April 30, 2019 / 6:03 AM / 3 months ago

Nivea revamp boosts Beiersdorf's sales

BERLIN (Reuters) - German consumer goods firm Beiersdorf reported a recovery in sales of its Nivea skin cream and its premium La Prairie brand in the first quarter after a new chief executive pledged more investment to fight niche brands.

FILE PHOTO: An employee examines the covers of a Nivea skin cream cover during a quality control inspection at production line of German company Beiersdorf AG in Hamburg, February 12, 2015. REUTERS/Fabian Bimmer

Beiersdorf shares rose more than 3 percent after the group said on Tuesday that first-quarter sales came in at 1.947 billion euros (£1.7 billion), a rise of 6 percent after stripping out currency effects and acquisitions. That was ahead of average analyst forecasts for 1.9 billion euros.

Mass-market labels like Nivea have struggled in recent years amid the rise of small, disruptive brands like Canada’s The Ordinary, and as consumers favoured more natural ingredients and premium products.

That has prompted Beiersdorf to push pricier brands like La Prairie and Eucerin, and to launch more expensive products under the Nivea label, like its anti-ageing Cellular range.

Shares in Beiersdorf were hit in February after new Chief Executive Stefan De Loecker warned that the group’s operating margin would fall in 2019 as it invests to respond to smaller disruptive brands.

On Tuesday, De Loecker said Beiersdorf’s drive to become more nimble was already paying off.

“Recognising local consumer and market trends and responding to them on an individual basis helped us boost sales in all regions,” he said in a statement.

Beiersdorf shares were up 3.4 percent at 0807 GMT, the top gainer in Germany’s Dax blue-chip index.

“This... is a notably strong result in absolute terms for a mass market player. Guidance is being maintained but we see room for upgrades on both the top and bottom line,” said Jefferies analyst Martin Deboo.

The consumer business saw growth jump 6.8 percent in January-March, well ahead of average analyst forecasts for 3.9 percent. Nivea sales rose 4.9 percent, compared with 2.8 percent in 2018, and La Prairie skin care brand accelerated again to 28.7 percent.

French rival L’Oreal reported a similar trend earlier this month, with first-quarter sales in its mass market division up 3.3 percent, while its luxury brand grew 14 percent.

Beiersdorf’s finance chief Dessi Temperley said Nivea’s recovery had been broad based across several regions, with the launch of premium “Cellular Elasticity” products going well in Europe, while La Prairie had been helped by travel retail, particularly in Asia.

De Loecker said the launch in Thailand of a new Eucerin anti-pigment serum, which aims to reduce dark spots on skin, had gone better than expected, with plans to roll it out to other countries in Asia this year.

Beiersdorf’s Tesa unit, which makes adhesives for the automotive and electronics industries and was the group’s main growth driver in 2018, saw first-quarter sales expand just 2.2 percent, shy of average analyst forecasts for 2.3 percent.

Beiersdorf said Tesa sales in the automotive sector fell, hitting its business in the Americas, while sales in Asia were supported by growth in the electronics business.

Beiersdorf confirmed its guidance for 2019 despite ongoing economic risks. It expects group sales growth of 3-5 percent, and an operating margin of 14 to 14.5 percent in its core consumer business unit.

Reporting by Emma Thomasson; editing by Thomas Seythal/Michelle Martin/Susan Fenton

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