UPDATE 2-Beiersdorf cuts 2010 margin goal on product revamp

* Package of measures will cost 270 million eur by 2012

* Now sees 2010 EBIT margin of 9 percent

* CFO to stand down at start of 2011

* Appoints new board member for emerging markets

* Shares reverse earlier gains, down 3.2 pct

(Adds more on products, analyst comment)

By Victoria Bryan

FRANKFURT, Dec 10 (BestGrowthStock) – Nivea maker Beiersdorf
(BEIG.DE: ) said profit will be hit by restructuring as the
Hamburg-based company cuts the number of products to focus on
skin care to counter a decline in market share.

Beiersdorf, which also makes hair products and make-up and
the La Prairie luxury skincare brand, has been losing ground in
the consumer and personal goods market to rivals such as Henkel
(HNKG_p.DE: ) and L’Oreal (OREP.PA: ) and has disappointed investors
with its results so far this year. [ID:nLDE6A30CN]

The package of measures, which will include investment in
new skin and body care products, will cost the company 270
million euros ($357.6 million) by 2012, 120 million of which
will be taken as charges in the current year, it said on Friday.

Some of the total charges also stem from write-downs on the
goodwill of brands it acquired when it moved into China three
years ago.

This means that the 2010 target for earnings before interest
and taxes (EBIT) as a percentage of sales will now be 9 percent,
down from a previous EBIT margin outlook of about 11 percent.

Shares in the company, which have far underperformed rivals
this year, reversed earlier gains after the statement on Friday
and were down 3.2 percent at 44.91 euros at 1504 GMT.

Analyst Robert Greil at Merck Finck said the relatively high
amount of additional costs for 2010 was especially surprising,
almost half of which he said was likely for the writedowns in

The departure of the Finance Director, Bernhard Duettmann
who has been with the group for 21 years, also prompted concern.

“You have to remember that two board members have already
left this year,” said another analyst who declined to be named.

“Duettmann was one of the strong bases of the company so the
fact that he’s leaving will make people question what’s going
wrong in the company.”

Merck Finck’s Greil suggested the size of the investment
programme had dampened takeover speculation and could also be
weighing on the shares.

“It’s a fairly large investment programme, which in my
opinion shows that they want to remain independent for the next
few years,” he said.

U.S. consumer goods giant Procter & Gamble (PG.N: ) has often
been cited as a potential suitor for Beiersdorf and admiring
comments from its chief executive caused a spike in the German
group’s shares earlier this year. [ID:nLDE68S1G9]

The timing of the statement was also earlier than expected.
Most analysts had been expecting the group to provide details of
its mid-term strategy at an investor day next Wednesday.


Beiersdorf also signalled its intent to focus on emerging
markets with the appointment of Turkey-born Umit Subasi to the
last place on its management board.

Sumbasi joins from SC Johnson, whose brands include Pledge
furniture polish and Mr Muscle cleaners. The board position had
originally been expected to focus on American operations but
Beiersdorf decided to shift the role to emerging markets, which
offer faster growth.

Among the products to disappear from shelves as part of the
revamp will be Nivea make-up in Germany, the company said in a

It will invest in its brand marketing and new skin care
products, however, to make up for the loss of revenue from
discontinued products in the medium-term.

The Nivea brand, known for its blue packaging, will
celebrate its 100th anniversary in 2011.

“In the coming years we will launch a large number of new
products for our skin and body care brands that represent
innovations for the consumer,” said Chief Executive Thomas
(Additional reporting by Michelle Martin; Editing by Jon
($1=.7551 Euro)

UPDATE 2-Beiersdorf cuts 2010 margin goal on product revamp