Letter from the Chairman
Dear Shareholders, dear Readers,
The year 2023 was exciting, it was challenging, it was intense – and it was a compelling illustration of Beiersdorf’s successful and progressive course of recent years. It underscored our momentum and showcased our robust and crisis-resistant business model.
The past year was one of geopolitical volatility and macroeconomic uncertainties, which sadly led to horrendous suffering and humanitarian tragedies in several parts of our world. We all hope these conflicts will be brought to a peaceful end as soon as possible. Simultaneously, the pressure concerning societal or sustainable issues remains high, and rightfully so. We can neither foresee nor control the majority of these volatile factors and developments, but we can face up to them, remain confident in our long-term course, keep growing, and take responsibility regarding the most pressing issues of our time. That is what we did in 2023. That is how we succeeded in 2023. And that is how we are setting the course for a promising future.
The adverse market conditions fostered an exceptional sense of unity within the international Beiersdorf team, which is why I am particularly proud that Beiersdorf’s excellent performance of recent years continued with record sales in 2023, fueled by outstanding double-digit organic sales growth. We were the fastest-growing beauty company in the world in the past year. We saw rising demand in all regions. Our trusted iconic brands, our deep understanding of ever-changing consumer needs, and our fantastic people once more collectively proved to be a dependable, strong, and future-ready partner for our shareholders.
Strong increases in terms of sales, profitability, and dividend
A more detailed glance at our financial figures shows our continued stellar performance in 2023: Organically, sales increased by 10.8% year-on-year at Group level, which led to record sales of €9,447 million in nominal terms (previous year: €8,799 million). At the same time and despite significant investments, the operating result (EBIT), excluding special factors, increased from €1,158 million in 2022 to €1,268 million, resulting in an improved EBIT margin of 13.4% (previous year: 13.2%). The main sales driver was our Consumer Business Segment, with the NIVEA and Labello business (16.2% organic sales growth) as well as our Derma brands Eucerin and Aquaphor (24.0% organic sales growth) at the head of the line with outstanding results. Overall, the capital markets recognized the strong performance as well as the upcoming opportunities for Beiersdorf with a very positive share price performance in 2023. We finished the year with a stock price of €135.70, and thereby 26.6% above the year-end price in 2022. The tesa business segment achieved sales of €1,667 million despite a challenging market environment. In organic terms sales grew by 3.2%. Main drivers of this positive development were the automotive business which achieved double-digit growth in 2023 and the Consumer as well as the Industry division which both grew slightly.
Following this exceptional business performance of Beiersdorf in recent years, the Executive and Supervisory Boards plan to increase the dividend for fiscal year 2023. With a significant increase of 43% to the previous year, a dividend of €1.00 per dividend-bearing share will be proposed to the Annual General Meeting on April 18, 2024, and thus enable our shareholders to participate in Beiersdorf’s profitable growth. At the same time, Beiersdorf will also start a share buyback program equivalent to up to €500 million.
Getting future-ready to become the best skin care company
So, we are on the right path and our strategic choices are yielding the intended results. This success instills a strong confidence in our vision to become the best skin care company, a goal that requires continuous effort and an unwillingness to rest on our laurels. Consequently, 2023 was a year marked by substantial investments aimed at ensuring the long-term success of our company.
We invested heavily in our global supply chain as well as in our digital infrastructure in the past year. The investments in our production sites adhered to the highest environmental and technological standards, thus enabling long-term and sustainable growth of our brands. Our new site in Leipzig (Germany), with a capacity of up to 450 million products per year, started producing in September 2023 and is already one of the largest Beiersdorf plants on the globe. Our plants in Poznań (Poland) and Silao (Mexico) will follow this state-of-the-art blueprint in 2024. An important milestone on the digital front was the seamless switch to the newest SAP technology for all our global affiliates. Thereby we enhanced the efficient digital transformation of Beiersdorf as the implementation of the cutting-edge SAP S/4HANA system enables faster, further standardized, and automated global business processes.
Becoming future-ready also means putting a tremendous effort into the realization of our CARE BEYOND SKIN Sustainability Agenda. For the second year in a row, Beiersdorf received the Triple-A rating by the renowned non-profit organization CDP in 2023 and was recognized with this best-in-class score for its efforts in target setting, performance, and transparency on the three dimensions of climate change, forest, and water security. This ranks Beiersdorf as one of only 10 companies worldwide to lead the sustainability transformation – out of over 21,000 companies scored. Our sustainable product transformation is of vital importance here: In 2022 and 2023 we successfully reworked, among other products, the formula of our NIVEA Soft, and in 2024 our iconic NIVEA Creme will follow with a more sustainable packaging. We are proud that our actions are already creating a viable impact, although we are still just at the beginning of this crucial journey. As we further progress as a sustainability leader into the future, Beiersdorf now announces its net zero target, which has been validated by the Science-Based Targets initiative (SBTi) to be in-line with the 1.5-degree pathway: We aim to reach Net Zero and reduce our emissions along the entire value chain by 90% until 2045.
To eventually become the best skin care company, you also need the best people in the industry. In 2023, we made significant progress not only to attract and retain the best talent in the market, but also to shape the ideal environment for them at our company. In our founding city of Hamburg (Germany), we opened our new global headquarters and the expanded research center on an area of 51,000 square meters. Our employees significantly shaped this new global heart of our organization and influenced the creation of a modern and sustainable work environment, which embraces the future of work, the well-being of our employees, and the exchange of ideas. Innovation and further growth can only emerge from exchange and inspiration. This is precisely what has made us and our brands such as NIVEA, Eucerin, and Aquaphor so strong and unique for decades.
Also on a global scale, we are continuously improving our working environment. We committed in 2021 to achieving a 50:50 gender-balanced leadership across all management levels worldwide by 2025. Already by September 2023, the representation of women in management positions had increased to 50.3%. That means we achieved our gender parity ambition 18 months ahead of schedule – a great success and an important step. However, we are not done yet. We must maintain our commitment, continue our efforts, and ensure that achieving a 50:50 gender balance remains not just a milestone but a legacy. Looking ahead, our commitment extends to broader initiatives that go beyond gender, emphasizing diversity, equity, and inclusion as integral components of our culture. We actively embrace the diversity of genders, origins, backgrounds and cultures, sexual orientation and gender identities, as well as generations and include people of all abilities.
Reaching and understanding our consumers
For over 140 years, prioritizing the consumer has been the central guiding principle for our actions. Today, we find ourselves confronted by swiftly shifting consumer needs, driven by societal progress and continuous digitalization. As new consumer behaviors emerge, we are adapting alongside them – sustainably and digitally, never letting go of our consumer focus. Our e-commerce business continues to thrive on a global scale and is a major contributor to the growth of our excellent sales figures. Over the past fiscal year, we have seen significant growth of 19% in e-commerce, once again positioning us among the top performers in our industry.
Embracing such digitally focused developments and pairing them with our innovative pioneering spirit leads to successful digital skin care innovations. In 2023, we increased our utilization of artificial intelligence (AI) to shape the skin care of the future: for example, as an integral part of our unrivaled SKINLY study that is one of the world’s largest consumer skin care studies. AI facilitate a smart data collection and analysis in this context, which not only provides insights about the effectiveness of consumers’ skin care routines but moreover leads subsequently to the product innovations of tomorrow. We are also increasingly utilizing AI in the development and optimization of our product formulas.
Beyond the digital space, our skin care innovations remain a central reason for our current success and optimistic outlook into the future. In 2023, we managed to incorporate our key patented ingredients such as Thiamidol, Q10, or LUMINOUS 630® into a variety of new skin care segments, thereby not only creating new and successful innovations but also strengthening our market leadership positions with our Derma and NIVEA business. Another tremendous innovation lies within the field of skin rejuvenation: We will enter the market for the first time with a product in the dynamic and exciting field of epigenetics in 2024.
Unlocking further growth potential
Fueled by the well-established “fewer, but better and bigger” principle across all business areas – and the successful recalibration of NIVEA’s operating model toward a more globalized approach –, we accelerated our growth in 2023 not only in our established market positions but also in several white spaces around the globe. Overall, NIVEA delivered record growth levels across all regions and categories, while also ensuring the best mix between volume and value. This led to over €5 billion sales in 2023, and we aim to keep this course with NIVEA in 2024 and beyond; the sky is truly the limit for our iconic brand.
Our Sun products within NIVEA and Derma were also a major growth driver in 2023 as well as the impressive acceleration of our sales in the Latin America region. The potential of this region remains huge and we are confident that this success story can be continued in 2024.
With our luxury and selective brands La Prairie and Chantecaille, we faced difficult external market circumstances in the travel retail business and in mainland China, which caused a decline in sales for both brands in the past fiscal year. This led to the decision to utilize 2023 as a transition year to clean up stocks and normalize inventory levels. Hence, we are now expecting a bounce-back effect in 2024 and a return to growth.
Together toward a successful future
The exceptional financial performance in 2023 reflects our resilience, our flexibility, and the value of our iconic brand portfolio in the eyes of our consumers. However, these achievements would not have been possible without the key ingredient: our amazing team! On behalf of my colleagues from the Executive Committee, I sincerely want to thank all employees around the world for their passionate and remarkable commitment to Beiersdorf. The displayed level of adaptability, creativity, and dedication was truly outstanding in the past year and instills great confidence in me regarding the future of this company. At the same time, I would like to thank you, our shareholders, for your trust in Beiersdorf and the critical and crucial support you provide.
In the past year, we not only delivered on our promises but also made great progress toward our readiness for the future through significant investments, the right strategic adjustments, unwavering consumer focus, and smart innovations. All of this, paired with an overall sustainable mindset while delivering an exceptional financial performance, has proved, once more, that we are not only crisis-resistant but also equipped with the right foundation for sustainable and profitable growth in the coming years. The year 2024 will also see a sharpened and focused corporate strategy to further accelerate our current positive development. I am convinced that we have everything in place for continued success in the next year, and I am personally very excited about the journey ahead of us!
We are indeed ready for the future.
Sincerely,
Vincent Warnery
Chairman of the Executive Board