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Henkel Chasing U.S. Laundry Leader Procter After Sun Deal

Published on Nov 9 2016 7:30 AM in A-Brands tagged: Brands / FMCG / Henkel / Procter & Gamble

Henkel Chasing U.S. Laundry Leader Procter After Sun Deal

Henkel AG said it’s focusing on catching up to competitors like Procter & Gamble Co. in the U.S laundry-products market after the $3.6 billion acquisition of Sun Products Corp. helped boost third-quarter sales.

“We’re still very far behind the big market leader, but it’s also the case that there are not many more small competitors,” Chief Executive Officer Hans Van Bylen said on an earnings call on Tuesday. Henkel now has about a 20 percent share of the U.S laundry market and can “do a lot with our current position” to grow internally, he said.

Earnings before interest and taxes increased 7.6 percent to 837 million euros ($924 million), the Dusseldorf-based company said in a statement. Analyst estimates compiled by Bloomberg had predicted on average 829 million euros. Sales increased 3.4 percent to 4.7 billion euros.

Henkel, which also makes Schwarzkopf-brand shampoo and industrial adhesives, is pushing into the highly-competitive U.S detergent market, bolstered by the Sun Products purchase in May. Completed in the latest quarter, the acquisition was made shortly after Van Bylen took over and puts Henkel into more intense competition with U.S. market leader P&G.

The shares were little changed at 113.80 euros as of 3:03 p.m. in Frankfurt. They’ve risen about 10 percent so far this year, valuing the company at 46 billion euros.

Uncertain Market

Henkel reiterated full-year targets for organic sales to grow by 2 percent to 4 percent and the adjusted Ebit margin to rise to more than 16.5 percent.

“We expect the overall challenging and uncertain market environment to persist in 2016,” the CEO said in the statement. “We will continue to focus on leveraging our successful brands.”

Sales at the laundry and home care division rose 4 percent in the quarter while its beauty care business posted revenue growth of 2.6 percent and adhesives grew 2.5 percent.

Henkel earnings were “strong” in laundry and positive in home care, Exane BNP Paribas analyst Jeff Stent wrote in a note, adding that there was also very strong growth in the transport and metals operations of its adhesives business.

News by Bloomberg, edited by ESM. To subscribe to ESM: The European Supermarket Magazine, click here.

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