Beiersdorf AG, the maker of Nivea skin cream, reported first-quarter profit that exceeded analysts’ estimates as higher emerging-market sales countered a drop in western Europe.
Adjusted earnings before interest and tax rose 8.3 percent to 215 million euros ($283 million), the Hamburg-based company said today. That beat the 210 million-euro average estimate of 11 analysts surveyed by Bloomberg and drove the shares up the most in almost two months.
Chief Executive Officer Stefan Heidenreich is investing in China, Brazil, Russia and other growing economies, where the company now gets almost 50 percent of revenue, as European customers rein in spending amid the sovereign-debt crisis. The euro-area jobless rate rose to a record in March and the region’s economy has contracted for five quarters.
“The reporting was above our and consensus expectations virtually across the board,” Andrew Wood, an analyst at Sanford C. Bernstein, wrote in a note.
Beiersdorf rose as much as 3.2 percent in Frankfurt trading, the steepest intraday advance since March 5. The stock was up 1.3 percent at 69.60 euros as of 11:47 a.m.
Sales in the quarter increased to 1.58 billion euros, representing growth of 5.4 percent on a like-for-like basis, Beiersdorf said. Revenue at the consumer unit, which accounted for almost 84 percent of annual revenue last year, increased 5.7 percent on that level.
Organic revenue declines in that division of 1.8 percent in Germany and 0.7 percent in the rest of western Europe were offset by jumps of 22 percent in Latin America and 16 percent in Africa, Asia and Australia.
“The big positive surprise to expectations was in Africa, Asia and Australia,” Wood wrote.
Beiersdorf has a stable market share in France, Heidenreich said today. The CEO expects “better results” in Germany for the rest of the year, he said. Heidenreich still expects the Chinese business to break even next year and said the company is gaining market share in the country, both in the skincare and haircare segments. The first few months of the year in China were “encouraging,” the CEO said.
Beiersdorf reiterated that Ebit as a proportion of sales will improve this year as it expects outpace competitors on revenue growth. The first-quarter Ebit margin widened to 13.6 percent from 12.9 percent a year earlier.
Under Heidenreich, who has been CEO for just over a year, Beiersdorf is focusing on large innovations and its main product lines to drive growth as part of the “Blue Agenda” reorganization, which takes its name from the company’s trademark Nivea packaging.
Heidenreich dropped singer Rihanna from Nivea’s advertisements last year as he vowed to return the brand to its roots. Nivea’s sales gained 5.7 percent in the quarter, Beiersdorf said today.
Beiersdorf is focusing on body, face, sun, men, shower products and deodorants. Deodorants will continue to be a “significant” growth driver this year while Heidenreich still isn’t happy with the sun category, he said today. The sun business will accelerate in the next few weeks, he said.
Beiersdorf is “very happy” with its 995 million euros of net cash and is focusing on organic growth for the time being, Chief Financial Officer Ulrich Schmidt told analysts on a conference call today.