Log in
Forgot password ?
Become a member for free
Sign up
Sign up
Dynamic quotes 

MarketScreener Homepage  >  News  >  Economy & Forex  >  All News

News : Economy & Forex
Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance ProfessionalsCalendarSectors 
All NewsEconomyCurrencies / ForexCryptocurrenciesEconomic EventsPress releases

Nivea maker warns of threat from niche consumer brands

share with twitter share with LinkedIn share with facebook
share via e-mail
02/27/2019 | 09:43am EDT
FILE PHOTO: Nivea tins on a Beiersdorf production line in Hamburg

HAMBURG (Reuters) - Beiersdorf's shares dropped more than 10 percent on Wednesday after the Nivea skin cream maker said margins would fall in 2019 as the company invests more to keep up with niche brands disrupting the consumer products industry

Beiersdorf is the latest consumer goods company to reset profit expectations for 2019 after German rival Henkel and Colgate-Palmolive last month, and following Kraft Heinz's writedown last week.

"The consumer goods industry... is in turmoil," new Beiersdorf CEO Stefan De Loecker, who took over on Jan. 1, said in a presentation to analysts. "I need to act now."

De Loecker said mass-market labels were being challenged by the rise of small, disruptive brands as consumers seek more personalised products and services, as well as more natural ingredients, a trend highlighted also by Henkel last week.

He said Beiersdorf was exposed as three-quarters of its sales come from sales of mass brands, noting that niche brands had already taken 40 percent of the European skincare market.

"Not keeping up to date with changing consumer needs is having a material impact on those companies who have so far done little to adapt and are left with no choice but to invest to catch up," UBS analyst Pinar Ergun said.

Warren Buffett said on Monday that his Berkshire Hathaway Inc overpaid in the 2015 merger that created Kraft Heinz, noting retailers such as Amazon and Walmart were making it harder for brands to push through price hikes.

Beiersdorf only managed to expand via volume growth rather than higher prices in 2018. De Loecker said digitalisation was making pricing tougher due to transparency, although he said that only underlined the need to invest in new products.

"People are still prepared to pay for real innovations," he said, highlighting an array of new ranges, including a patented formula for its Eucerin skincare line that reduces dark spots.

Jefferies analyst Martin Deboo said the recent warnings added to evidence that the "cost of growth" was increasing in the consumer products sector.

Beiersdorf's shares fell more than 10 percent. By 1348 GMT they were down 9.5 percent, with rivals Henkel, Reckitt and Unilever also weaker.

eiersdorf shares vs Henkel, Reckitt and Unilever:

Beiersdorf had said late on Tuesday it expected group sales growth of 3-5 percent in 2019, down from 5.4 percent in 2018, and an operating margin of 14 to 14.5 percent in its core consumer business unit, down from 15.3 percent in 2018.

To counter the slowdown, Beiersdorf will invest up to 80 million euros ($91 million) more a year in its consumer business, which makes Nivea and other brands like premium line La Prairie, where growth slowed at the end of 2018.

The additional spending on opening new markets, innovations, digitisation and training should boost organic growth in this area to 4-6 percent by 2023 and the operating margin to 16-17 percent.

De Loecker, who previously led Beiersdorf in its Near East region that includes India, said the company would expand in Asia to counter limited growth prospects in Europe. This ambition was underlined by his hiring of Asim Naseer, former P&G global marketing director for skin care, as head of consumer brands.

It will also invest in technology, aiming to double online sales to 10 percent of the total in the next five years.

De Loecker said the family-controlled company would remain "conservative", but wanted to be more active in looking for acquisitions, particularly in emerging markets, technology and areas like natural cosmetics.

(Editing by Thomas Seythal, editing by Louise Heavens and Jane Merriman)

By Emma Thomasson and Jan Schwartz

Stocks mentioned in the article
ChangeLast1st jan.
BEIERSDORF AKTIENGESELLSCHAFT 0.68% 111.25 Delayed Quote.21.22%
COLGATE-PALMOLIVE COMPANY 1.11% 73.08 Delayed Quote.22.78%
HENKEL AG & CO. KGAA 0.69% 87.58 Delayed Quote.-8.81%
RECKITT BENCKISER GROUP PLC 1.23% 6276 Delayed Quote.2.99%
THE KRAFT HEINZ COMPANY 1.18% 25.71 Delayed Quote.-40.26%
UNILEVER PLC 0.65% 5127.46 Delayed Quote.23.91%
share with twitter share with LinkedIn share with facebook
share via e-mail
Latest news "Economy & Forex"
03:54aIndonesia's 2020 energy subsidy policy "flexible," price freeze may stay - officials
03:42aFreepoint to supply IMO-compliant bunker fuel in Singapore from fourth quarter
03:40aDAX : Humbled Deutsche Bank faces battle in its own backyard
03:34aAnnual earnings at South Africa's Shoprite miss estimates
03:27aOPEC ORGANIZATION OF PETROLEUM EXPORTING COU : daily basket price stood at $59.56 a barrel Monday, 19 August 2019
03:16aNEWS HIGHLIGHTS : Top Company News of the Day
03:16aNEWS HIGHLIGHTS : Top Global Markets News of the Day
03:12aINE NATIONAL STATISICS INSTITUTE : Business Turnover Index. Provisional data
03:12aItaly needs 50 billion euro budget for 'shock' stimulus - Salvini
02:57aOil prices rise on stimulus hopes, trade optimism
Latest news "Economy & Forex"