UBS Report

Nivea Maker Beiersdorf Suffers Blow

  • Why it matters

    Why it matters

    • Beiersdorf has seen sluggish sales growth in recent years and faces tougher competition for consumer market share.
    • An analyst report by Swiss UBS chides the company for its lack of innovation and slow digital growth.
    • Investors pressure the company, known for its Nivea brand, to acquire a competitor but CEO Heidenreich wants to take it slow.
  • Facts


    German Nivea skincare and Tesa adhesives maker Beiersdorf has faced pressure by investors over sluggish growth in recent years. A new analyst report and meager preliminary results could add to the mix.

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Inside Beiersdorf AG Production Center And Nivea Haus Store
A shopper walks down the stairs at Nivea Haus in Hamburg, where the producer of the skincare brand, Germany's Beiersdorf, is based. Source: Bloomberg

It has not been a particularly invigorating start to the new year for Beiersdorf shareholders.

The consumer group, known for its Nivea skincare brand, was slapped with a peppery analyst report that temporarily gave its shares a hard time but also laid bare the company’s long-term challenges.

Analysts at Swiss bank UBS warned Beiersdorf will significantly lag behind its competitors in the coming years and is set for slower growth rates. Only serious investments in the group’s marketing budget, its digital business and innovative capabilities could prevent such a trend, the analysts said, but added they saw little indication for such a turnaround.

Beiersdorf, which is also known for its Tesa adhesives business, on Tuesday posted preliminary full-year results for 2016. Organic sales, adjusted for currency, grew by 3.2 percent and only reached the lower end of the group’s own sales target increase of 3 to 4 percent.

While the Hamburg-based group said it would significantly exceed its 2015 margin on earnings before interest and tax (EBIT) of 14.4 percent, UBS analyst Pinar Ergun looked warily at the company’s sales prospects.

While big competitors like L’Oréal invested heavily in the expansion of their online business and the acquisition of innovative startups, Beiersdorf showed little ambition in that realm, despite pressure from investors to grow inorganically. Consequently, UBS downgraded the stock from “hold” to “sell,” but the bank is among a minority of financial institutions to do so.

Beiersdorf last year posted consensus-beating €6.75 billion in sales – a result mainly attributed to the better than expected performance of its adhesives business, which had suffered from sluggish growth in Asia in recent years.

But popularity of the group’s consumer products, which account for most of the business, stagnate across its Western European core market and consumers in surveys regard the Nivea brand as little innovative.

Beiersdorf’s chief executive, Stefan Heidenreich, at the start of his term in 2012 slashed spending on a ballooning advertising budget. While the move boosted margins and was generally acknowledged as strategically important, analysts are concerned he went too far.

Mr. Heidenreich has ordered the company to give innovations more time to mature in the market rather than frequently rolling out new products. But analysts now wonder how the consumer company will market new products, such as its latest skin lotion for use under the shower.

Following the presentation of the company’s preliminary results on Tuesday, however, Heidenreich said he was “cautiously optimistic” about Beiersdorf’s future.

“The sales increases and market shares achieved are proof of our high competitiveness, the strengths of our business model, and the attractiveness of our products and innovations,” he said in a statement. Final results are expected for March 8.

Investors and analysts will then likely ask him to delineate his strategy more sharply in light of the company’s strong competition in the race for global consumer market share.


Christoph Kapalschinski covers consumer goods, textiles and food for Handelsblatt. To contact the author: