Developing markets drive big gains for Beiersdorf

By Simon Pitman

- Last updated on GMT

Related tags: Net profits, United states dollar

A continuing focus on developing markets and an overhaul of its
production and logistics operations has led to a better than
expected jump in profitability during the first quarter.

The company, which produces and markets one of the world's biggest personal care brands, Nivea, said that net profits increased 28.6 per cent, up from €112m in the corresponding quarter last year, to €144m. The jump in profits was attributed to the company'a logistics and production revamp, which has centred on its hair and skin care operation in Europe during the past two years and is now starting to pay dividends. Likewise, the company also mentioned that the estimated cost of the revamp is likely to come in at around €200m, instead of the €220m it initially forecast at the beginning of the project, back in 2005. Profits above expectations​ The profits were also above market expectations, with Thomson Financial claiming that a poll it had carried out amongst financial analysts showed that on average net profits had been expected to be in the region of €132m In line with the jump in profits, sales also showed strong growth, up from €1.38bn in the corresponding quarter last year, to €1.52bn - a jump of 9.8 per cent, and again a figure that beat analysts' expectations. This figure was positively impacted by currency translation effects during the quarter, which meant that sales were up 12.8 per cent. The company's consumer business segment, which includes the Nivea brand, registered sales growth of 10.7 per cent compared to the same quarter last year, registering €1.29bn. Outlook for 2008​ Looking ahead to the rest of the year, the company says it is sticking by forecasts that sales for its skin and hair care division will grow by an estimated 8 per cent during the course of the next 12 months. As has been the case in the first quarter, the company is expecting that the sales increases for the full year will mainly centre on the big developing markets, namely China, Russia, Brazil and India. In its financial results for 2007 the company reported sales of €5.5bn for the fiscal year, which adjusting for currency translated into a 9.1 per cent increase on 2006.

Related topics: Business & Financial

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