Beiersdorf Unveils Plans for Future Growth

Beiersdorf AG’s supervisory board has approved a package of new measures and investments designed to complement its consumer business strategy named “Focus on Skin Care. Closer to Markets.”The package comprises substantial investments in the company’s skin and body care brands, the global streamlining and harmonization of the product portfolio, and the realignment of regional structures.

“Implementing the package of measures and investments will make Beiersdorf even more competitive and more profitable. Today we have laid key foundations to safeguard the company’s long-term future,” said Thomas-B. Quaas, Chairman of the Executive Board of Beiersdorf AG.

Beiersdorf will streamline its product range in skin care and body care and will withdraw from decorative cosmetics in Germany. All other local affiliates will decide independently about their decorative cosmetics business, according to a statement made by the company today.

The sales affected by the streamlining of the product portfolio will be offset in the medium term by the launch of product innovations, the company said.

“In the coming years we will launch a large number of new products for our skin and body care brands that represent innovations for the consumer,” said Quaas.

By merging the brands and supply chain areas, Beiersdorf has created the ideal conditions for a seamless, fast and effective innovation process and allowed Beiersdorf to gain valuable competitive advantages, according to Quaas.

The measures will bring with them additional costs of approximately €270 million up to fiscal year 2012, with roughly €120 million of this amount probably being incurred in fiscal year 2010. The additional costs also include write-downs of intangible assets relating to the Chinese business, according to the company.

As a result of the additional costs, the Beiersdorf Group’s EBIT margin for fiscal year 2010 will be approximately 9% (the figure from operations will be approximately 11%), while sales growth will be 2-3%. The consumer business segment is forecasting sales growth of 1-2% and an EBIT margin of 8-9% (the figure from operations will be approximately 11%).

In addition to approving the company’s furture plans, the supervisory board approved personnel changes.

Dr. Ulrich Schmidt, currently head of the Beiersdorf’s Southeast European business, has been tapped to succeed Dr. Bernhard Düttmann as the new executive board member for Finance & Human Resources. Effective January 1, 2011, Dr. Schmidt will initially assume responsibility for the Human Resources function. Following the preparation of the annual and Group financial statements for 2010, he will then also taken over responsibility for the Finance function from Dr. Düttmann, who will leave the company.

Ümit Subaşı was appointed as the executive board member for the previously unfilled Emerging Markets position. Most recently, Subasi was responsible for S.C. Johnson’s business in the Central, Northern, and Eastern Europe regions.