Henkel posts positive results due to emerging markets, but challenges still remain


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Henkel posts positive results due to emerging markets, but challenges still remain

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Sales in Eastern Europe, Latin America and China helped to boost Henkel’s beauty care business which dipped slightly in Western Europe in Q2 2015, and this positive development helped boost the Group’s overall figures.

The German manufacturer reported its net profit for the three months ended June 30 was €521 million, up 18% compared with last year, with organic sales rising 2.4% to €4.7 billion.

The Beauty Care business saw a double digit sales rise in nominal terms, or 1.9% growth in organic terms, as both the retail and hair salon businesses were positive.

The firm’s laundry and adhesives units performed particularly well in the period, with organic sales rising 4.3% and 1.7%, respectively, whilst there was a slowdown in its adhesives business.

“In a persistently challenging market environment, Henkel delivered overall a solid performance in the second quarter. We again achieved double-digit growth for both sales and earnings,”​ comments Henkel CEO Kasper Rorsted.

“The main drivers were solid organic sales growth, last year’s acquisitions and, above all, the strong US dollar. Organic sales in emerging markets were strong, once again making an above-average contribution to growth.”

Beauty boost

In Beauty, Rorsted says that the company has seen a strong performance in the emerging markets, with double-digit contributions from Latin America and Asia Pacific, predominantly driven by a very strong China business too.

Double-digit contributions from Russia and from Turkey have helped to boost the Eastern Europe business, but this has been offset slightly by a stutter in the mature markets, where results have been ‘mixed’, as Western Europe is down while North America is up.

“We have a negative organic net sales growth in Western Europe, especially by the price and the competitive and promotional situation,”​ he said in a conference call.

“Our North American business recorded a solid organic net sales growth, here supported by the the launch of Essence Ultime. Bottom line you also see in the beauty care business a continuous profitable growth development.”

Conditions still challenging

Commenting on the fiscal year 2015 for the Group as a whole, Rorsted adds: “We expect the current difficult global economic environment to persist.”

“Market volatility will remain high. In this context, agility and flexibility are key success factors. We will therefore continue to adapt, further simplify and accelerate our structures and processes in line with the changing market conditions.”

Despite the challenging environment, Rorsted confirmed the outlook for the full year adding that Henkel expects to achieve organic sales growth of 3-5% in 2015.

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