Hard hit Beiersdorf to reduce beauty range as profits fall

By Andrew McDougall

- Last updated on GMT

Related tags: Skin care, Personal care, Beiersdorf

The Nivea skin cream maker is cutting back on unprofitable lines and investing more in its skin care brands in an attempt to gain market share after seeing its third quarter profits take a tumble.

Third-quarter profit fell 25 per cent for the Germany-based company, which it put down to rising costs and fewer personal care products bought in Europe, its largest market.

Net income declined to €76m from €101m a year earlier, with revenue falling 0.6 per cent to €1.37bn.

Where it is going right, where it is going wrong

Revenue in Europe fell 3 per cent and Beiersdorf stated that it expects the economic situation in the region to remain ‘extremely mixed’ with growth in countries hardest hit by the economic downturn to be below average.

There was better news elsewhere as sales in the Americas rose to €251m during the third quarter, while revenue from Africa, Asia and Australia increased to €319m.

The company also pointed out that it sees more potential in faster-growing economies such as China as the rising incomes help to fuel the demand for personal care products.

Business refocus

Last year the company turned its focus to its skin care range by reducing its business in the colour cosmetics arena, and earlier this year Beiersdorf added that it would be scaling down its 500 product Nivea range by 19 per cent in Europe.

As third quarter results were announced, the company said it had completed 90 per cent of the planned product trimming by the end of September, but that it would remain patient on a full recovery until next year.

Group CEO, Thomas Quaas stated: "We are continuing to hit our planning targets in full in our realignment year," ​before adding that the business shake-up was beginning to show promise.

As a result, Beiersdorf is standing by its forecast for a ‘slight increase’ in full-year sales, but would not offer 2012 guidance due to uncertainty over the next year, Quaas said.

Management change

Next year will also see Quaas hand the baton over to Stefan Heidenreich, who will take over as CEO in April.

In an official statement following the appointment Heidenreich underlined the strength of the company’s brands and its dominant position in the skin care category, but equally drew attention to his belief that the company has ‘great growth potential’.

Under the governance of outgoing CEO Quaas, the company has undergone significant restructuring and a refocus of its business strategy.

Beiersdorf is hoping that Heidenreich’s executive experience and success at the Hero Group, where he is currently CEO, can be translated into equally high achievements at the company.

Taking the first nine months, net profit declined by 4.8 per cent to €336m while sales grew by 1.1 per cent to €4.28bn.

Related topics: Business & Financial

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