Beiersdorf, the company behind Nivea, projects a deceleration in organic sales growth for 2024. This comes after a notable 10.8% surge in the previous year, with the company implementing measures to moderate price hikes.
Known for its cautious projections, Beiersdorf achieved total sales of 9.5 billion euros ($10.3 billion) for the full year, compared to 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 anticipates more restrained growth for its consumer business segment in 2024, aiming for “more reasonable” price increases compared to 2023. However, it remains cautious due to high commodity prices, inflation rates, and strained consumer budgets.
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The sector is facing subdued demand as consumers, contending with inflation and rising borrowing costs, have become more discerning in their purchases.
At 10:15 AM GMT on Thursday, shares declined by 3% to 133.4 euros.
“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.
Fujimori noted that Beiersdorf’s core division reported quarterly organic sales growth of 9%, falling short of analysts’ estimates of 11%. This was primarily attributed to a decline in sales at its luxury brand La Prairie.
Luxury companies like L’Oreal have raised concerns about the impact of increased scrutiny by the Chinese government on the “Daigou” business model. This model involves resellers purchasing goods at lower prices from other markets and selling them at a discount in mainland China.
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.
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