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UPDATE 1-Beiersdorf sees swift return to profit in China
August 2, 2012 / 10:35 AM / 5 years ago

UPDATE 1-Beiersdorf sees swift return to profit in China

* H1 sales 3.06 bln eur, up 2.6 pct

* H1 adj EBIT up 11.6 percent to 390 mln

* Sees 2012 sales up 3 pct

* Says China to return to profit ahead of schedule

* Shares rise 5 pct, top Dax gainer

FRANKFURT, Aug 2 (Reuters) - Beiersdorf, the maker of Nivea skin care products, said it would return to profit in China a year earlier than scheduled after a haircare buy failed to deliver while announcing a slightly disappointing outlook for 2012 sales growth of 3 percent.

Like rivals Henkel and Unilever, Beiersdorf on Thursday said emerging markets had helped mitigate a 4 percent fall in second-quarter sales at its main consumer products division in western Europe.

But its new forecast for 2012 sales growth of 3 percent fell short of the average expectations for growth of 5 percent, according to a Reuters poll.

In China, Beiersdorf had fallen behind rivals’ expansion and last year took a 140 million euro ($172 million) writedown and replaced management.

“We see a much improved situation in China and we are approaching breakeven in the foreseeable future,” new Chief Executive Stefan Heidenreich told analysts.

Its shares were up 4.20 percent at 55.80 euros at 1027 GMT, the top gainer on the Dax index of leading German shares .

Beiersdorf shares already trade at a premium because of speculation the controlling Herz family could sell out to Procter & Gamble, and have a price to forward earnings ratio of 24.28. That compares with 19.31 for L‘Oreal, 15.3 for Henkel, and 14.13 for Reckitt Benckiser.

“The specified outlook for sales growth is below consensus for both the Consumer and the Tesa (adhesives) division and may require a downward revision of consensus,” said DZ Bank analyst Thomas Maul.

Heidenreich admitted Beiersdorf, which also makes Labello lip balm and La Prairie luxury skin creams, had fallen behind in terms of innovative creams and lotions and vowed to bring more new products to the market.

“The innovation did not come out in the previous year and that is why we are not growing enough,” Heidenreich said. “The pipeline looks a lot better for 2013, I believe some real hits will come through.”

Procter & Gamble, the world’s largest household products maker, warned on profits after failing to deliver enough new products and cost cuts to make up for weak demand in Europe, the United States and China.

Beiersdorf said on Thursday that first-half sales rose 2.6 percent to 3.06 billion euros and adjusted earnings before interest and tax (EBIT) rose 11.6 percent to 390 million.

It forecast a 2012 operating margin of 12 percent, compared with a previous range of between 11 and 12 percent.

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