Beiersdorf’s European sales continue to tumble, but profits beat expectations

By Simon Pitman

- Last updated on GMT

Related tags: Marketing, Business

Beiersdorf’s preliminary full year sales show that the consumer division has been steady, boosted by developing markets but let down by European sales, but profits beats expectations on the back of restructuring.

Full year group sales were up 2.1 per cent on a like-for-like basis to reach €5.63bn, compared to the figure for 2010, while the division’s organic sales showed a slower rate of increase, up 1.1 per cent.

The EBIT result was slightly down on the previous year, coming in at €646m, compared to €699m for 2010, while the EBIT margin was 11.5 percent, compared to 12.5 per cent.

However, this figure was ahead of the company’s forecast, which had predicted EBIT of approximately €624m. Financial analysts believe that the success lies in the progress of the company’s restructuring programme.

Restructuring was implemented throughout the financial year, primarily to realign the company’s mainstay Nivea portfolio by focusing on skin care and moving away from other less successful categories such as colour cosmetics.

Restructuring Nivea brand takes effect

“We realigned and strengthened our consumer business in 2011 by comprehensively streamlining our product assortment and thanks to the global marketing measures relating to the 100th anniversary of our Nivea brand,”​ said CEO Thomas Quaas.

The company said that like-for-like sales for its all-important consumer products division were up by 1.1 percent to €4.69bn, while the organic sales increase was 0.6 per cent - a performance that reflected great disparity in its international markets.

Growth was headed up by the Latin American market, which the company described as ‘particularly strong’, while the performance in the United Kingdom and Russia were described as ‘extremely positive’.

Consumer sales take a dive in Europe

However, consumer sales in the other European markets showed a decline, particularly in the mainstay domestic market of Germany, a situation that was exacerbated by the unfolding economic crisis and lower consumer spend.

Meanwhile in the Africa/Asia/Australia market sales were said to be only slightly up despite more robust economic growth in this region. The company said this was mainly due to the re-organisation of the business structure in China.

What boosted the slow performance on the consumer side was the continued growth of its tesa division, which produced industrial adhesives. Here sales were up by 7.9 per cent for the year, to €937m.

Towards the end of 2011, Beiersdorf decided to build on the plan to streamline the Nivea brand, announced at the beginning of the year, by taking the step to restructure the company’s regional operations for the consumer business in an effort to increase margins.

Geographic restructuring of consumer division

“Optimally aligning our structures with the regions and markets will significantly increase our competitiveness in the future,” ​said Quaas.

The preliminary results are unaudited, with the full audited results expected to be announced at the beginning of February.

Related topics: Business & Financial

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