In a noteworthy update for the beauty and skincare industry, German conglomerate Beiersdorf, the maker of the well-known Nivea brand, has reported a solid rise in group sales for the first nine months of 2024. Despite ongoing challenges in the Chinese luxury market, the company anticipates strong sales performance as it heads into the final quarter of the year.
Shares of Beiersdorf experienced a robust increase, climbing 3.9 percent to €132 in early trading following the announcement, reflecting analysts’ optimism towards management’s outlook for the upcoming quarter. Sales figures indicate an organic growth of 6.5 percent, reaching €7.55 billion ($8.15 billion), compared to €7.26 billion in the same period last year. A significant portion of this increase is attributed to a rebound in North America and strong performance in the skincare category.
Chief Executive Vincent Warnery expressed cautious optimism in the company’s statement, acknowledging the challenges posed by the luxury sector, particularly in China, where a notable slowdown in consumer demand has persisted amid economic uncertainties. This scenario is not exclusive to Beiersdorf; colleagues in the industry, including L’Oreal and LVMH, have also reported dips in their sales due to similar factors affecting discretionary consumer spending.
One significant casualty of this trend is Beiersdorf’s luxury brand, La Prairie, which recorded a 7.3 percent decline in organic sales over the first three quarters. The Greater China region’s underperformance has particularly affected La Prairie, impacting travel retail and indicating a broader struggle for brands heavily reliant on high-end markets. Warnery remarked that the company does not anticipate a recovery for La Prairie before the year’s end but maintains a more optimistic outlook for 2025, particularly noting promising growth in Japan and potential in the United States.
In addition to geographic challenges, Beiersdorf faces another layer of competition from parallel trading, where consumers are increasingly opting for secondhand and grey market products, especially as prices rise. In response, the company is taking legal action to address the prevalence of counterfeit goods in the market.
Nonetheless, Beiersdorf’s core brands showed resilience, particularly in the consumer segment, where sales rose 7.3 percent to €6.3 billion in the first nine months of 2024. This growth was significantly fueled by strong performance from Eucerin and Aquaphor skincare brands in North America, alongside the steadfast sales of Nivea in emerging markets during the third quarter.
Looking forward to the remainder of 2024, Beiersdorf still projects organic sales growth between 6-8 percent and expects earnings before interest and taxes (EBIT) margins—excluding special factors—to remain slightly above last year’s levels. Analysts at Barclays echoed the positive sentiment surrounding Beiersdorf, suggesting that the upbeat management commentary could instill confidence among investors.
In conclusion, while Beiersdorf faces hurdles, particularly in luxury sales in China, its diverse portfolio and adaptability could position it favorably as the company drives into the upcoming year. With expectations for growth in other markets and a robust product lineup, the company’s next moves will be closely monitored by industry experts.
