‘Extremely turbulent year’: Beiersdorf H1 sales decline but derma brands stick strong

By Kacey Culliney contact

- Last updated on GMT

Sales across Beiersdorf's derma business are up 6.2% for H1 - largely driven by strong retail activity via pharmacies and online during lockdowns (Getty Images)
Sales across Beiersdorf's derma business are up 6.2% for H1 - largely driven by strong retail activity via pharmacies and online during lockdowns (Getty Images)

Related tags: Beiersdorf, financial results, derma beauty, Skin care, COVID-19

International skin care major Beiersdorf has reported a sales drop for the first half (H1) of 2020, with luxury brand La Prairie especially hard-hit by COVID-19 whilst its derma brands defied the crisis.

Beiersdorf generated €3.44bn total sales for the first half (H1) of 2020 across the entire group, down 10.1% on the previous year in nominal terms. Sales in its consumer business unit represented €2.83bn for H1, down 9.9% on the previous year.

Africa, Asia and Australia were hardest hit with group sales across the region down 15.3% for H1. Across Europe, group sales declined 12.1% to €1.72bn; sales in the consumer division dropped 13% – 13.8% in Western Europe and 9.4% in Eastern Europe.

COVID-19 has ‘far-reaching negative impact’ on business

Stefan De Loecker, CEO of Beiersdorf, said: “In this extremely turbulent year, our business has been strongly impacted by the COVID-19 pandemic. The entire skin care market significantly declined and, as a consequence, the effect on sales was clearly felt in the first half of 2020.”

Speaking to investors in the company’s earnings call last week, De Loecker said the effects of COVID-19 were “clearly visible”.

Beiersdorf’s flagship and largest brand Nivea saw sales fall 8.8% in H1 and the company’s luxury skin care La Prairie brand continued to be especially hard-hit, with sales plunging 41.9%.

“The COVID-19 pandemic has had a far-reaching negative impact on our business, especially in the second quarter because of the significant contraction of skin care markets – our core business around the world,” ​the CEO said.

Skin care declines and travel retail woes hit La Prairie

De Loecker said the entire luxury cosmetics market, including skin care, had been subject to “a massive decline” ​during COVID-19 and travel retail business had also “decreased drastically” ​worldwide – two big reasons behind La Prairie’s sales plunge.

And whilst other competitor luxury skin care brands had increased promotional activity to combat declines, he said La Prairie would “safeguard”​ its exclusivity and “forego discounts”. ​Instead, Beiersdorf would focus on improving the consumer experience – continuing to offer skin treatments in select La Prairie stores once permitted, he said.

“Business development prior to COVID-19 showed what La Prairie is capable of. We will return to the dynamism and win people over with powerful innovations.”

Derma business ‘more resilient’ than cosmetics

De Loecker said that during H1 2020, Beiersdorf’s derma business – with its Eucerin and Aquaphor brands – had “defied the crisis”, ​growing sales by 6.2%.

He said that, overall, the derma cosmetics market had proven to be “more resilient than the overall cosmetics market”​ and business through pharmacies was one key reason behind this, given these stores were classified as essential businesses during worldwide lockdowns.

“Moreover, demand for products that offer solutions to skin problems remain intact despite the crisis,”​ he said.

Online sales across Beiersdorf’s derma business in North America, for example, had contributed to more than 20% of sales in H1 and Beiersdorf planned to continue its digital push for its derma brands and other brands in its portfolio.

Sustainability efforts 'will not be side-tracked’

De Loecker said that despite all the difficulties associated with the ongoing COVID-19 crisis, Beiersdorf remained fully focused on sustainability.

“Our commitment to sustainability will not be side-tracked by this crisis. On the contrary, we intend to make a real long-range contribution for people, society and environment.”

Details of this, he said, had been outlined in the company’s recent sustainability agenda and would also be fulfilled through its CARE+ initiative – a concept to develop business with ‘courage, aspiration, responsibility and empathy’.

Related topics: Business & Financial, COVID-19, Skin Care

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