Beiersdorf Forecasts Higher Sales on Nivea Brand Strength

  • Skincare maker sees revenue rising 3%-4% on organic basis
  • Company forecasts slight improvement on record 14.4% margin

Beiersdorf AG forecast a further increase in sales and improved profitability this year as its brand-name skincare products help the Nivea cream maker outpace the market.

Revenue will increase 3 percent to 4 percent from last year on a so-called organic basis, Hamburg-based Beiersdorf said Wednesday, compared with last year’s 3 percent growth. That’s in line with Sanford C. Bernstein’s estimates. Operating margin will be slightly higher than 2015’s record level of 14.4 percent, the company forecast.

Chief Executive Officer Stefan Heidenreich is benefiting from increased demand for “trusted” beauty brands including its Nivea, Eucerin and La Prairie lines, said Bloomberg Intelligence analyst Duncan Fox. Its ability to extend those brands to new consumer groups will help it outpace the global skincare market, which has grown 2.2 percent on average over the past four years, he said. Nivea is also raising prices as it competes with products from Procter & Gamble Co. and L’Oreal SA.

“We have made Beiersdorf more resilient,” Heidenreich said.

Earnings before interest and taxes, excluding some items, rose 12 percent to 962 million euros ($1.1 billion) last year, compared with the average 963.4 million-euro estimate of analysts compiled by Bloomberg. Beiersdorf said on Jan. 14 that last year’s sales grew 3 percent on an organic basis, or 6.4 percent as reported in euros, to 6.69 billion euros, in line with estimates.

The stock fell 1.4 percent as of 9:04 a.m. in Frankfurt. The shares have dropped 4.8 percent this year, compared with a 15 percent drop in the DAX Index.

Its consumer sales rose 3.6 percent last year on that basis, though its Tesa adhesives business, a much smaller unit, barely grew. For this year, Beiersdorf expects its consumer business to grow by 3 percent to 4 percent and Tesa sales to rise 2 percent to 4 percent. Robert Waldschmidt, an analyst at Liberum, said he expected 4.3 percent consumer-division growth.

“The margin guidance for the group and the consumer unit is conservative,” said Waldschmidt, who recommends buying the shares.

Beiersdorf is using strong sales in the U.S., Latin America and eastern Europe to compensate for sluggish demand in western Europe, where sales fell 0.3 percent last year. Revenue in eastern Europe by contrast was up 7.9 percent and North and Latin American sales rose by 3.9 percent and 10.9 percent respectively.

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