Restructuring and write-downs hit Beiersdorf earnings

Published: 3-Mar-2011
Manufacturing Skin Care Finance

But Nivea centennial celebrations get digital and brand sponsors Rhianna

The earnings generated by the German Nivea producer Beiersdorf in 2010 were down markedly because of an extensive restructuring of its cosmetics operation and write-downs linked to business in China. Depreciations alone accounted for €56m while write-downs in hair care product brands for the Chinese market added a further €23m.

Beiersdorf estimates that its major restructuring and investment programme together with the removal of weak margin products from its range cost €210m in 2010 and in the period to 2012 will cost some €270m. Only a small proportion of total planned investment was spent last year and the lion's share of the cost will fall this year.

Profits for 2010 on the core business reached €308m for 2010, or a fifth less than in 2009. Beiersdorf is currently contending with intense competition from the major US and German groups in its domestic market. Group sales rose 8% last year to €6.2bn with overall pre-tax profits up about 9% at €697m.

Meanwhile Beiersdorf has also announced global plans for the celebration of Nivea’s 100 years in skin care. With the business strategy ‘Focus on Skin Care. Closer to Markets’, the company plans to concentrate on its core competence skin care, placing Nivea at the centre. As part of the celebrations the company will launch its biggest digital campaign to date, taking a multi-channel approach targeting younger consumers.

This will include the sponsorship of Rihanna’s upcoming LOUD tour in the US and Europe. “The multi-city tour will include fan engagement through Nivea- and Rihanna-owned social media channels and will feature various Nivea branded activations,” says Beiersdorf. “As the brand enters its centennial, it will pay homage to its heritage while looking ahead to the next generation of fans, enlisting Rihanna to lend her voice to the anniversary celebration.”

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