Beiersdorf net profit soars 25%: We’ve had a ‘fantastic season’ in sun care, says CEO
Last week, Beiersdorf reported worldwide group sales of €4.47bn for the first half (H1) of 2022, up 15.5% on the previous year with organic sales growth sitting at 10.5%. The consumer business division generated €3.63bn of sales, up 17.3%, with growth across all brands and regions, especially the Americas and worldwide with Nivea, Eucerin, Aquaphor and La Prairie.
Total company net profit tallied in at €505m, up 25% on H1 2021.
Vincent Warnery, CEO of Beiersdorf, said 2022 had been a “successful year” for the company so far.
“In an increasingly challenging environment, Beiersdorf carried the strong growth momentum from the start of the year into the second quarter and posted double-digit sales growth at group level. We were also able to significantly improve our profitability,” Warnery said.
Speaking to analyst’s during the company’s earning call, he added: “After an already strong first quarter, we saw a slight acceleration in Q2.”
Nivea surges worldwide in H1
Across Beiersdorf’s global portfolio, the company’s flagship skin care brand Nivea performed especially well – up 13.2% in organic sales during the second quarter (Q2) and up 11.2% in H1.
The brand’s performance was “outstanding” in the sun care market, according to Astrid Hermann, chief financial officer at Beiersdorf.
Warnery agreed it had certainly been a “fantastic season” for sun care at Nivea, with business back above 2019 levels. “…All in all, this has been a continuous success since last year, and we are now expecting a record year for sun care,” he said.
But results showed Nivea had also performed impressively in lip, face and body care globally, with body care especially strong in North America and Nivea Luminous face care doubling sales year on year worldwide.
Beyond this, Nivea had also performed strongly in personal care with its deodorants and shower gel variants, “resulting in market share gains around the globe”, according to the CEO. And its work to relaunch climate-friendlier shower bottles last year – made from at least 96% recycled plastic and 26% lighter which reduced packaging-related CO2 emissions by 32% – had proven important for the company’s wider sustainability agenda and growth in this space, he said.
Earlier this month, Nivea was highlighted as ‘brand of the decade’ in Kantar Worldpanel’s Brand Footprint, after consistently increasing its shopper base worldwide, and tallied in as the 29th most chosen FMCG brand globally. Notably, it was the most chosen health and beauty brand in Europe this year, with growth coming from beyond its traditional skin care realm.
Latin America ‘front of the pack’ for Beiersdorf
Regionally, Warnery said Latin America was an “ongoing success story” for Beiersdorf, with organic sales up 29% on the previous year for H1 2022.
“This region was once again at the front of the pack from a regional standpoint, delivering another very strong performance in the second quarter with broad-based sales growth. It is really interesting to note here that the dynamics of Latin American development were quite similar to the development we saw in Western Europe,” he said.
In Latin America, the sun care category also “really stood out”, he said, with Nivea performing especially well here.
A ‘cautious’ approach to H2 2022 with tough retail negotiations
Looking ahead, Warnery said Beiersdorf anticipated “additional headwinds from economic and political tensions” in the second half (H2) of 2022 to impact global business and it had therefore maintained full-year guidance of upper-end mid-single-digit sales growth.
Hermann added: “Given current visibility, we are taking a cautious approach. We are very happy with where the business is year-to-date. That said, we have a number of risks and we are managing and trying to understand them further.”
Ongoing retail customer negotiations on pricing was one risk, particularly in Europe, she told analysts, where Beiersdorf was on track to cover 80% of additional costs with pricing. This was followed with difficulties presented by the COVID-19 lockdowns in China and regular recessionary fears worldwide and continued supply constraints, she said.
On pricing, Warnery added that retail negotiations were certainly no easy task: “Obviously, we have been forced and [have] to be much more bearing in terms of the price proposals we are discussing with retailers, especially in Western Europe. So, we are having those conversations. We went through the first price increases (…) and we’re entering into the second negotiations about price increases, which is not a walk in the park, and which is generating the necessary exchanges with retailers in Western Europe.”
All of these had previously been highlighted by competitor personal care majors as important challenges ahead for the beauty and personal care industry.