Persil Helps Laundry Business Shine Despite Henkel Sales Fall
New Persil detergent lines helped a pick up in growth at Henkel's laundry and home care business, although the German consumer goods company's beauty and adhesives division struggled as overall third quarter sales fell.
Henkel said on Thursday its laundry and home care unit, which has relaunched Persil detergent and is trying to sell more online-friendly products, reported a rise in organic sales of 4%, up from 2% in the second quarter.
Persil, which competes with Procter & Gamble brands like Tide and Ariel, had double-digit sales growth, helped by a strong launch for its new four-chamber discs in Europe and North America, Henkel's chief executive Hans Van Bylen told analysts.
Henkel's overall sales fell by a like-for-like 0.3% to €5.07 billion ($5.6 billion) versus average analyst forecasts of €5.1 billion. Adjusted earnings per preferred share dropped 9.5% to €1.43, versus a €1.45 consensus.
New Chief Executive
Last month, Henkel announced that chief financial officer Carsten Knobel would take over as CEO from Van Bylen in January after a string of poor results.
While Henkel's laundry and home care business was also supported by double-digit growth in eastern Europe and from its heavily-marketed Pril 5 washing up liquid, its adhesives unit, which accounts for half its sales, saw sales fall 2.4%.
It was hit by a slowdown in automotives, despite strong demand from the semiconductor and paper sectors.
German rival Beiersdorf also reported a fall in sales of adhesives to the auto industry in the third quarter but new products boosted its skin care business.
Henkel's struggling beauty business, which makes Schwarzkopf shampoo and Dial soap, reported another fall in organic sales of 2.2%, which the company blamed on fierce competition in western Europe and destocking in China.
Analysts have suggested Henkel should consider selling or spinning off beauty products. But the founding family, which owns around 60% of the company's voting shares, is seen as unlikely to take such a radical step.
Instead, Henkel has been buying up new brands, including earlier this month adding DevaCurl, a premium professional brand for curly hair.
Van Bylen declined to comment on speculation Henkel might be interested in Coty Inc's Wella brand, but added that acquisitions remained part of the company's strategy in general.
Henkel reiterated its 2019 forecast for group organic sales growth of between zero and 2% and for adjusted earnings per preferred share (EPS) to fall by a mid- to high single-digit percentage at constant exchange rates.