Flat sales but profits up for Beiersdorf
broadly in line with the previous quarter, but a small increase in
profits helped the company to achieve a respectable bottom line,
reports Simon Pitman.
Group sales fell by 0.1 per cent, from €1.174 in the first three months of 2004, to €1.174 in the first three month of 2005. But with slightly more favourable currency translation the company reported that sales had actually increased by 0.4 per cent.
Sales revenues did not show any significant increase due to a good quarter in 2004 in both the US and German markets following extensive product launches, the company said. Correspondingly the flat consumer market in Germany had also impacted this quarter's revenues.
The group's operating result (EBIT) increased by 5.5 per cent to €145 million, compared to €137 million in the previous year, while the EBIT margin increased to 12.3 per cent, compared to 11.7 per cent in 2004. Net profit increased by 4.5 per cent, from €88 million to €92 million.
The sales revenue for the quarter was slightly down on analysts expectations and was likewise short of the company's targets for full year growth. However, the company said that more launches planned in the rest of the year, including Nivea Beaute, should help to boost the performance in coming quarters.
Looking at the sales on a regional basis the European division put in a sluggish performance. Overall European sales were down 0.1 per cent (-0.8 per cent currency adjusted), from €883 million to €882 million, while sales in the consumer division fell O.4 per cent to reach €746 million.
The figure was hard-hit by a particularly poor performance in the German market, where sales were down 3.3 per cent. The company said that the performance in its largest European market was impacted by the continued stagnation of the personal care and cosmetics market on the back of overall muted consumer spending.
In the rest of Europe sales results were reported to be mixed, with Eastern Europe putting in a much stronger performance after a difficult 2004. Consolidation plans for the Russian market were reported to be on track, while sales in Italy, Portugal and Spain were all reported to have shown strong growth.Sales in the UK were also reported to be sluggish, which the company put down to retailers placing orders later and later. In particular orders for Nivea Sun products were reported to have only been placed in April.
Sales fell 3.6 per cent in the Americas to reach €155, allowing for currency fluctuations, but currency adjusted sales were reported to have increased by 0.3 per cent, on account of good performances in Brazil, Venezuela and Colombia. Sales in the US were, in contrast, slightly down as a result of a high level of sales in the prior quarter leading to higher stock levels.
Africa/Asia/Australia was the strongest region in terms of sales growth, with sales adjusted for currency effects up 8.3 per cent. Unadjusted, the sales were up from €130 million to €136 million, an increase of 5 per cent. Business in China was the primary source of this sales increase, with the success of the Nivea For Men range helping to boost sales by 50 per cent.
Looking ahead to the rest of 2005, Beiersdorf said that planned product launches should help to keep revenue growth expectations in line with those of 2004, when currency adjusted sales grew by 4.5 per cent to reach €4.545 billion and net profit was in line with the previous year.
The results for 2004 were above analysts' expectations, with Goldman Sachs estimating that sales would increase by 3 per cent for the year. At the time Goldman Sachs said it believed that the increase was attributable to a reduction in marketing costs.