November 2, 2012 / 7:55 AM / 5 years ago

UPDATE 2-Beiersdorf raises outlook as Nivea strategy bears fruit

* Q3 adj EBIT 185 mln eur vs poll avg 172 mln

* Q3 revenues 1.5 bln eur vs poll avg 1.46 billion

* Sees new products in early 2013

* Emerging markets now make up 48 pct of sales

* Shares jump 6 pct, top DAX gainer

By Victoria Bryan

FRANKFURT, Nov 2 (Reuters) - Nivea cream maker Beiersdorf raised its sales growth forecast for the year after a strategy to pursue new markets and products paid off in a larger-than-expected 30 percent rise in third-quarter profit.

Shares in the group, controlled by the Herz family, jumped 6 percent on Friday after new CEO Stefan Heidenreich said the company’s Blue Agenda plan “is starting to bear fruit” and that group sales are now expected to rise by between 3 and 4 percent, compared with a previous target of 3 percent.

“I‘m happy with the pipeline which is coming, it looks a lot better than what I saw in the beginning,” he said, promising new products in the first quarter of 2013.

Beiersdorf has been cutting back on unprofitable products and Heidenreich has also put a focus on overseas markets and launched a new round logo for the Nivea brand under the Blue Agenda programme.

The company’s shares were up 5.9 percent at 1130 GMT, topping the DAX index of leading German companies and boosting local rival Henkel, up 2.11 percent.

“We are aware we still have a way to go,” Heidenreich told analysts, saying it would take Beiersdorf 3 to 5 years to achieve all the goals set out under its programme.

One of those goals is for the consumer division, which makes up 83 percent of sales, to reach a margin of 16 percent on earnings before interest and tax (EBIT) in the “medium term”, compared with 12.5 percent now. Heidenreich declined to give a more exact time frame.

Heidenreich has taken a tough stance at Beiersdorf, which was slow to catch on to emerging markets, saying in August he would not tolerate businesses that weren’t growing. He also criticised the choice of popular singer Rihanna in advertising campaigns for a family brand like Nivea, and said the group previously had not introduced enough exciting new products.


Beiersdorf, which also makes luxury La Prairie skincare and Labello lip balm, reported third-quarter sales of 1.5 billion euros ($1.94 billion) and EBIT before special items of 185 million euros.

Analysts had expected adjusted EBIT of 172 million euros on sales of 1.462 billion, according to a Reuters poll.

It maintained a target to increase its 2012 EBIT margin to 12 percent.

The results follow higher-than-expected numbers last week from Procter & Gamble, thanks to cost cuts, and Unilever , which saw strong demand in China.

Beiersdorf has struggled in China after an acquisition there went awry and after posting flat growth there in the first nine months of the year, Heidenreich said he expected a return to sales growth in 2013.

China and the United States are the two areas where Beiersdorf needs to work hardest, he added.

It has also opened a new research and development centre in Wuhan, China, which will be able to react more quickly to local demands and make use of the raw materials available there.

However, the skin care products maker grew strongly in other emerging markets, such as Russia, Thailand, and Brazil.

Sales in emerging markets rose 11.7 percent in the first nine months and now make up 48 percent of sales at its Consumer division.

To tap into the Latin American market more, Beiersdorf said it will invest 80 million euros in a new production site in Mexico, due to come on stream in 2014.

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