National Starch acquisition boosts Henkel's results
Sales for the quarter rose 11.1 per cent to €3.54bn, although once the acquisition of National Starch was taken out of the equation, the top line looked less attractive - organic sales actually fell 1.2 per cent.
Substantial price increases of 4.8 per cent didn’t manage to offset the 6 per cent decline in sales volumes.
Cosmetics and Toiletries (C&T), and Laundry and Homecare (L&H), experienced sales growth of 3.3 and 5.4 per cent respectively but the company’s adhesives business struggled reporting a 9.2 per cent drop in organic sales.
Operating profit fell significantly, due to restructuring costs and the integration of National Starch but adjusting for these factors gives an operating profit of €379m, up 16.6 per cent on last year.
The adjusted margin rose from 10.2 per cent in the fourth quarter of 2007 to 10.7 per cent in 2008 which was well received by analysts.
“But the real surprise for many should be margin growth, which was strong (+51bps), fully in line with our expectations, and significantly ahead of consensus,” said analyst Andrew Wood from Sandford C. Bernstein.
Annual results improved by acquisitions
Performance for the full year was again boosted by National Starch. Organic sales growth (attributable to price increases rather than volume gains) came in at 3 per cent for the year.
Again, the company highlighted C&T and L&H as the strongest sectors.
C&T organic sales growth was 4.7 percent and operating profit increased to €367m. After adjusting for foreign exchange, operating profit was 4.1 percent above the previous year.
Despite reporting a respectable fourth quarter, Henkel refused to give any guidance for the coming year.
Commenting on the year ahead CEO Kaspar Rorsted said: “We know that 2009 is not going to be an easy year. At the moment it is difficult to predict how the economy as a whole is going to develop.”
“However, we are well equipped and confident we will emerge from this difficult economic environment with our position strengthened,” he continued.
Henkel is not alone in its cautious position; L’Oreal and Unilever have also refused to publish guidance figures for 2009.
