The company reduced its expected adjusted EBIT [Earning Before Interest and Taxes] margin for 2020 to around 15%, versus the 16.2% achieved this year. The company said total earnings would be negatively impacted “in view of an uncertain industrial environment and investments in marketing and advertising as well as digitalisation and IT expected to increase versus 2019”.
Organic sales growth expectations for 2020 now lied between 0-2%, Henkel said. And while organic growth was expected to be positive for Henkel’s beauty, home and laundry care units, its adhesive technologies unit would “presumably be impacted by the uncertainty in industrial demand”, it said.
‘Continue to face a challenging market environment’
“We expect Henkel to continue to face a challenging market environment in fiscal 2020 that is difficult to predict, particularly with regard to industrial demand,” said Hans Van Bylen, CEO of Henkel.
“Nevertheless, we will consistently pursue our growth investments in order to sustainably strengthen the business in the long-term at a higher level than in fiscal 2019.”
Last month, the personal care major reported a “differentiated performance” for fiscal 2019 so far, citing an “increasingly difficult market environment”.
Its beauty care unit reported an organic sales dip of -2.2% for the third-quarter (Q3) of 2019, impacted by a “slower recovery in a highly competitive market environment in Western Europe”. Total sales for the unit were down 2.3% at €970m and adjusted operating profit was down 21.2% on Q3, 2018.
Van Bylen said at the time: “Despite first positive effects from our additional investments in brands and innovations, the development of the beauty care business was below the prior year.”
Beauty investments and sustainable commitments
Last month, the Schwarzkopf and Syoss owner announced plans to acquire US-headquartered premium hair care brand DevaCurl. Henkel said the move would enable it to grow its position in professional hair care but also expand in the curly category – one of the fastest-growing areas in the hair care.
“With DevaCurl’s strong line-up of premium products for all types of curly and wavy hair, it is highly complementary to our existing beauty care portfolio, and offers strong innovation capabilities and growth potential,” said Stefan Mund, North America’s regional head for Henkel beauty care.
In May, this year, the company also launched 100% recycled packaging across two special editions of shampoo and shower gel. Within this initiative, 50% was classified ‘social plastic’ under a programme with Plastic Bank to fight ocean plastic while reducing poverty.