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Beiersdorf adhesives sales hit by auto industry slowdown
[BERLIN] German consumer goods firm Beiersdorf reported a fall in sales of adhesives to the auto industry in the third quarter but new products boosted its skin care business which held up better than expected.
The Tesa unit, which makes adhesives for the automotive and electronics industries, reported sales growth of just 1.2 per cent between January and September, after stripping out currency effects and acquisitions, down from 2.4 per cent in the first half of 2019.
Suppliers to the auto industry are being hit by a slump in production as demand falls in the world's biggest car market China and as a trade war between Washington and Beijing curbs global economic growth.
Cutting its forecast for Tesa's 2019 sales growth to 1-2 per cent from 3-4 per cent previously, Beiersdorf said the unit, which accounts for about 20 per cent of sales, saw growth in its retail consumer business and the electronics sector but a fall in the automotive business, particularly in North America.
Growth at Tesa should pick up again in the fourth quarter, finance chief Dessi Temperley told analysts, citing a good order pipeline.
Beiersdorf confirmed its overall 2019 guidance for group sales growth of 3-5 per cent and a consolidated operating margin from ongoing operations of around 14.5 per cent. It also narrowed the sales forecast for its consumer business to 4-5 per cent from a previous 3-5 per cent.
Shares in Beiersdorf were down 1 per cent at 0904 GMT.
Sales growth for the company's core Nivea brand slowed to 2.7 per cent in the third quarter from 3.2 per cent in the first half, while growth for premium La Prairie skin products dipped to 14 per cent in the quarter, from 27 per cent in the first half, as sales fell in Hong Kong where tourists have been put off by months of political unrest.
However, sales picked up for the Eucerin and Aquaphor skin brands and for Beiersdorf's Hansaplast and Elastoplast sticking plaster lines, with a new patented Eucerin formula that reduces the appearance of dark skin spots selling well around the world.
As consumers move away from mass-market labels like Nivea, new Chief Executive Stefan De Loecker has set up an innovation unit to develop new "indie" brands, including a new line of body creams for tattooed skin launched in September.
Beiersdorf is also tapping into demand for products with more "natural" ingredients, launching the Florena line of "fermented" skincare in Italy and France, as well as a new Nivea product range called "Naturally Good" to be launched in France.
"In times of a challenging and very competitive market environment, it is more important than ever to adapt our business model to new economic and technological conditions," Mr De Loecker said. "The needle is moving in the right direction."
Overall, the company reported organic sales growth of 4.3 per cent for the first nine months, compared to 4.8 per cent in the first half, with third-quarter sales at 1.89 billion euros (S$2.84 billion), versus average analyst forecasts for 1.91 billion euros.