Strong Beiersdorf results driven by emerging markets

Sales grew from €1.33bn to $1.46bn, whereas profits after tax were up from €56m to $94m, putting the company's performance at the top end of forecasts it made at the beginning of the year. For the first six months of the year sales were up 9.24 per cent, from €2.61bn to €2.85bn, whereas net profit fell 60.2 per cent, down from €518m to €206m, which reflected the sale of its BSN Medical subsidiary during that period in 2006. Investors reacted positively to the results, with share prices up around 2 per cent at the close of business yesterday. At 11.55 am today share prices were trading on the Frankfurt stock exchange at €50.20, further contributing to a long-term upward trend. Likewise operating margins also rose, with operating income for the second quarter rising from 7.6 per cent of sales in 2006, to 9.8 per cent of sales for the most recent quarter. During the first six months of 2006 this figure represented 10.1 per cent of sales, while for the most recent six months the figure was 11.1 per cent. The rise in operating income has been positively impacted by restructruing, which has already seen the consolidation of several production facilities in Europe. As part of this restructuring programme, the company took the opportunity to announce that it would be transferring production from the facility owned by its Italian affiliate to locations in Spain, Germany and Poland. Looking at the results by business segment, sales for the company's consumer division rose by 11.1 per cent for first six months of 2007 to reach €2.43bn. Breaking this figure down on a regional basis, sales in Europe were up 5.8 per cent to €1.76bn, up 18 per cent in the Americas to reach €332m and up 38.9 per cent in Africa, Asia and Australia to reach €331m. In Western Europe sales grew by 4.5 per cent during the first six months, while Eastern Europe led the way with growth of 33 per cent, driven by a particularly strong performance in Poland and Russia. In the Americas, sales in North America grew by 9.9 per cent, due mainly to the success of the Nivea Body relaunch. However, it was in Latin America where the most dramatic growth was recorded, with overall sales up 28.1 per cent, driven by particularly strong growth in Brazil, Mexico, Venezuela and Argentina. In Africa, Asia and Australia region sales were driven by a particularly strong performance in South Africa, up 57.2 per cent China, up 40.1 per cent and Thailand, up 28.7 per cent, while the mainstay Japan market recorded solid growth of 5.5 per cent. Likewise, global sales of Nivea, the company's leading brand, rose by 13 per cent, driven primarily by strong sales of Nivea Body, Deodorant, Visage and For Men, while the relaunch of the Nivea Hair Care range also continued its roll-out. The company's Tesa division, which serves various consumer goods industries, grew worldwide sales by 7.9 per cent during the six month period, to reach €424m. Looking ahead to the rest of 2007, the company remains guarded about its forecasts, pointing to the fact that underlying growth in the global cosmetics and personal care industry is expected to come in at around 3 - 4 per cent this year. Bearing this in mind and current macroeconomic conditions, it is expecting moderate growth in the major European markets to continue, while significant growth is expected to continue in specific markets in Asia, Eastern Europe and Latin America.