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Beiersdorf Shares Drop as Sales Growth Falls Short of Estimates

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Beiersdorf Shares Drop as Sales Growth Falls Short of Estimates

Shares of Beiersdorf AG fell the most since 2010 after the maker of Nivea body washes and Eucerin lotions reported first-half revenue growth that trailed analyst expectations.

Beiersdorf stock declined as much as 5.2 per cent to €63.68. Organic sales rose 5 per cent in the first six months of the year, the Hamburg-based company said today. Analysts had anticipated growth of 5.9 per cent on that basis, according to the median estimate of 10 analysts surveyed by Bloomberg News.

“While the market was braced for a soggy second-quarter sales print, this is likely worse than anyone had feared,” Exane analysts including Jeff Stent wrote in a note today.

Growth slowed from the 6.7 per cent pace the company reported in the first three months of the year as shoppers in China spent less and customers around the globe shunned Beiersdorf’s smaller brands including Labello lip balms, chief executive officer Stefan Heidenreich said on a call with journalists.

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Under Heidenreich, Beiersdorf has been investing in its biggest brands and expanding sales in new markets including India and the Middle East. The executive pledged to start promoting the smaller brands more in coming weeks.

The company repeated its forecast for sales growth of between 4 per cent and 6 per cent this year. Earnings before interest and taxes from operations as a percentage of sales will be above 13 per cent.

“The global economic situation looks set to improve in 2014,” the company said today. “We expect that this trend will be driven mainly by the industrialised nations, while growth in the developing countries and emerging markets will be somewhat lower than in previous years.”

Still, Beiersdorf’s organic sales growth is faster than the 4.5 per cent pace posted by larger European rival Unilever in the first half at its personal-care division, while Procter & Gamble Co. last week said it plans to eliminate as many as 100 brands in the next two years to cut costs and focus on its most important product lines.

Bloomberg News, edited by ESM

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