Beiersdorf to invest in Nivea brand as Q4 results confirm slower growth

The year was rounded off by what research analysts Sanford Bernstein termed ‘a very weak’ performance for the fourth quarter, with organic sales growing by just 0.3 per cent.

This figure reflected a 0.7 per cent fall in sales for the consumer division, which covers the company’s personal care and cosmetics operations, while it’s industrial adhesives division, Tesa, bumped up the results with a 6.8 per cent increase in organic sales.

However, the results have not come as a surprise, after Beiersdorf issued two profit warnings in December – one for the 2010 results and one for the projected results for 2011. Indeed, the full results were slightly above analysts’ expectations.

Profits dip, while sales edge up slowly​

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.

The company said that the 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.

2011 sales to be affected by streamlining​

Looking ahead to 2011, the company said that sales would be affected by the streamlining of its product range, which would include the proposed investments to the Nivea brand.

In its results statement, the company said that, although it anticipated growth in its Tesa adhesives division in 2011, sales for the consumer division are expected to be in line with 2010 on account of the streamlining.

Sanford Bernstein analyst Andrew Wood described the outlook for 2011 as both weak and cautious, while stressing that the 2010 performance was particularly poor for the consumer business, especially in light of the comparisons with an already weak performance in 2009.

Focusing in on skin care ​

“In December of last year, we laid key foundations for Beiersdorf’s future success by resolving to introduce a package of measures and investments, in 2011, we will be concentrating on their systematic implementation, with the focus being on Beiersdorf’s core competencies, skin and body care,”​ said CEO Thomas Quaas.

The company says that the investment in the Nivea brand coincides with its centennial year of business, a factor that will be used in the marketing and advertising campaigns that will accompany the promotion of the brand.

In line with the added emphasis on skin and body care, the company has already announced measures that it will scale back investments in its activities in the colour cosmetics and hair care categories.