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A-Brands

Henkel Sees Sales Up In Q2, But Remains Cautious About Rising Costs

Home and personal care firm Henkel has raised its full-year sales outlook after its business rebounded above pre-crisis levels in the first half.

However, the business has also voiced concern about rising prices and over-stretched supply chains.

"The exceptionally sharp rise in raw material prices and strained supply chains will weigh heavily on the economy in the further course of the year," chief executive Carsten Knobel said of the group's outlook.

Slowing Growth Rates

Henkel also said growth rates would probably slow in the second half of 2021 compared to the first half, as the rebound in industrial demand began in the second half of 2020.

Henkel said it expected 2021 sales to rise by an organic 6% to 8%, up from a previous 4% to 6% forecast, and confirmed it expected earnings per preferred share to rise in the high single-digit to mid-teens percentage range.

It slightly lowered its forecast for its operating earnings margin to 13.5% to 14.5% of sales, from a previous 14% to 15%.

Rival group Procter & Gamble said earlier this year that it expects higher core earnings this year, while warning of a nearly $2 billion hit from rising commodity and transportation expenses. It is relying on price increases and cost cuts to cushion the impact.

Second-Quarter Performance

Henkel's second-quarter sales rose an organic 15% to €4.96 billion, just shy of an average analyst consensus for €4.98 billion.

The adhesives unit, which supplies the automotive and electronics industries and accounts for almost half of sales, recorded organic growth of 28.5%, helped by the global economic recovery.

The maker of Schwarzkopf hair care products said its beauty care business saw sales jump 8.2% in the second quarter as hair salons reopened after lockdowns.

Henkel, which aims to divest or discontinue brands and categories worth around €500 million by the end of 2021, said it had already reached around €350 million of the target, mainly in the consumer business. It recently announced the acquisition of Swania SAS, a French home care business.

German rival Beiersdorf last week also reported strong demand for adhesives and its dermatological brands, pushing its shares up.

News by Reuters, edited by ESM. For more A-Brands stories, click here. Click subscribe to sign up to ESM: European Supermarket Magazine.

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