Beiersdorf Earnings: Profit Miss and the First Change to Shareholder Distributions in Decades

Narrow-moat Beiersdorf delivered 2023 full-year net income of EUR 749 million, below the FactSet consensus of EUR 896 million and our forecast of EUR 876 million. The growth momentum was maintained, as the company delivered 10.8% organic sales growth, with a balanced contribution from price and volume for the consumer brands. The gap to the market’s profit expectation was driven by a lower-than-expected EBIT margin and a higher-than-expected effective tax rate. The 13.4% EBIT margin represents a 20-basis-point year-over-year improvement, which is modest in the context of a 100-basis-point improvement in gross margin to 57.3%. The investments in advertising and promotions and research and development were increased ahead of sales driven by higher investment in digital media and the skincare category. For 2024, management expects mid-single-digit growth and an EBIT margin “slightly” ahead of last year. The share price was down around 4% in early trading, likely due to the profit miss. We don’t expect to materially change our EUR 100 fair value estimate after incorporating these results and the 2024 guidance, and we continue to view shares as expensive.