The job losses will include around 230 positions in the domestic mainstay market of Germany, which will see the company’s global workforce reduced to around 17,000.
Implementation of the strategy will lead to an estimated €125m in extraordinary one-time expenses, while savings in the first financial year of implementation are expected to amount to around €30m, rising to a full effect of €90m by financial year 2014.
“We will aim to find fair solutions for all involved parties,” said Beiersdorf CEO Thomas Quaas. “We have always been able to achieve this in the past and this is also now our goal.”
China operations restructured
The latest cuts will give a further boost to the company’s aim to also restructure its business in China, of which the initial plan was announced at the beginning of this year.
The company says that further to this plan, it now intends to write-down approximately €140m in assets relating synergies and cost savings from the acquisition of its hair care business there.
“Now, in the final phase, a significant increase in the role played by the regions will give us greater freedom and flexibility in implementing our strategy, allowing us to react quickly to regional consumer and market requirements,” said Quaas.
“To achieve this, we also have to realign our corporate structures and processes. This key decision for Beiersdorf will strengthen our future profitability and our competitiveness.”
The company is aiming to decentralise its operations, giving greater autonomy to its different geographical divisions worldwide. This means that many of the job losses announced in the programme are likely to affect the company’s headquarters in Hamburg.
Bid to win back market share and profitability
The Beiersdorf restructuring was initiated on the back of falling market share and shrinking profits, but after its implementation at the end of last year, the company’s financial results for the first six months of 2011 have already started to show the dividends.
The group recorded organic sales growth of 2.6 per cent during the period. At current exchange rates, group sales were up 1.9 per cent on the previous year, at €2,9bn.
The Consumer business segment increased organic sales by 1.3 per cent in the first six months of 2011 with sales amounting to €2.4bn.
And it was the Nivea brand that saw the biggest transformation, with the streamlining of the product range and the exit from the make-up business, followed in the second quarter by a driven marketing campaign for the brand’s 100th anniversary.