Beiersdorf forecasts tough year for its personal care business

Related tags Consumer business segment Marketing

Speaking at the 2011 Annual General Meeting in Hamburg yesterday, Beiersdorf CEO Thomas Quaas says that personal care sales are likely to remain level with last year, while profits will be hit by restructuring costs.

Although the company has experienced a strong recovery in its adhesives business, Tesa, this performance has not been duplicated in its consumer business segment, which holds the global skin care brand Nivea.

“The consumer business segment is not growing at its customary pace during the transitional phase in which we currently find ourselves,”​ said Quaas.

“We are streamlining our portfolio and investing substantial sums in our strong brands. In 2010 we prepared the ground and in 2011 we shall continue to sow a large number of seeds, which will allow us to gather in good, rich harvests again in the coming years.”

Consumer business in a 'transitional' phase

Although the company pointed to ‘above-average market growth for its Tesa business in 2011, the situation with the consumer business was described as ‘transitional’.

Speaking about the consumer division, Quaas said: “We expect sales to be on a par with 2010, and that growth in our core areas will offset the effects produced by the streamlining of our product range.”

At the end of last year Beiersdorf announced that one of the major overhauls to its product range would be to concentrate its global Nivea brand on skin care, which it said would lead to the discontinuation of the brand’s colour cosmetic ranges.

While Quaas said that the consumer business had performed in line with expectations in the first part of the year, he also underlined the fact that the restructuring and discontinuation of its product offerings would lead to costs that will impact profit margins.

“The EBIT margin from operations will not match the prior-year level due to the package of measures we are taking,”​ said Quaas, who went on to cite his belief that the current measures will see positive effects in 2012.

Profits also tumbled in 2010...

For the full year 2010, the company reported organic sales growth up 3.1 per cent to €6.19bn, while profit after tax fell from €380m in 2009 to €329m in 2010.

Beiersdorf’s results in the consumer division were very mixed in 2010, with markets such as Russia and the UK showing strong growth, while the domestic market of Germany saw sales slump.

Likewise there was significant development in the Americas, with both North and Latin America showing strong gains, while in other markets the results showed a more modest increase.

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