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By
Reuters API
Published
May 9, 2018
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Beiersdorf lifted by La Prairie as ageing Nivea slips

By
Reuters API
Published
May 9, 2018

Beiersdorf's sales growth was lifted by its Tesa adhesives unit and La Prairie premium skin care brand in the first quarter, smoothing slowing sales of its Nivea products.


Sales for luxury skincare brand La Prairie rose 56% - Instagram: @laprairie

La Prairie sales jumped 56 percent as the German consumer goods firm reaped the benefits of a strategy to make its other businesses as strong as its mainstay Nivea brand.

Luxury cosmetics are enjoying booming demand, particularly in China, which has also helped L'Oreal offset weaker performance in its mass market division.

Beiersdorf said on Tuesday that its Tesa unit, which makes adhesives for the automotive and electronics industries, saw sales rise 8.5 percent and the medicinal Eucerin and Aquaphor lotions unit grew by 8.5 percent.

However, sales growth of its Nivea brand came in at just 1.9 percent, which analysts said was the slowest rate for three years, although the strong performance of other skin care brands meant the consumer business reported 6.1 percent growth overall.

Beiersdorf's shares, which trade at a premium to rivals Unilever and Reckitt Benckiser , were up 2.4 percent by 0920 GMT, the biggest gainer on the German blue-chip index <.GDAX>. German rival Henkel , which reports on Wednesday and also makes adhesives, rose 0.2 percent.

"We expect modest upgrades to consensus at constant forex but expect the Nivea result to be the talking point," said Jefferies analyst Martin Deboo, who rates the stock "hold".

DEODORANTS DENTED

Sales of Nivea deodorant - the brand's biggest category - were dented by a new packaging design and the switch out of old products, Chief Executive Stefan Heidenreich told journalists, adding he was happy with market share trends.

"Against a background of political and economic uncertainty, we look at the coming months with cautious optimism," he said.

La Prairie got a boost from high-price products such as its Platinum anti-wrinkle creams and a new design for store displays, as well as booming travel retail in Asia, Heidenreich said, adding that he saw opportunities for luxury sunscreens.

Quarterly sales, excluding exchange rate effects and acquisitions, rose 6.5 percent to 1.81 billion euros (1.6 billion pounds), just ahead of average analyst forecasts, although nominal growth was just 0.4 percent due to the strong euro.

Beiersdorf reiterated its forecast for 2018 sales growth of around 4 percent, predicting Tesa will grow sales 3 to 4 percent and its consumer products division 4 to 5 percent.

Heidenreich admitted that the guidance implied that sales growth would slow for the rest of the year, but said Beiersdorf would review its forecasts in June.

 

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