Beiersdorf misses profit forecast, says slow China hit luxury brand sales

Nivea maker Beiersdorf missed expectations for half-year operating profit on Wednesday, and said the luxury market slowdown in China had hit the sales of its La Prairie brand.

Beiersdorf’s shares fell 4.7% and were at the bottom Germany’s blue-chip index in early trading.

Sales of high-end beauty products have slowed down in China as economic uncertainty weighs on middle-class shoppers and makes those who can still afford luxury cautious about ostentation.

The world’s No. 2 economy grew less than expected in the second quarter, prompting consumers to shop less, both online and in stores.

Half-year sales at Beiersdorf’s key businesses Nivea and Derma grew by 11.1% and 8.3% respectively, but luxury brand La Prairie saw its sales drop 7% mainly due to the tough market environment in China.

Group sales rose 7.1% organically to 5.2 billion euros ($5.7 billion) in the first six months of 2024, just below the 7.2% growth expected by analysts polled by Vara Research.

“Weakness at La Prairie was the main explaining factor for the Q2 sales miss at Consumer, overshadowing another strong quarter for Nivea,” analysts at Stifel said in a note.

French peer L’Oreal also flagged a hit from the lack of a rebound in China and said it expected the market to stay slightly negative in the second half of the year.
The German group’s operating profit, excluding special factors, fell to 838 million euros in the first half, below the year-ago number of 852 million and analysts’ average forecast of 890 million.

That decline was mainly due to higher spending on marketing, research and development, and digitalisation, Beiersdorf said.

The group reiterated its 2024 forecast for 6-8% growth in group sales and an operating margin slightly above last year’s level.