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A-Brands

Henkel Trims Earnings Outlook As Raw Material Prices Rise

German consumer goods group Henkel trimmed its full-year earnings outlook, saying it could not fully compensate for a spike in raw material prices and it also expects an impact from changes in foreign exchange rates.

"Tight supply chains and rising raw material and transport costs are proving to be particularly challenging," chief executive Carsten Knobel said in a statement.

Outlook

The maker of Persil detergent and Schwarzkopf hair care products said it still expects 2021 organic sales growth of 6-8% after third-quarter organic sales rose 3.5% to €5.1 billion, in line with average analyst forecasts.

But it trimmed its forecast for 2021 adjusted earnings per preferred share at constant exchange rates to a percentage rise in the high single digits, from a previous range of high single-digits to mid-teens.

Henkel said it now expects an adjusted operating earnings margin of around 13.5% of sales compared to a previous 13.5-14.5%.

In addition to the impact of higher raw material prices, it said it also expected changes in exchange rates to adversely affect earnings.

Divisional Performance

Henkel's adhesives unit, which supplies the automotive and electronics industries and accounts for almost half of sales, reported organic sales growth of 7%, even though it said the automotive and metals business saw a slight contraction.

The laundry and home care unit saw sales rise 2%, but the beauty care business reported a 3% fall, mainly due to a drop in the body care category, even as sales were strong for professional hair care products.

Knobel stated, "Successful innovations, particularly in the area of sustainability, and the further expansion of our digital business activities were important growth drivers. The strong organic sales increase in the third quarter is also a testament to our robust and balanced portfolio of successful brands and innovative technologies.

"It is, above all, the result of the strong performance by our global team, which is contributing with great commitment to Henkel's long-term success in these challenging times."

The company recently defined a framework within which sustainable bonds can be placed in the future to create a direct link between its sustainability strategy and funding strategy.

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

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