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Beiersdorf full year results in line with lowered expectations

By Simon Pitman , 11-Jan-2011

Beiersdorf has announced a full year organic 2010 sales increase of 3.1 percent, in line with the forecast that were recently lowered by costs relating to its restructuring programme.

In nominal terms the full year sales rose by 7.7 per cent to reach €6.192, while the preliminary EBIT rose by 18.7 per cent to €697m and the EBIT margin increased by 11.3 per cent, compared to 10.2 per cent in 2009.

Breaking the sales down, the results showed how the gains had largely been made in the company’s industrial adhesives business, tesa, which has shown a marked recovery compared to the weak performance experienced in 2009.

The consumer business, which represents its cosmetics and personal care activities registered an organic sales increase of 1.6 per cent €5.320bn, a figure that reflected stark contrasts on a regional basis.

Weakness in the German market

The company noted that both the Russia and UK have performed strongly in the past 12 years within the European market, but this performance was counterbalanced by weaker performances in other countries, namely the important domestic market, in Germany.

In the Americas, both Latin America and the US had helped to boost the company’s performance through strong growth, while sales in Africa, Asia and Australia were described as being ‘up slightly on the previous year’.

The preliminary EBIT for the consumer division adjusted for special factors was up by approximately 7.5 per cent to €600m, while the corresponding EBIT margin increased to 11.1 per cent compared to figure of 3.9 per cent in 2009.

CEO underlines weak consumer division peformance

Thomas Quaas, chairman and chief of the Beiersdorf executive board, underlined the contrast in performance between the tesa and consumer divisions, expressing disappointment over the performance of the consumer division.

“Despite clear successes in individual regions, we are not satisfied with the overall performance by the consumer business segment in 2010,” Quaas said in a statement.

“As a result, we resolved significant investments and restructuring for this segment in December,” which he stated were aimed at restoring the growth patterns achieved by the company prior to the economic downturn.

Pulling out of color cosmetics in Germany

Back in mid-December the company announced new measures designed to focus the business on skin care that will weigh on next year’s operating margin, including pulling out of the color cosmetics market in Germany.

The move is part of the company’s attempts to streamline the business and focus on skin care, which will incur costs of approximately €270m before 2012. According to the company, about €120m of this is expected to affect fiscal year 2010.

Beiersdorf claims the changes will make the company ‘even more competitive and even more profitable’. “Today we have laid key foundations to safeguard the company’s long term future,” said Quaas, when the measures were first announced.