Henkel reports improved personal care results

By Katie Bird

- Last updated on GMT

The beauty division at Henkel remains the most profitable sector,
reporting positive net earnings amongst otherwise
disappointing second quarter results for the Germany-based
company.

Henkel released it second quarter results yesterday, experiencing a relatively stagnant overall sales figures, up just 1.9 per cent, with a decrease in earnings before interest and tax (EBIT) of 5.5 per cent. The company explains the fall in EBIT is due to one off gains counted in previous quarter results; the figure for the previous year quarter included one-time gains of €41 million from the sale of a unit whilst, this years included an €8 million gain from the sale of land in Turkey. Adjusting for these one time gains the company reports an increase in EBIT in 6.4 per cent, from €324m to €345m. The weak quarterly sales results for the group as a whole were affected by a 7.7 per cent decrease in North American sales, an area which accounts for a fifth of the company's revenue. The company suggests that this is due primarily to a slumping dollar, stating that after adjusting for foreign exchange the decline in sales was 1.1 per cent. However, the cosmetics and toiletries sector reported an increase in organic sales of 4.3 per cent on the last quarter, which the company says is due to a number of successful innovations. The division remains the most profitable, reporting an increase in 3 per cent in earnings before interest and tax (EBIT) on the last quarter, to €98m. Furthermore the company reported that the sector performed particularly well in Eastern European and Latin American markets, suggesting it has taken advantage of the emerging markets for personal care products in these areas. Henkel, which is involved in laundry and home care, technologies and the adhesive markets, similarly reported particularly positive results for its cosmetics and toiletries division in previous recent quarters. Furthermore, last year it bought Right Guard, Soft & Dri and Dry Idea brands from Proctor and Gamble, making it the third largest deodorant maker in the US. Looking to the full financial year, the company anticipates an increase in organic sales of 4 - 5 per cent for the full fiscal year of 2007, in addition to an increase in operating profit (after adjustment for foreign exchange).

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