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Henkel Expects Recovery In 2021, Sees Sales Down 4.3%

German consumer goods company Henkel said that it expects sales to rebound this year, although demand for detergent and home care products, boosted by the pandemic, is likely to return to normal.

The group, best known for its Schwarzkopf hair care products and Persil detergents, forecast organic sales growth of 2% to 5% for 2021 and a rise in adjusted earnings per preferred share of 5% to 15%, at constant exchange rates.

Henkel shares were up 0.5% in pre-market trade, making them the only riser on the German blue-chip index.

Henkel said it assumes that coronavirus restrictions in many key markets will be lifted in the first quarter and there will be no widespread shutdowns for rest of year.

Sales Performance

In 2020, sales fell 4.3% to €19.25 billion, while adjusted operating profit dropped 20% to €2.579 billion, both slightly ahead of average analyst consensus.

Before the coronavirus outbreak in Europe, Henkel had forecast organic sales to increase up to 2% in 2020.

Sales at its adhesives business, which accounts for around half of group sales and largely relies on demand from industrial customers like the auto makers, fell 4.2% in 2020, while the beauty care division reported a decline of 2.8%.

As the pandemic increased demand for hygiene products, sales at Henkel's laundry and home care business jumped 5.6%.

Demand Levels

Chief executive Carsten Knobel said he expects demand to return to normal levels, while he predicted a recovery in industrial demand and in the hair salon business.

Rival Procter & Gamble Co raised its fiscal 2021 sales growth forecast to a range of 5% to 6% in January as it benefits from pandemic demand for cleaning products, while also warning that the pace of sales might slow as vaccines roll out.

Henkel's sales in the fourth-quarter rose by 3.7% on an organic basis to €4.765 billion, with laundry and home care growing 4.9%, adhesives 3.7% and beauty care 1.4%.

News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.

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