Bloomberg News

Beiersdorf CEO Appointment May Help Rebuild Investor Confidence

October 06, 2011

Oct. 6 (Bloomberg) -- Beiersdorf AG’s appointment of Stefan Heidenreich as chief executive officer may help rebuild confidence among investors after the Nivea skin-cream maker cut profit forecasts twice at the end of last year, analysts said.

Heidenreich, the 48-year-old head of Swiss food company Hero AG, will join Beiersdorf’s board in January and succeed Thomas Quaas as CEO after the April annual general meeting, the Hamburg, Germany-based company said yesterday. Quaas, 59, who’s been CEO since 2005, will join Beiersdorf’s supervisory board.

“Heidenreich’s appointment gives a fresh leader to a fresh strategy and he will start from a position of hope and credibility with investors,” Andrew Wood, an analyst at Sanford C. Bernstein in London, said in a note.

The new CEO, who worked at Procter & Gamble Co. and Reckitt Benckiser Group Plc before joining Hero in 1996, will need to address shrinking margins and stagnant sales at Beiersdorf’s consumer unit. At Hero, he led acquisitions such as the purchase of Schwartauer Werke GmbH’s retail unit and he may bring new ideas on how to use the company’s 2 billion-euro ($2.67 billion) cash pile.

“An injection of the entrepreneurial culture prevalent at Hero could also be a welcome addition at Beiersdorf,” Celine Pannuti, an analyst at JPMorgan Cazenove, wrote in a note, adding that he’ll face the challenge of growing the company’s business outside western Europe.

Share Reaction

Beiersdorf fell 15 cents, or 0.4 percent, to 40.97 euros at 10:29 a.m. in Frankfurt trading, boosting the company’s market value to 10.3 billion euros. The stock gained 4.5 percent yesterday on the news of Heidenreich’s appointment.

“We can understand the positive stock reaction,” said Bernstein’s Wood. “The new appointment does increase the chances that Beiersdorf can outperform our expectations.”

Hiring Heidenreich will add credibility to Beiersdorf’s focus on reinvigorating the Nivea brand, Guillaume Delmas, an analyst at Nomura in London, wrote in a note.

The company can “rapidly return to above-industry growth” by exiting its makeup and haircare businesses in some markets and strengthening its skin-care franchise, Delmas said.

Beiersdorf is reducing its beauty-products lineup to focus on skin care, including sun-protection creams.

--Editors: Jerrold Colten, Thomas Mulier

To contact the reporter on this story: Paul Jarvis in London at pjarvis@bloomberg.net

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net.


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