Beiersdorf gives solid outlook but coronavirus impact unsure

  • 2019 EPS up 5% to 3.42 euros
  • 2020 organic sales growth forecast at 3-5%
  • 2020 underlying EBIT margin seen at 14-14.5%
  • Outlook does not include coronavirus impact (Adds details, background)

Nivea maker Beiersdorf on Tuesday said it expected similar sales growth and profitability in 2020 compared to 2019, although it cautioned that it could not yet assess the impact of coronavirus on its business.

The German firm forecast organic sales growth of 3-5% for 2020 after 4.1% in 2019, with its consumer unit predicting growth at the same level, while the Tesa adhesives unit would probably only manage slightly positive growth.

The Tesa business has been suffering from a downturn in the automotive industry, while the electronics business held up well in 2019.

Beiersdorf reported its underlying earnings before interest and taxation (EBIT) margin fell to 14.5% in 2019 from 15.4% as it invested more in reviving its business. It expects the metric to come in at 14-14.5% in 2020.

Earnings per share for 2019 rose 5% to 3.42 euros ($3.81), beating average analyst forecasts for 3.37 euros.

Beiersdorf said the outlook did not include any impact from the coronavirus in China. The company makes almost a third of its sales in the Africa/Asia/Australia region, where sales for its consumer unit jumped 8.4% in 2019.

“While the situation of the coronavirus remains dynamic, its impact on our business is not quantifiable yet. We therefore expect stronger headwinds in 2020,” Chief Executive Stefan de Loecker said in a statement.

But he added that Beiersdorf was well placed to cope due to the strategy he launched last year to invest in new business areas, strengthen the existing skin care portfolio of brands like Nivea and Eucerin, and increase digitalisation.

Rival Procter & Gamble Co said last month its current-quarter revenue and profit would take a hit from supply chain disruptions and weak demand due to the coronavirus outbreak in China, the company’s second-biggest market.

Beiersdorf has suffered as consumers move away from big brands like Nivea towards niche labels and products with more natural ingredients, prompting the company to set up an innovation unit which has launched a skincare line for tattooed skin. ($1 = 0.8973 euros) (Reporting by Emma Thomasson Editing by Michelle Martin)

Source: Reuters