Beiersdorf delivers strong sales growth, but not on profits

By Simon Pitman

- Last updated on GMT

Related tags Sales growth Organic growth Eastern europe Russia

Beiersdorf reported solid group sales growth, driven by big gains for its industrial adhesives unit, Tesa, and more modest increases in its consumer products division.

For the third quarter the company said group sales increased by 8.7 per cent at constant rates to €1.53bn, a figure that was boosted driven by a 15.4 per cent increase in sales for its Tesa division – although these figures were impacted by negative currency translations, given the strong Euro..

The consumer division, which includes sales of the company’s global Nivea brand, increased by 7.6 per cent at constant rates during the quarter to €1.31bn.

Net income misses analysts' expectations

Net income for the period rose by 3.1 per cent from the same period last year to €101m, a figure that was below analysts' expectations. Bloomberg said that 13 analysts it had interviewed had predicted net income would be €115.5m, on average.

For the full nine months, organic sales were up 4.0 percent to €4.70bn, with the consumer business sales growing by 2.3 per cent to €4.05bn and the Tesa division growing sales by 15.6 per cent to €654m.

“In the consumer business segment, developments in the individual regions were again extremely mixed,”​ said CEO Thomas Quaas. “Business in the United Kingdom and Russia was very positive. In other regions we were not satisfied with our performance.”

Germany and Eastern Europe disappoint

In particular the home market of Germany showed a poor performance, with organic sales for the consumer segment during the nine month period falling 1.6 per cent to €1.38b, while sales in Eastern Europe fell 2.5 per cent to €439m.

On the other hand the Russia market reported double-digit sales growth, driven by healthy economic conditions that has seen a significant increase in consumer confidence.

In the developing markets worldwide, the Latin America region reported organic sales growth for the nine months of 15.5 per cent, led by men’s care, deodorant and sun care, while organic sales growth in the Africa/Asia/Australia market amounted to 6.1 per cent.

Deodorant sales grow worldwide

A number of launches in the deodorant category helped to boost sales globally by 10 per cent during the nine month period, while sales of La Prairie White Caviar skin care system increased by 10.6 per cent.

The mixed sales result in the mainstay consumer division and the fact that net profits were lower than expected means that the company has now lowered its outlook for the rest of 2010.

Beiersdorf is now expecting organic group sales growth for the full financial year 2010 will come in at 3 per cent, while sales growth for the consumer division will be around 2 per cent.

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