German Beiersdorf's profit margin declines due to innovation investments

Source: Xinhua| 2019-08-06 20:25:22|Editor: Wu Qin
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BERLIN, Aug. 6 (Xinhua) -- Beiersdorf's operational profit margin (EBIT margin) declined from 16.2 percent in the first half (H1) of 2018 to 15.4 percent in the first half of 2019, the German consumer products company announced on Tuesday.

The consumer goods industry was experiencing an "historical disruption," said Stefan De Loecker, chief executive officer (CEO) of Beiersdorf.

Beiersdorf's H1 2019 EBIT margin had been "impacted" by the scope of investments in the company's Care+ innovation program, according to the German company.

With its Care+ program, which was launched in February, Beiersdorf announced that it was seeking to "realign" its consumer products segment.

The German consumer products company was planning to invest around 70 to 80 million euros (78.4 to 89.6 million U.S. dollars) annually into "new markets, innovation, digitalization and up-skilling".

The first "major milestone" of Beiersdorf Care+ strategy had been the "agreed acquisition" of Coppertone, a U.S. brand of sunblock products, Loecker announced on Tuesday.

In May, Beiersdorf entered a definitive agreement to buy Coppertone from the German chemical giant Bayer for 550 million U.S. dollars.

At the same time, group turnover of Beiersdorf increased by 4.8 percent to 3.8 billion euros (4.3 billion U.S. dollars) in the first half of 2019, Beiersdorf announced.

Increased turnover of the German company was "positively affected" by exchange rate changes as well as acquisitions in the company's adhesive tape segment, according to Beiersdorf.

"Our entire business model needs timely adaptation due to new market realities and fast-changing technology developments," emphasized Loecker.

Beiersdorf stated on Tuesday that its consumer goods business, comprising skincare brands like Nivea or Eucerin as well as the company's plaster business, increased 5.3 percent year on year in H1 2019.

The German company's consumer goods segment accounted for more than 80 percent of the group's total turnover in the first six months of 2019, according to Beiersdorf.

The results of the first six months showed that Beiersdorf was "on track" and the German company was seeing "significant progress" in various segments, emphasized CEO Loecker.

Beiersdorf confirmed its business guidance and is expecting the group's turnover to increase by 3 to 5 percent in 2019.

The EBIT margin in Beiersdorf's consumer products segment was expected to decline to between 14 and 14.5 percent for the ongoing year, the German consumer products company noted.

Investors reacted positively following the publication of Beiersdorf's H1 results as shares of the German consumer products company increased by more than 4 percent on Tuesday morning and were among the biggest winners on the German stock index DAX.