Beiersdorf Announces Further Realignment

GERMANY: The executive board and the supervisory board of Beiersdorf AG decided on a further realignment of the company’s structures and processes to strengthen its regional focus.

More realignment efforts were announced from Beiersdorf’s headquarters.

The goal is to simplify and optimize the structures and processes, and to align them with the newly defined division of responsibilities between headquarters, regions, and the Beiersdorf affiliates that were introduced earlier this year, the company announced.

According to the firm, the move marks the start of the final implementation phase for Beiersdorf’s consumer business strategy “Focus on Skin Care. Closer to Markets.”

“We have worked intensively this year to implement the package of measures and investments that we announced in December 2010. To date, we have concentrated on investing in our Nivea brand in its 100th anniversary year and on streamlining our product assortment to focus on skin care,” said CEO Thomas-B. Quaas. “Now, in the final phase, a significant increase in the role played by the regions will give us greater freedom and flexibility in implementing our strategy, allowing us to react quickly to regional consumer and market requirements. To achieve this, we also have to realign our corporate structures and processes. This key decision for Beiersdorf will strengthen our future profitability and our competitiveness.”

Beiersdorf currently operates three business regions—Europe/North America, Asia, and Emerging Markets—and has decentralized decision-making structures and responsibilities. The final implementation phase will further strengthen the regions and assign roles and responsibilities in the markets more transparently, the company said. The headquarters in Hamburg will concentrate on strategic, global tasks and will therefore also be affected by the restructuring measures.

The realignment of the company’s headquarters in Hamburg is expected to be largely completed by mid-2012. The necessary realignment in the regions will be developed and implemented by Beiersdorf’s affiliates.

Beiersdorf expects to generate annual cost savings of approximately €90 million before taxes from this improvement in efficiency, starting in fiscal year 2014. Savings of €25 million in 2012 and €75 million in 2013 are projected. The measures will improve Beiersdorf’s profitability and will help further increase its competitiveness.

Beiersdorf estimates that as many as 1,000 employees worldwide may be affected by the measures, including up to 230 in Germany.

“We will aim to find fair solutions for all involved parties. We have always been able to achieve this in the past and this is also now our goal,” said Quaas.

A comprehensive redesign of the company’s business structures in China was launched in 2011.
These decisions by the executive board and the supervisory board on the future strategy to be adopted by Beiersdorf’s business in China will entail write-downs of approximately €140 million on the intangible assets resulting from the acquisition of its hair care business there, the company said.

Beiersdorf is budgeting for total extraordinary one-time expenses of approximately €265 million as a result of the realignment, the majority of which are expected to incur in fiscal year 2011.