Henkel sales dip on continued weakness in consumer environment

By Simon Pitman

- Last updated on GMT

Related tags: Organic growth, Marketing

Preliminary results from Germany-based home and personal care provider Henkel show that sales have continued to decline in the latest quarter, but the results beat market expectations.

The company said early figures show sales for the third quarter ending in September should be around €3.49bn, compared to a figure of €3.77bn for the corresponding period last year, representing a fall of 7.2 percent.

However adjusting for negative currency translations, the company said that the fall in its organic sales was a lot less severe, declining by just 2.5 per cent compared to the same period last year.

The company also announced that, despite the fall in sales, its adjusted EBIT operating profit fell slightly, €385m to €391m, representing a decline of 1.5 per cent.

Personal care comes out on top

However, breaking the figures down, the results showed that the company’s cosmetics and personal care business had faired considerably better than both its laundry & home care and adhesives businesses.

During the quarter the cosmetics division registered sales of €760m, a figure that was slightly down on the corresponding quarter last year, but one that equally registered an increase in organic sales of 8.7 per cent.

Likewise, the division was also the only one in the group to register an improvement in its EBITA operating profit, which jumped from €96m in the corresponding quarter last year, to €100m for the current quarter.

Adhesives let the side down

Laundry & home care sales for the quarter were €1.04bn, just below the comparable figure for last year, but organic sales were up 2.4 per cent.

Again the company’s adhesive’s business was hard hit by the continued downturn in the manufacturing sector, with sales down to €1.63bn, representing a fall in organic sales of 7.6 per cent.

“We outperformed market expectations for our earnings development in the third quarter,”​ said Kasper Rorsted, chairman of the Henkel management board.

“This reflects both the stabilization in our markets and our programs on structural and cost alignment. However, it can not be expected to again achieve the strong past quarter results in the fourth quarter.”

Results beat market expectations

Despite the poor performance of its adhesives business, the overall figures were above expectations, helped by the organic sales growth in both its laundry & home care, together with its personal care business.

Indeed, after the results were revealed, investors helped push the company’s share price up by 4.7 percent to €27.51 on the first day of trading on the Frankfurt stock exchange.

Henkel says it will publish its full results, including net profit figures, in its quarterly report out on November 11.

Related topics: Business & Financial

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