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Mar 3, 2011
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Beiersdorf to invest $140 mln to boost Nivea

By
Reuters
Published
Mar 3, 2011

Mar 3 - Germany's Beiersdorf said it will invest close to 100 million euros ($140 million) in its traditional Nivea brand this year as part of efforts to win back market share.

Beiersdorf, Nivea
Nivea factory in Hamburg, Germany

"Beiersdorf is investing an additional high double-digit million amount ... This will strengthen Nivea in the long term," Chief Executive Thomas Quaas said in a statement on Thursday.

The group announced the level of investment as it confirmed its outlook for sales to be flat in 2011 and profit margin to be impacted by restructuring measures such as scaling back make-up and hair-care lines.

It also announced a flat dividend of 0.70 euros per share for the year, falling short of the average analyst estimate of 0.75 euros.

It had already released preliminary 2010 figures in January, showing sales of 6.19 billion euros and a group margin -- earnings before interest and tax as a percentage of sales -- of 11.3 percent.

The investment in Nivea, which celebrates its 100th anniversary this year, is part of a package of measures that will cost the company 270 million euros ($374.9 million) by 2012 and which resulted in two profit warnings at the end of last year.

The Hamburg-based company, which also makes the la Prairie luxury skin care range and Tesa adhesives, said it expected group sales and margins to improve once again in 2012.

The battle for market share in the cosmetics and skincare market is tough at the moment, with firms across the world being forced to review strategies.

Beiersdorf's consumer business grew sales by just 1.6 percent last year, hurt by a decline in its home market.

At the end of last month, Avon the world's largest direct seller of cosmetics, said it would split into two units and outlined new products after it disappointed in markets such as Brazil.

The bright spot at Beiersdorf over the last year has been its adhesives division, which, like the corresponding unit at German rival Henkel, has benefitted from returning demand in the industrial and automotive sectors.

Beiersdorf said the division should see a slight improvement in earnings in 2011 after sales rose 13.3 percent and the EBIT margin jumped to 11.4 percent in 2010.

Shares in Beiersdorf were down 0.06 percent at 43.18 euros in early trade, while the wider blue-chip index was up 0.45 percent.

(Reporting by Victoria Bryan; Editing by Hans Peters)

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