Beiersdorf Stock Reaches 18-Year High on Raised ForecastJulie Cruz
Beiersdorf AG jumped to the highest in almost 18 years in Frankfurt trading after the maker of Nivea skin cream raised its full-year sales forecast and said the Tesa adhesives unit is performing better than anticipated.
Beiersdorf gained as much as 5.7 percent to 73.69 euros, the highest intraday price since at least January 1996, and was trading up 5.5 percent at 12:38 p.m. in the biggest increase on Germany’s benchmark DAX Index. The stock has risen 19 percent this year, valuing the Hamburg-based company at 18.5 billion euros ($24.9 billion).
Revenue will increase in a range of 6 percent to 7 percent this year, Beiersdorf said late yesterday. It previously forecast 5 percent to 6 percent growth. Earnings before interest and taxes will amount to about 13 percent of sales, the company said, the top end of an earlier margin-forecast range.
Tesa, which produces adhesive tapes for the electronics and automotive industries, will report stronger annual sales growth and a wider Ebit margin than expected, the company said. Nine-month revenue increases in the Americas and Asia offset lower sales in southern European countries, it said.
“Beiersdorf had an excellent third quarter delivering results well ahead of our expectations and consensus, led by another quarter of extraordinary results from Tesa,” Andrew Wood, an analyst at Sanford C. Bernstein, said in a report.
Chief Financial Officer Ulrich Schmidt said on a conference call that “good development” of the automobile industry in the U.S. and strong electronics sales in Asia helped Tesa’s performance.
Under Stefan Heidenreich, who has been chief executive officer since April 2012, Beiersdorf is investing in China, Brazil, Russia and other emerging economies, where the company now gets about half of revenue, as government austerity measures weigh on consumer spending in Europe.
“We have been able to significantly increase sales and earnings thanks to a clear, disciplined brand strategy and successful innovations,” Heidenreich said in a statement. “Our market share has increased in many countries, both in emerging markets and for the first time in Europe.”
Speaking on a conference call with analysts today, the CEO highlighted that Beiersdorf is “closer than ever” to Chinese competitors as its market share in the country has gained 3 or 4 points, he said. Nine-month revenue at the consumer business in Africa, Asia and Australia rose 19 percent, excluding acquisitions, disposals and currency effects, amid “very good” sales growth in China, Beiersdorf said. Nivea performed strongly in that market, and the relaunch of the SLEK and Maestro brands boosted haircare sales there, it said.
In Latin America, consumer-division sales rose almost 16 percent on an organic basis, boosted by sales of Nivea deodorants and Nivea Body products in Brazil.
The company generated “significant” consumer-revenue growth in the U.K. and Germany in the third quarter, with products such as Nivea in-shower skin conditioner, Heidenreich said. Nine-month consumer sales rose 0.3 percent in western Europe on an organic basis. Southern European markets also showed the first signs of a slight economic recovery, the company said.
Beiersdorf is making “good progress” in North America and expects product introductions in the first quarter of next year to help further, Heidenreich said.
Tesa’s sales growth will be 6 percent to 7 percent this year, compared with an earlier forecast of 4 percent to 5 percent, the company said. The unit’s Ebit margin may be about 16 percent, exceeding a prior target of 14 percent.
Nine-month group sales rose 7.3 percent on an organic basis to 4.67 billion euros. Nivea revenue gained 7.3 percent, while sales of Eucerin skin cream increased 11 percent. The group Ebit margin widened to 13.9 percent from 12.6 percent.
Third-quarter Ebit jumped 17 percent to 216 million euros, Beiersdorf said. That exceeded the 195.5 million-euro average of 11 analyst estimates compiled by Bloomberg.