German company applies Nivea cream as profits dry up | Business| Economy and finance news from a German perspective | DW | 22.04.2011
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German company applies Nivea cream as profits dry up

Beiersdorf, the maker of Nivea skin cream, is grappling with a restructuring program. It wants to market a no-frills lineup of core products using social media, but a key investor may be losing patience.

Nivea tins

Nivea skin creme got its start 100 years ago

Hamburg-based Beiersdorf, the company behind the now 100-year-old Nivea skin cream, has fallen on hard times, and has been struggling to keep its investors happy. This year the company expects to pay a dividend similar to the 70 euro cents ($1.02) it paid per share in 2010, it announced at its annual shareholders meeting Thursday.

That may not be enough to appease majority shareholder Maxinginvest, the parent company of coffee giant Tchibo. Beiersdorf insiders fear Maxinginvest could bail out unless its investment returns increase by 2012, the news agency Reuters recently reported.

The company saw turnover increase in 2010 to 6.2 billion euros but after-tax profits fell by more than 10 percent to 326 million euros. To reinvigorate its fortunes, Beiersdorf is planning to sharpen its focus on skin-care products with a comprehensive restructuring.

The company plans to cut back on its cosmetics line and market its core skincare products aggressively using social media. It sold off its regionally marketed Juvena and Marlies Möller brands in December of 2010.

Factory closing

The restructuring will likely include shuttering a factory with 390 employees in Baden-Württemberg. Some 100 workers protested the closing or selling the factory at Thursday's shareholder meeting in Hamburg.

Tins of Nivea

Beiersdorf aims to increase profits by focusing on skincare products

Beiersdorf hopes to see first results of the restructuring in 2012, according to Executive Board Chairman Thomas-Bernd Quaas. He has been quoted in German media as targeting an operating margin of 15 percent; Beiersdorf's 2010 operating margin was 9.4 percent.

"We are absolutely convinced that we are decisively strengthening Beiersdorf's growth and profitability by focusing on our core business and increasing our closeness to our markets," Quaas said in a press release. "We want to be the best skin care company in the world."

Nivea skin cream - an oil and water emulsion - was invented in 1911 in Hamburg. The resulting brand is sold in more than 200 countries and net Beiersdorf nearly 4 billion euros in sales last year.

With some 19,000 employees worldwide, Beiersdorf is one of the largest publically traded consumer goods companies in Germany but remains smaller than many of its international competitors, including Procter & Gamble, L'Oreal and Unilever.

Author: Gerhard Schneibel (dpa, Reuters, AP)

Editor: Sean Sinico

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