Beiersdorf must mend the pieces with Nivea

Beiersdorf must mend the pieces with Nivea

Beiersdorf, which produces both professional adhesives and Nivea, can not meet analysts' expectations: the decline in the sale of adhesives to the auto industry was too big to be offset by care products, especially since sales disappointing in that area as well.

 

Disappointing second half of the year

In the first nine months of this year, Tesa (the division that produces adhesives for the automotive and electronics sectors) achieved only a 1.2 % growth in sales. Sales fell in the third quarter, especially in the automotive industry. The German group is therefore reducing the annual forecast for the division — which accounts for some 20 % of total turnover — from 3 to 4 % down to 1 to 2 %.

 

The skin care department, which includes Nivea and Eucerin, only partially made up for the setback. Nivea only achieved a 2.7 % increase in turnover in the third quarter, while in the first half of the year it still experienced growth of 3.2 %. Premium brand La Prairie saw its growth halved to 14 %, according to Reuters as a result of continued protests in Hong Kong. Hansaplast sticking plaster lines and Eucerin products, among others, did see accelerated growth.

 

Movement away from mass-market brands

Total sales amounted to 1.89 billion euros in the third quarter, while analysts were expecting a figure of 1.91 billion euros. In the first nine months of the year, organic group sales increased by 4.3 % - a drop from the 4.8 % growth in the first half year.

 

The slow-down is striking, since L'Oréal has just announced record growth for the same period. Cosmetics groups are mainly dependent on the Asian market, but that market is predominantly focused on luxury labels. Beiersdorf CEO, Stefan De Loecker, also says that consumers are moving away from mass-market brands such as Nivea, and are instead choosing alternative labels.

 

The group has therefore set up an innovation branch which, among other things, is launching a new line for tattooed skin, as well as products containing natural ingredients. It would appear that the company is going in the right direction in a challenging market.