Aug 9, 2018
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Heatwave fuels Beiersdorf sales of sunscreen, deodorant

Aug 9, 2018

A hot summer is boosting demand for Beiersdorf’s Nivea skincare range, the world’s leading sunscreen maker said on Tuesday, as it nudged up its 2018 sales forecast.

Monica Bellucci for Nivea - Beiersdorf

The German consumer goods company now expects underlying sales growth of 5 percent this year, up from a previous forecast of 4 percent, following a stronger-than-expected first half.

Chief Executive Stefan Heidenreich told reporters he also saw a good second half for Nivea thanks in part to the successful launch of a new packaging design for its deodorant - the brand’s biggest category.

The heatwave currently affecting swathes of the northern hemisphere is boosting sales of sunscreen by 20 to 30 percent, and also helping to shift more deodorant and shower products, Heidenreich said.

But he cautioned it was too early to say how big the weather impact would be on Beiersdorf, noting a late start to summer in parts of southern Europe like Spain had dented sales there even as northern Europe sweats.

First-half Nivea brand sales grew 3.5 percent, recovering from 1.9 percent in the first quarter, which analysts said had been the slowest rate for three years, dented by the switch to the new packaging for deodorant.

While Beiersdorf raised its 2018 sales forecast, it left its earnings target unchanged, with Heidenreich saying he expected headwinds from raw material costs in the second half.

The company’s shares fell more than 2 percent in early trade, but had recovered to stand up 0.3 percent at 1030 GMT.

“Full-year sales guidance is being lifted, but consensus is already there, while margin guidance implies a modest downgrade,” Jefferies analyst Martin Deboo said.

The shares had come under pressure in June when Beiersdorf said Heidenreich would step down at the end of 2019, marking a second board resignation at the company this year.

The stock has since recovered and is up 6 percent this year.
Under Heidenreich, Beiersdorf has introduced a new Nivea logo, focused on emerging markets, stripped out underperforming lines, and regained market share.

First-half sales, excluding currency moves and acquisitions, rose 7.7 percent, beating analysts’ average forecast of 7 percent in a Reuters poll, as both its consumer products and Tesa adhesives businesses exceeded expectations.

Tesa, which supplies the automotive and electronics industries, saw sales accelerate to 10.6 percent in the first half, from 8.5 percent in the first quarter, powered by particularly strong growth in the Americas.

Tesa accounts for about a fifth of Beiersdorf’s sales.

Beiersdorf said group nominal sales growth was 2.8 percent as adverse exchange rates lopped 5.1 percentage points off the sales increase, bringing first-half sales to 3.61 billion euros ($4.18 billion) versus analysts’ mean forecast for 3.56 billion.

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