‘As expected’: Beiersdorf Q1 sales drop with Europe hardest-hit
Beiersdorf reported €1.9bn in total sales for the first quarter (Q1) across the entire group, down 1.9% on the previous year, and €1.58bn in sales across its consumer business segment, down 1% on the previous year. Organic sales across the group were down 3.9% and down 3.3% in consumer.
Europe was the hardest-hit region, with consumer sales down 6.6% on the previous year at €750m for the quarter. Results were dragged down by a 9% dip in Western Europe and particularly weak performances in France, Italy and Spain – countries affected by early curfews amid the COVID-19 crisis. This European sales drop happened despite a 3.7% sales rise in Eastern Europe and strong growth in Germany for the quarter.
Sales were also down 6.4% across Africa, Asia and Australia at €494m, with declines felt especially in China, India and Japan.
COVID-19 impact ‘expected’, 2020 guidance withdrawn
Stefan De Loecker, CEO of Beiersdorf, said the results reflected the impact felt by the global spread of the COVID-19 pandemic: “As expected, the ongoing COVID-19 pandemic has affected the company’s results for the first quarter.”
Speaking to investors on the company’s earnings call, De Loecker said whilst the coronavirus crisis had created a surge in demand for essential personal care products like soap, hand wash and hand cream and fuelled a 23% increase in online sales, the company’s La Prairie brand – heavily present in travel retail – had been hit hard by “the collapse of international travel”. The selective cosmetics brand, he said, saw sales plummet 35.8% for the quarter – a significant change from being cited a key growth driver in 2019.
De Loecker said a look elsewhere in the portfolio for Q1, saw Beiersdorf’s core skin care Nivea brand remain “steady”, with a sales dip of just 0.6%.
Alongside its Q1 earnings, Beiersdorf withdrew its 2020 financial guidance, stating it was “unable to currently project the future development or the economic impact of the coronavirus crisis”. Initial targets set at the beginning of March were “unlikely to be achieved”, the company said.
CARE+ investments to continue
De Loecker insisted, however, that despite “economic challenges”, Beiersdorf would continue its planned initiatives under the company’s CARE+ strategy – a concept to develop business with ‘courage, aspiration, responsibility and empathy’. “We remain committed to CARE+ resolutely, without compromise.”
Among the strategy’s many goals, securing 100% certified sustainable palm oil by the end of this year remained a priority, along with reducing water use across all operations by 25% by 2025 and launching more products made from natural ingredients.
Beiersdorf had also just invested in UK eco-valve specialist Salvalco through its OSCAR&PAUL venture capital platform – a company that provided a “sustainable alternative to conventional aerosol propellants”, De Loecker said.
Americas and derma beauty strength
Results in the Americas region contrasted declines seen in Europe and Africa, Asia and Australia, with sales up 7.9% on the previous year and an organic sales surge of 18.9%. This rise was largely fuelled by a strong performance in Latin America, notably Brazil, Chile and Mexico.
Beiersdorf’s derma business, which featured the Eucerin and Aquaphor brands, had also performed particularly well in Q1, with a “strong sales growth” of 11.5% for the quarter.
De Loecker said Eucerin’s anti-pigments range with its patented Thiamidol ingredient had helped “significantly fuel growth in the derma segment”, with sales for the range up 43% in Q1 on the previous year.
Beiersdorf also launched Eucerin Sun Pigment Control SPF 50+ in the first quarter, which contained Thiamidol, and he said the company had further market introductions within sun care prepared for 2020. “Eucerin anti-pigment is and will remain the market leader in the even-skin category, and already enjoys a high level of acceptance among consumers,” De Loecker said.
COVID-19 planning and response
De Loecker said Beiersdorf would continue to navigate the ongoing COVID-19 crisis and had plans to safeguard business through savings, particularly in the area of material costs.
“The further development of this crisis is still difficult to predict. It may be that the situation worsens before things pick up again, but I can clearly state one thing today: Beiersdorf’s foundations are strong. We will march and overcome this unprecedented crisis together.”
To date, the company had pledged €50m to an international funding program to aid crisis management and support communities in the fight against COVID-19. It had also donated a million litres of disinfectant to hospitals and medical personnel and distributed five million Nivea skin and hand care products worldwide.
