Beiersdorf reports flat 2004 but outlook is brighter

- Last updated on GMT

Related tags: Cent, Personal care, Stock market, Beiersdorf

Beiersdorf has reported flat financial results following what the
Germany-based skin specialist described as a difficult year for
trading as the domestic market continued to prove particularly
challenging. However, the company says that the outlook for 2005
should prove better as developing markets continue to race ahead,
reports Simon Pitman.

The company said that full year sales came in at €4.456 billion compared to €4.435 million in 2003. The group's after tax profit was virtually unchanged at €302 million, compared to €301 million in 2003.

"Our worldwide sales rose by 2.5 per cent,"​ said Dr Rolf Kunisch Beiersdorf​ CEO. "On a comparable basis, the increase was 4.5 per cent. A number of European markets were weak, but we exceeded our long-term target of 8 per cent growth in all other regions."

He added that the group had achieved improved profits, despite the fact that it had been hit by costs of €11 million incurred for its share buyback.

The group said that its continued focus on core brands had also paid dividends. Nivea, Eucerin, Labello and Atrix are a number of the leading cosmetic and toiletry products that it has continued to focus on in the course of 2004.

Looking at the results from a regional basis, the growth rates in the individual regions were extremely varied. In Europe, which accounts for 74.5 per cent of total sales, the currency adjusted growth rate was 1.8 per cent, in North and South America, which accounts for a 14 per cent share of sales, it was 10.4 per cent, and Africa, Asia and Australia, which accounts for 11.5 per cent share of sales, achieved a growth rate of 15.4 per cent.

As part of the full year results, Kunisch also announced his successor as the head of the group, Thomas-Bernd Quaas, who will take over as CEO on May 18. Quaas said that his top priority was to use Beiersdorf's business base as a starting point to further expand the competitive position of the Group's brands.

Quaas said that future growth will concentrate on the so-called young markets - tweens and young adult - whereas in other partially saturated markets, quality and innovation are expected to pay dividends. He also said that successful implementation of these goals would have to be backed up by a concerted optimization of the supply chain to ensure success.

Looking ahead for the full year 2005, the group said that it did not expect any major changes in the economy as a whole during the next few years, giving it reason to believe that growth in Europe will continue at the same moderate pace, while growth in Asia, Australia and the Americas will remain higher.

Considering these conditions, the group believes that the world market for cosmetics will grow at 3 per cent in 2005, giving reason for it to believe that sales growth will continue at a slighter higher rate than that of 2004. Likewise, EBIT margin is expected to rise to around 11 per cent, while the return on sales is estimated at nearly 7 per cent.

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