08.04.11
Shares of Beiersdorf surged the most in 10 months in Frankfurt trading after the maker of Nivea skin care products said sales will rise this year, lifting an earlier forecast as efforts to promote the brand pay off.
Revenue will show a “slight” increase and earnings before interest and taxes from operations will amount to 10-11% of sales, Hamburg-based Beiersdorf said in a statement today. That compares with an earlier forecast of unchanged sales and a slightly lower profit margin.
Beiersdorf is reducing its beauty products lineup to focus on skin care, including sun protection creams. The marketing budget for 2011 has been increased as Nivea celebrates its 100th anniversary with a social-media campaign that includes raffling hand massages and tickets for concerts by singer Rihanna. Revenue in Europe, Beiersdorf’s biggest market, increased 3.8% in the quarter.
“The recovery in Europe was strong,” and “clearly sun care has been a bright spot,” Nic Sochovsky, a London-based analyst at UniCredit SpA, said today in a research report. “We see the actions taken by management to refocus Nivea on its skin franchise as the correct one.” Sochovsky recommends holding the stock and estimates the share price will rise to 48 euros in a year.
Beiersdorf rose as much as 2.74 euros, or 6.4%, to 45.35 euros in the biggest intraday jump since Sept. 29 and was up 4.2% as of 12:36 p.m.
Second-quarter net income rose 4% to 131 million euros ($186 million), the company said. Profit beat the 95 million-euro average of nine analyst estimates compiled by Bloomberg. Sales climbed 2 percent to 1.5 billion euros.
A return to “noticeable growth” will take until next year, Chief Executive Officer Thomas Quaas said today on a conference call.
Beiersdorf anticipates reorganization costs of about 270 million euros in the two years through 2012 related to advertising spending and a reduced value of a hair care business in China.
The manufacturer is studying potential acquisitions, while no transaction is imminent, Quaas said on the conference call. The company won’t seek purchases just to boost revenue and will only buy brands at the top of their markets or with potential to take the leading position, he said.