Beiersdorf is buoyed by emerging markets

By Katie Bird

- Last updated on GMT

Related tags Cent United states Europe

Lower consumer spending in the developed markets has not stopped Beiersdorf recording strong sales growth and a significant jump in profit.

The Germany-based skin care company has recorded sales nearing €3.1bn for the first half of 2008, up 11.5 per cent on last year’s figures.

Increased sales revenue boosted profit after tax to €282m, compared to €244m for the first half of last year.

Emerging markets support global economy

However, like L’Oreal and other major global players, much of this growth is derived from emerging markets.

Eastern Europe remained a significant driver reporting 19 per cent sales growth, only beaten by the Latin American region that reported 25.3 per cent growth.

In contrast, figures for the established markets were less rosy.

North American sales for the half were up 1.2 per cent on last year’s figures, and sales in the company’s domestic market were even weaker, increasing only 0.6 per cent on last year.

These results are reflected in the company’s predictions of moderate growth in Western Europe and significant increases in Eastern Europe, Latin America and Asia for the rest of 2008.

Flagship brand Nivea continues to do well reporting an increase in sales of over 10 per cent, but it is the peripheral product categories that are driving this growth.

For example it was the Nivea deodorant and the Nivea for Men range that the company highlighted as the stars of the first half whereas the Nivea body range suffered in certain markets.

Price increases next year

Although results from the first half are positive, the skin care giant cannot escape the rising raw material and energy costs that are hitting the market.

CEO Thomas Quaas explained that up till this point rising costs have been offset by cost cutting measures, however next year will see those costs being passed onto the consumer.

“Beiersdorf is not immune to the increasing prices in the global raw material market and will adjust its selling prices to take account of this development next year,” ​he said.

The company predicts that the consumer segment of its business will continue to enjoy growth of approximately 8 per cent, double the cosmetics market as a whole.

This is more confident than the outlook of competitor L’Oreal which, on the back of recent results affected by the weak US dollar, pulled down its expectations for the full year to just under 6 per cent growth.

Related news