Beiersdorf Sales Increase Most Since 2008 on Emerging Markets

Beiersdorf AG (BEI), the maker of Nivea skin cream, reported the strongest sales growth since 2008 as increased demand in Brazil and other emerging markets helped offset sluggish consumer spending in western Europe.

Revenue rose 7.2 percent to a record 6.04 billion euros ($8.1 billion), the Hamburg-based company said today in a statement. That compared with the 6.02 billion-euro average estimate of 32 analysts surveyed by Bloomberg.

Sales in Latin America “developed well,” Beiersdorf said, while the division covering Africa, Asia and Australia posted “strong growth.” Chief Executive Officer Stefan Heidenreich, who joined the company a little over a year ago, is instituting a program of product innovation, particularly in faster-growing emerging markets, to keep revenue growing as European consumers rein in spending amid the region’s debt crisis.

“All the gains in the top line came from emerging markets and none from Germany and western Europe, which are the most important markets for them,” said Sebastian Frericks, an analyst at Bankhaus Metzler in Frankfurt.

Beiersdorf rose as much as 1 percent in Frankfurt trading and was up 0.5 percent at 9:17 a.m. The stock has gained 4.1 percent this year, adding to 2012’s 41 percent advance.

Organic sales, which exclude acquisitions, disposals and currency shifts, rose 4.7 percent last year, including gains of 4.9 percent at the consumer division and 3.6 percent at the Tesa adhesives unit. Societe Generale SA had estimated growth of 4.3 percent, while Bankhaus Metzler expected 4.5 percent.

Margin Guidance

Sales of the main Nivea, Eucerin and La Prairie brands “showed an encouraging performance,” Beiersdorf said. Nivea sales in Germany were at the same level as last year, it added.

The company reiterated its 2012 margin guidance, which Frericks said was “a bit disappointing.” Earnings before interest and taxes as a percentage of sales were about 12 percent, Beiersdorf said.

The business is “on the right track” with Heidenreich’s Blue Agenda plan, the company said. Under the plan, the CEO has restored Nivea’s familiar round blue logo and changed the packaging design. Heidenreich has also vowed to focus on emerging markets and opened a new research & development center in Wuhan, China, in May. A similar establishment is under construction in Mexico, which is due to start operating in 2014.

“We have strengthened our core brand and gained market share in many countries,” the CEO said in the statement. “These are important first steps on the road to a successful economic future for Beiersdorf.”

Earnings Multiple

The increase in revenue last year followed three years of almost stagnant sales.

“2012 looks fairly good only because 2009 to 2011 was so bad,” Andrew Wood, an analyst at Sanford C. Bernstein, said in a note yesterday. The results “make Beiersdorf only an average to below-average performer among its major global peers. Beiersdorf’s current valuation and massive premium to its peers require exceptional performance.”

Beiersdorf shares trade at more than 26 times estimated earnings, according to data compiled by Bloomberg, compared with 21 times for French competitor L’Oreal SA (OR) and about 17 times for Unilever, the world’s second-biggest consumer-goods company. The high valuation means most analysts are reluctant to recommend the shares. Using a scale of 1 to 5, with 5 being the most positive, the consensus recommendation is 2.57, below L’Oreal’s 3.38 and Unilever’s 3.53, according to Bloomberg data.

To contact the reporter on this story: Julie Cruz in Frankfurt at jcruz6@bloomberg.net

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net

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