognized in other operating expenses and is attributable to the Consumer Business Segment. The trademarks from the acquisition of the Coppertone business of €188 million (previous year: €194 million) are established in its markets and will continue to be advertised in future. The trademark rights therefore represent intangible assets with an indefinite useful life.

The trademark rights and customer relationships acquired as part of the Chantecaille acquisition were classified in full as intangible assets with finite useful lives. They are amortized over their useful lives. As at the reporting date, the carrying amount was €54 million (previous year: €59 million) and is subject to amortization of €8 million (previous year: €8 million).

As at December 31, 2024, all relevant cash-generating units and groups of cash-generating units were subjected to an impairment test for the purpose of assessing the recoverability of recognized goodwill and intangible assets with indefinite useful lives. The recoverable amount was determined on the basis of a value-in-use calculation using cash flow forecasts.

The key estimation parameters on which the impairment tests were based included market shares and sales growth rates as well as price trends for raw materials, gross profit margins, and corresponding discount rates. The detailed planning provides for moderate sales growth and an EBIT return on sales that is customary in the Group’s business. Based on the sales achieved in 2024, the detailed planning for the Chantecaille group of cash-generating units envisages sales growth that is significantly above average, in particular due to the introduction of new products and intensified market development, as well as increasing growth in the EBIT margin due to efficiency improvements and the elimination of negative one-off effects. The estimated future cash flows are based on financial planning with a planning horizon of five years. Cash flows beyond the planning period are extrapolated using an individual growth rate, taking external macroeconomic and business-specific factors into account.

In the 2024 financial year, there was an impairment of goodwill in the amount of €38 million from the Chantecaille group of cash-generating units, which is allocated to the Consumer Business Segment. The carrying amount of the Chantecaille group of cash-generating units amounted to €405 million at the time of the impairment test. The need for impairment mainly results from the changed assumptions in the financial planning of the Chantecaille group of cash-generating units; these are derived from the adverse development of the market for luxury goods and the continuing negative development in the travel retail business. The value in use method is used to determine impairment. The recoverable amount is €363 million. The impairment was recognized in other operating expenses. 

In the case of the nie wieder bohren GmbH cash-generating unit, the weaker market development and the associated subdued expectations with regard to cash flows and an adjustment in the calculation logic from the impairment test resulted in an impairment loss of €3 million on goodwill and €5 million on the remaining intangible assets allocated from the purchase price allocation. The value in use method is used to determine the recoverable amount. The recoverable amount is €9 million. The impairment resulting from the impairment test is recognized in other operating expenses and is attributable to the tesa Business Segment.

The impairment tests of all other cash-generating units and groups of cash-generating units did not reveal any impairment of goodwill or trademark rights in the year under review.

The 2024 financial year was characterized by a phase of uncertainty and reorientation. In some regions of the world, trends towards stabilization could be observed, but others continue to struggle with considerable economic challenges. The constantly high interest rates also led to a slowdown in economic momentum in the 2024 financial year. Economic growth was significantly lower than in previous years, driven by persistently lower private consumption and investment due to restrictive monetary policies in some countries. A decline in inflation was observed, but not as strong as expected. With regard to the global economy, business continues to suffer in particular from the subdued economic economic development in China, which in the 2024 financial year was primarily driven by the tightened trade relations with the USA and Europe. This is also having a negative impact on our Travel Retail business in this financial year. For the 2025 financial year, we expect price levels to slowly stabilize despite still high inflation rates and a persistently tense global geopolitical situation. The effects described also have an impact on growth and profitability in the Group. If the weighted average cost of capital were to be increased by +1% in isolation, the impairment the impairment requirement of the group of cash-generating units Chantecaille would increase by €56 million. If the long-term growth rate were reduced by –1% alone, this would result in would result in an increase in the impairment requirement of €43 million. If the reduction in the long-term If only the reduction in the long-term EBIT margin by –1% is taken into account, the need for impairment would be €14 million higher. A reduction in the medium-term sales growth rate of –1% would lead to an increase in the impairment requirement of €18 million. For all other cash-generating units, the Group assumes that even in the event of reasonably possible reasonably possible changes to the parameters of the impairment test, the recoverable amount would amount exceeds the carrying amount of the goodwill.