* What’s it all about?
We upgrade Beiersdorf from Hold to Buy and raise our TP from EUR75 to EUR85, implying 18% upside. We see stronger organic growth for the consumer division from Q3 and a faster improvement in profitability, which is now one of management’s priorities. We expect Nivea to post organic sales growth of c. 5% a year from 2016 and the other consumer brands to be back in positive territory. We expect operating leverage, due to the organic growth recovery, to be enhanced by procurement, A&P and fixed cost optimisation. Forex should also help in 2015 and 2016. We see Consumer’s EBIT margin reaching 16% in 2018, in line with current industry standards. This implies an average 80bps EBIT margin improvement a year, above the 50bps average seen in recent years.