Beiersdorf's momentum is waning - La Prairie's strength is diminishing
Beiersdorf's sales growth takes a significant dip, with the high-end market, particularly in China, posing major challenges. Conversely, the Nivea brand is thriving. The DAX company is on track to hit its annual objectives.
In the first nine months, sales rose organically by 6.5% to 7.5 billion euros compared to the previous year, as announced by the Hamburg-based company. However, the growth rate dropped to 5.1% in the summer. The luxury market surrounding the La Prairie brand, especially in China, has been causing issues. L'Oréal, a rival company, also shared weak sales figures for the region. On a positive note, the company's business in North America has bounced back, according to Beiersdorf. The company is sticking to its annual predictions.
"We've experienced robust, consistent growth in a dynamic market in the first nine months of 2024," said Beiersdorf CEO Vincent Warnery: "We anticipate a positive overall development in the fourth quarter," he added. Beiersdorf will therefore meet its 2024 targets.
The Consumer segment, centered around the flagship brand Nivea, recorded a 7.3% organic growth with sales of 6.3 billion euros from January to September. The core brand Nivea, including Labello, achieved a 9.4% organic growth. The smaller Tesa segment saw a 3.1% organic growth in the first three quarters, but necessitated a boost from the automotive industry. However, the Electronics and Printing and Packaging segments saw an increase.
"A small rise, but no miracles"
Luxury brand La Prairie, however, experienced a 7.3% organic sales drop in the first three quarters - the only brand to record a decline. Beiersdorf had initially expected that the luxury cosmetics brand could make a significant recovery by year-end. Unfortunately, La Prairie has been hit hard by China's consumer restraint and weak travel retail business for several quarters now. "We anticipate a slight improvement for La Prairie in the last quarter, but definitely no miracles," said Warnery.
"Our forecast considers that travel retail won't resume growth, the stationary business in China will remain negative, but there will be a positive development outside of China," Warnery continued. He also sees further growth opportunities, such as the lack of La Prairie's online presence in the USA.
Beiersdorf still expects an organic growth of 6 to 8% in 2024. Competitor Henkel has set a growth target of 2.5 to 4.5% for the year. The operating EBIT margin is expected to be slightly above the 13.4% of the previous year at Beiersdorf, excluding special effects.
The quarterly figures for Beiersdorf's sales growth are expected to provide some insight, given the company's anticipation of a positive overall development in the fourth quarter.
Regrettably, Beiersdorf has revised its expectations for the luxury brand La Prairie, predicting a slight improvement but no miracles in Q4 sales due to ongoing challenges in China and travel retail.
