Beiersdorf blames retail destocking for poor Q1

By Simon Pitman

- Last updated on GMT

Related tags United states Europe

Beiersdorf first quarter results were hit by poor sales in its Western European and US markets, which the company blamed on retailer de-stocking.

Taking currency translation into effect, sales for the period fell by 5.7 per cent to €1.44bn, compared to €1.52bn in the same period last year.

However, the breakdown of the sales figures reveals that the company’s consumer business, which is largely made up from its beauty operations, did fair considerably better than its consumer goods labelling business, Tesa.

Inclusive of currency translation, sales at the company’s consumer goods division, which accounts for all beauty and Nivea brand turnover, fell by 2.5 per cent to €1.29bn, a dip of 0.5 per cent on a like-for-like basis.

Tesa hit by industrial weakness

The Tesa business was hit hard by the downturn in industrial output worldwide, with sales falling 23.9 per cent, taking into effect currency translation, to €171m.

Financial analysts largely reacted negatively to the results, which were mostly below expectations.

Andrew Wood, a senior analyst with Sanford C. Bernstein, underlined that the financial markets had reacted negatively to the results and reaffirmed an ‘underperform’ rating for the company.

Consumer sales hold up better

“Sales in the consumer segment were on a par with the high prior-year level despite the difficult market environment,”​ said Thomas Quaas, Beiersdorf CEB.

“We are preparing for further effects of the economic crisis and have established flexible measures to safeguard earnings for our business areas and regions."

Although the consumer business held out well in the first quarter, Quaas said that the very variable picture during the quarter makes predictions difficult in the cosmetics market.

Contrasting results in Europe and the Americas

Breaking the figures down on a geographical basis, there were some quite pronounced differences within both the markets for Europe and the Americas.

In Europe, sales in the German market were up 7.2 per cent, mainly due to the sale of the Futuro business by the BODE group. By contrast sales elsewhere in Western Europe declined by 7.8 percent to $460m.

In North America sales fell by 5.4 per cent in organic terms, to just €79m, a figure that was sharply contrasted by a 10.7 per cent increase in organic sales in the Latin America market.

European sales beat expectations

In his comments Wood said that the European sales figures were slightly higher than expected, whereas the performance in both the Latin America and North America markets were below expectations.

Looking to the year ahead, the company underlined the fact that the economic crisis was likely to further impact results during the remaining three quarters of the year, which means it will be unable to match sales figures for last year.

The company said that its consumer business was likely to grow faster than the overall market rate and was likely to generate ‘slightly’ higher sales than in 2008, whereas demand from industrial sectors would dictate how well the Tesa business will perform.

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