Henkel Profit Beats Estimates on Acquisitions and Dollar Boost
Henkel, the maker of Loctite glue and Schwarzkopf shampoo, reported first-quarter profit which beat analyst estimates as the strong dollar and a string of acquisitions boosted earnings.
Adjusted earnings before interest and taxes jumped 12 per cent to €707 million ($802 million), the Düsseldorf-based company said in a statement. The average estimate of six analysts in a Bloomberg survey was €686 million.
“We achieved our highest quarterly sales to date, thanks to good organic sales growth, the impact of last year’s acquisitions and the strong US dollar,” chief executive officer Kasper Rorsted said in the statement. “We expect the economic environment to remain difficult.”
Rorsted has been trying to curb discounting in the US, where competitor Procter & Gamble dominates the laundry markets. Growth in North America, Henkel’s second-biggest market, is key as Rorsted seeks to boost group revenue to €20 billion by 2016, and the company sealed a deal for Wal- Mart to be the sole US vendor of its Persil detergent in March.
Henkel reiterated its forecast for sales to grow 3 per cent to 5 per cent on an organic basis in 2015, with adjusted Ebit representing 16 per cent of sales and an increase in adjusted earnings per preferred share of about 10 per cent. The margin was 15.8 per cent last year.
Danish-born Rorsted spent more on deals last year than he did cumulatively in his previous five years as CEO to offset slowing sales growth. He spent about €1.8 billion on French detergent-maker Spotless Group SAS, three US-based hair companies and adhesives specialist The Bergquist Company.
Bloomberg News, edited by ESM