(News Bulletin 247) – The German Beiersdorf, specializing in dermatological and skin care products, achieved growth of 7.3% over the first three months of the year on a comparable basis thanks to its two flagship brands.

Among the first large European groups to publish its first quarter activity, the German Beiersdorf does not disappoint.

This company born at the end of the 19th century specializes in consumer, beauty, cosmetic and dermatological products. Its best-known brands remain Nivea, Labello, Hansaplast, Elastoplast and La Pairie (cosmetics). The company is also present in adhesives through its Tesa business. With nearly 30 billion euros in market capitalization, the group is among the 20 most important companies on the Frankfurt Stock Exchange and is a small comparable to L’Oréal.

The start of 2024 is off to a strong start. Beiersdorf announced on Tuesday that it had generated revenues of 2.6 billion euros over the first three months of the year, an increase of 5% on a published basis and 7.3% on a comparable basis, significantly more than market expectations. analysts (6.2% on a comparable basis according to Jefferies).

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A record quarter for Nivea

The “consumer” division alone achieved growth of 10% on a comparable basis, against a consensus of 6.9%. Conversely, Tesa suffered, with a drop in revenue of 5.4% on a comparable basis, when analysts were expecting growth of 3%.

“This decline was particularly evident in the ‘electronics’ division in Asia and North America (…) Despite a difficult market environment, Tesa remains confident that all divisions and their markets will recover significantly, in especially in the second half of the year,” Beiersdorf explained.

Returning to consumer products, Beiersdorf was driven by the strength of its two best-known brands, Level and Labello. The division bringing together these two brands recorded growth of 12.6% in the first quarter on a comparable basis, well above the 7.5% expected by analysts. “This is clearly the bright spot of this publication,” underlines Stifel. This progression is balanced between price and volume increases as well as in the regions (13% in Europe, 14% in emerging countries).

“Nivea’s strong double-digit growth has driven our portfolio forward, with sales increases everywhere, particularly in Europe and emerging markets. Nivea also had its best quarter in terms of absolute value in the first quarter. This underlines the enduring global popularity of our iconic brand,” said the group’s chief executive, Vincent Warnery, quoted in a press release.

Growth prospects raised

Dermatology brands (Eucerin, Aquaphor) grew by 10.2% year-on-year on a comparable basis in the first quarter. La Prairie, its cosmetics brand, returned to positive territory, with like-for-like growth of 1%, very slightly above the consensus (0.7%). “La Prairie only slightly exceeded expectations, but this is the first time in six quarters that it has exceeded them,” underlines Royal Bank of Canada.

Building on this good start to the year, Beiersdorf has raised its growth target for 2024. The company previously expected growth in comparable figures in the mid-range (i.e. around 5%) for both its “consumer” division. than for the whole group. It now anticipates like-for-like growth of 6% to 8% for the group and by “consumer” division. The company’s operating margin is also expected to increase “slightly in 2024”.

On the Frankfurt Stock Exchange, this publication allows the German group to resist the prevailing gloom. The stock rose 1.3% around 11 a.m. while the DAX 40 lost 1.4%.

“Beiersdorf remains a relatively isolated name in our coverage, offering attractive revenue dynamics from Nivea and Derma, with a balanced contribution from solid volume growth and gradual pricing normalization,” Stifel said.

“La Prairie presents an attractive recovery option in the second half of 2024, with the Chinese beauty market and Hainan (an island in China which is a favorite vacation and shopping destination for the Chinese, Editor’s note) eventually recovering their normalized growth potential”, continues the research office which reiterated its advice to purchase.