Wednesday, December 15, 2010

   By Natascha Divac and Kirsten Bienk
  Of DOW JONES NEWSWIRES
 
FRANKFURT (Dow Jones)--Personal care products maker Beiersdorf AG (BEI.XE) said Wednesday it expects a weaker earnings margin in 2011, as costs for streamlining its troubled consumer business will weigh on results.

The company already disappointed investors Friday when it lowered its earnings outlook for 2010 for the second time this year, citing additional costs from investments in the skin and body care brands.

Beiersdorf, which competes with the likes of Henkel AG (HEN.XE), L'Oreal SA (OR.FR) and cosmetic group Clarins SA, said it expects its 2011 earnings before interest and taxes margin from operations to be lower than the expected 2010 level of around 11%. While sales in 2011 are seen at roughly the same level as in 2010, the after-tax margin will be lower than in 2010. Beiersdorf last saw its after-tax margin at around 7%.

Beiersdorf Friday announced a package of measures to implement a consumer business strategy that will entail additional costs of approximately EUR270 million until 2012.

Roughly EUR120 million of that amount will likely be incurred in 2010, the company said. The EUR270 million additional costs include write-downs of intangible assets relating to the Chinese business.

Beiersdorf was hit hard by the credit crisis and resulting economic downturn as its industrial clients and consumers reined in spending. It has seen a recovery for its industrial glues unit, as demand from auto and electronics manufacturers boosted profits, but its larger consumer products division, maker of skin care products like Nivea and La Prairie, reported disappointing growth all through 2010.

The company sees sales in 2010 rising 2% to 3% from EUR5.75 billion in 2009.



-By Natascha Divac and Kirsten Bienk, Dow Jones Newswires; +49 69 29725 500; djnews.frankfurt@dowjones.com

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