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Beiersdorf warns of slowing sales growth amid soft demand

by Staff GBAF Publications Ltd
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Beiersdorf warns of slowing sales growth amid soft demand

By Matthias Inverardi and Linda Pasquini

(Reuters) -Nivea maker Beiersdorf on Thursday forecast a slowdown in organic sales growth in 2024, after reporting a 10.8% increase in the past year, as it reins in price increases.

Beiersdorf, which typically sets cautious guidance, recorded full-year sales of 9.5 billion euros ($10.3 billion), up from 8.8 billion euros in 2022, in line with Beiersdorf’s guidance for low-double-digit organic growth.

The German company cautioned that sales growth would slow to a mid-single-digit percentage this year.

It sees more moderate growth for its consumer business segment in 2024, as it targets “more reasonable” price increases compared to 2023, while still anticipating high commodity prices and inflation rates, and stretched consumer budgets.

The sector is grappling with softer demand as consumers battling with inflation and a surge in borrowing costs have turned more selective in their purchases.

Shares were down 3% to 133.4 euros at 1015 GMT.

“Consumer segment sustained sector-leading growth in (the fourth quarter), but market expectations were high…hence we may see some modest profit taking today,” Stifel analyst Rogerio Fujimori said in a note to investors.

Quarterly organic sales growth of 9% at Beiersdorf’s core division missed analysts estimates of 11%, Fujimori noted, dragged by a drop in sales at its luxury brand La Prairie.

Luxury companies such as L’Oreal have flagged a hit from tighter controls by the Chinese government of the so-called “Daigou” business, where resellers buy inventory at lower prices in other markets and resell it at a discount in the mainland.

Sales at Beiersdorf brands La Prairie and Chantecaille fell by 15.4% and 18.4% respectively in 2023 due to such limitations affecting China and South Korea.

“Even though the Daigou business was a relevant part of our business, we are happy to see that unauthorized distribution contributing to price erosions is now regulated,” CEO Vincent Warnery said in a call.

Beiersdorf said it aimed to return to growth with La Prairie and Chantecaille in 2024. ($1 = 0.9229 euros)

(Reporting by Matthias Inverardi, Linda Pasquini and Eva Orsolya PappEditing by Miranda Murray, Mark Potter and Keith Weir)