Beiersdorf Sales Growth Tops Estimates, Boosted by TesaMatthew Boyle and Aaron Ricadela
Beiersdorf AG, the maker of Nivea skin cream, bucked the trend of disappointing first-quarter results from consumer-goods companies with sales growth that topped analysts’ estimates, boosted by demand at its adhesives business and improving conditions in Europe.
Revenue excluding the impact of currency swings, acquisitions and divestments advanced 6.7 percent, ahead of the 6.5 percent anticipated by analysts surveyed by Bloomberg. Sales at the adhesives business rose 8.7 percent, Hamburg-based Beiersdorf said. The beat contrasts with weaker growth posted by European rivals Unilever and L’Oreal SA in the same period.
The company confirmed its outlook for 2014 growth. Chief Executive Officer Stefan Heidenreich has been expanding in China and other emerging markets and capitalizing on rebounding personal-care sales in western Europe while restocking Beiersdorf’s product pipeline. The company has been expanding its Nivea line for men and redesigning its packaging to stand out on shelves.
“In the context of what we have seen elsewhere, this is a pretty phenomenal number,” Exane BNP Paribas analyst Eamonn Ferry said in a note today.
Beiersdorf advanced 0.2 percent to 72.80 euros as of 9:10 a.m. in Frankfurt. The stock has lost about 1.1 percent of its value in 2014, following a 19 percent gain last year.
Unilever, the maker of TRESemme shampoo, last month forecast weaker first-half profit margins and reported the slowest quarterly sales growth at its personal-care unit in more than three years. L’Oreal, the world’s largest cosmetics maker, posted its worst quarterly sales performance in more than four years.
Beiersdorf’s consumer segment, which makes LaBello lip balm and accounts for over 80 percent of its revenue, boosted sales 6.3 percent, “a tad lower” than the 6.7 percent estimate of analysts polled by Bloomberg, Ferry said. Sales were driven by emerging markets like Brazil and China along with “significant” increases in Germany and Spain, the company said. Nivea sales advanced 7.6 percent, it said.
A recent survey of European consumers by Sanford C. Bernstein found that 31 percent of German respondents saw an improving economy, up from 14 percent who said so last year. Southern European markets continued to improve, the company said, a sentiment echoed by Unilever and Nestle SA, the world’s largest food company. One weak spot was France, where sales declined, Beiersdorf said.
Operating profit in the quarter rose 9.5 percent to 235 million euros, while profit margins on that basis widened to 14.7 percent, from 13.6 percent in the first quarter of last year.
Beiersdorf, which also makes Hansaplast bandages and La Prairie beauty products, in March reported estimate-beating full-year profit and forecast further gains in profitability this year as it pushes into emerging markets to counteract slower growth in Europe.
“We expect Beiersdorf to deliver some of the fastest growth in European staples in 2014 and over the next three years,” said Toby McCullagh, an analyst at Citigroup Inc. who recommends buying the stock, in a May 6 note to clients. “We see plenty of scope to drive significant margin expansion.”