Corporate Strategy

Swimming in Capital but Saving on Dividends

  • Why it matters

    Why it matters

    If Beiersdorf fails to pay out more dividends to shareholders, as well as improve digitization and increase its presence in emerging markets, it could fall even further behind its competitors.

  • Facts

    Facts

    • Dividends have remained at 70 cents per share at Beiersdorf for years.
    • The profit margin on Beiersdorf’s cosmetic products was a mere 13.9 percent in 2015.
    • This left the company trailing behind competitors such as P & G with 19.1 percent and Schwarzkopf with 15.3 percent.
  • Audio

    Audio

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Inside Beiersdorf AG Production Center And Nivea Haus Store
Nivea products continue to fly off the shelves, though shareholders don't seem to be benefiting from the success. Photo: Krisztian Bocsi/Bloomberg

In 2012, Stefan Heidenreich appeared to be Beiersdorf’s knight in shining armor, ready to rescue the Hamburg-based company from having spread itself too thin.

At the time, Beiersdorf, a consumer conglomerate that makes the Nivea skincare and body care products, wasn’t winning over new customers; its make-up range and natural cream products simply didn’t appeal. Former chief executive Thomas-Bernd Quaas barely had a chance to announce his strategic move toward a pure skincare range before 54-year-old Mr. Heidenreich swept in and took over the reins.

Mr. Heidenreich weeded out the weaker products, bid farewell to pop star Rihanna as brand ambassador, showed old board members the door and ushered in new ones. All successful moves if you look at Beiersdorf’s profits, which have soared by over 40 percent to some €1 billion ($1.06 billion) since he took over. Official numbers will be released this Wednesday.

Currently, the cosmetics and adhesives company is doing so well that plans are underway to build a new company headquarters in Hamburg. However, the chief executive seems unsure what else to do with his earnings.

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