Shares in Nivea maker Beiersdorf fell on Wednesday after it said it does not expect a recovery in profitability in 2021 even though sales of products such as sunscreen and luxury skin cream should bounce back as COVID-19 lockdowns are lifted.
Beiersdorf said late on Tuesday that it expects a return to revenue growth for the group as a whole and its consumer business but its operating margin to remain at the same 12.9% level as 2020.
The group's Tesa adhesives unit is also projected to return to sales growth, but its operating margin is expected to be hit by increased investment. Beiersdorf said on Tuesday that it will invest an extra €300 million ($362 million) over the next five years.
'A Year Of Recovery'
"2021 was meant to be a year of recovery; now we know it is a year of another reset and margins won't grow from the low levels of 2020," said Bernstein analyst Bruno Monteyne. "Our estimates and consensus will have to come down materially."
Beiersdorf shares were down 3.7% at 07:19 GMT.
In 2019 Beiersdorf set a target to improve its margin on earnings before interest and tax (EBIT) to 16-17% by 2023.
Asked whether the company had abandoned that objective, chief executive Stefan de Loecker said that the current environment was too uncertain to make longer-term forecasts but its investments would ultimately lift profitability.
"We will see substantial improvements by the end of the year as vaccinations gather pace in many countries," he told analysts.
Incoming finance chief Astrid Hermann added: "Post-COVID, we will drive EBIT beyond top-line growth."
Beiersdorf said organic sales fell 3.4% in the fourth quarter, with its core Nivea brand down 5.4% but its Eucerin and Aquaphor brands increasing sales by 5.9% while its premium LaPrairie skincare achieved 21% growth.
Sales of Nivea suncream and lipbalm were dented by the collapse in tourism because of coronavirus lockdowns.
While LaPrairie sales are expected to continue gathering pace in China, the outlook is less promising in Europe and Australia because of ongoing lockdowns, outgoing finance chief Dessi Temperley told analysts.