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Beiersdorf: It’s not time for ‘innovation mania’ despite market slowdown

By Andrew McDougall+

21-Aug-2014

Beiersdorf cautious as big players face reality of market slowdown

At a time when all the big players in the cosmetics and personal care space have faced a market slowdown, Beiersdorf CEO Stefan Heidenreich says that manufacturers must strategize for the long haul and not panic.

Beiersdorf reported lower-than- expected quarterly results this month, much like many other consumer goods companies, as growth in emerging markets, which had previously compensated for developed Western markets, slowed down.

Asia, Eastern Europe and Latin America saw a slowdown for many big players such as Beiersdorf, L’Oreal, and Unilever, this quarter and the Nivea skin care maker’s boss says that “markets are cooling down dramatically," particularly in China, Thailand and Vietnam.

Beiersdorf’s organic sales growth remained among the best, as other companies felt the slowdown, but Heidenreich echoed comments from L'Oreal, which said it had enjoyed the strongest growth in Western Europe since 2007 in the first half, as the Hamburg-based firm reported a 2% sales increase there.

Not time for ‘innovation mania’

Heidenreich comments that in order to come through the market slowdown and remain on course it is important to innovate as it has with its Black & White and Stress Protect brand, and not panic.

While not giving much away in terms of what is in the pipeline, he did hint at the success of the In Shower innovations over the years and potentially in the men’s category, but that patience and strategy is important with new innovations.

“What I have learned, in the two and a half years [at the company], innovations have to be much longer and much also on a continuous base,” says the Beiersdorf boss.

“The race for innovations which was going on year-after-year is not the right way… innovations now have longer cycles to really be penetrated across regions and it just takes time and we are definitely not going into innovation mania.”

Business

For its second quarter 2014, Beiersdorf reported earnings before interest and tax (EBIT) of €217 million and sales of €1.575 billion.

The Consumer Business Segment generated organic sales growth of 5% for the first half of 2014. In nominal terms, sales were down 0.2% from €2,641 million in the previous year to €2,637 million.

Nivea achieved sales growth of 6.1%. Eucerin delivered 6.8% growth and La Prairie 7.0%. Beiersdorf says it now expects its full year EBIT margin to be above 13%. Its previous guidance was for a margin slightly above the 2013 level of 13.2%.

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