Beiersdorf hit with second ‘Underperform’ rating

The world’s fifth largest beauty and personal care company has again been hit by an Underperform rating from Bernstein Research. Beiersdorf is believed to be paying the consequences from size issues and the failed strategy of ex CEO Thomas Quaas.

Though Beiersdorf is ranked number four in the Beauty and Personal Care market in Western Europe, Bernstein points out it is much smaller in other regions. “For example, it is ranked number 20 in North America, where it is dwarfed by the market leader P&G, whose market share is 18.7 times that of Beiersdorf. Even in western Europe,” added Bernstein, “and the Middle East, where Beiersdorf has its best rankings (number four), the respective number one players, L’Oréal and Unilever, have about 2.5 times its market share.”

The strategy of former CEO Quaas was to expand the business – particularly the Nivea brand – into shampoo, conditioner and cosmetics. But Quaas was undermined by grim background economics and huge competition from global peers.

“The new CEO seems more impressive, focused and demanding than his predecessor,” said Bernstein analyst Andrew Wood, “and his Blue Agenda seems to make sense even if it is not exactly original. However, we believe that even the recovery in performance in 2012 and the potential for more in 2013 and beyond is unlikely to be strong enough to justify the current valuation and Beiersdorf’s premium rating relative to its peers.”