Henkel expects stronger organic sales growth

Henkel expects stronger organic sales growth

4:17 PM, 8th June 2011
Henkel expects stronger organic sales growth
Kasper Rorsted, CEO, Henkel.

DUSSELDORF, GERMANY: Henkel’s sales in the first quarter of 2011 came in at € 3,823 million, an increase of 8.9 per cent compared to the figure for the prior-year quarter. At 7.2 per cent, organic sales – that is to say sales adjusted for foreign exchange and acquisitions/divestments – again increased significantly. This positive development was supported by all Henkel business sectors. Adjusted operating profit improved by 12.1 per cent, from € 421 million to € 473 million. Operating profit (EBIT) increased by 1.9 per cent, from € 422 million to € 430 million.


Net income for the quarter rose by 9 per cent, from € 266 million to € 290 million. After deducting non-controlling interests totaling € 7 million, net income for the quarter came in at € 285 million (prior-year quarter: € 259 million). Earnings per preferred share (EPS) rose from € 0.60 to € 0.66. The adjusted figure was € 0.73 compared to € 0.60 in the prior-year quarter.


“Despite the challenging market environment, Henkel reports a solid start to the financial year. We achieved good organic sales growth, outperforming our relevant markets. With continued double-digit growth rates we were able to further expand our position in the emerging markets. We remain confident of being able to achieve our 2012 targets,” said Kasper Rorsted, CEO, Henkel.


For the fiscal year 2011, Rorsted provided the following guidance: “With intense competition and rising raw material costs, the economic environment will remain challenging. We will need to continue reviewing our structures to ensure our long-term international competitiveness.”


Henkel has slightly raised its expectations for organic sales growth: “We are confident that we will again outperform our relevant markets in 2011 and now expect an increase in organic sales at the upper end of the 3 to 5 per cent range. We expect – in line with our previous guidance – increasing our adjusted EBIT margin to around 13 per cent and improving adjusted earnings per preferred share by about 10 per cent,” added Rorsted.


Despite the continuing intensity of the competitive environment, the laundry and home care business sector increased nominal sales by 2.2 per cent to € 1,072 million. Organically, sales rose by 1.6 per cent, supported primarily by strong volume growth of 4.8 per cent against a downturn in pricing levels. Operating profit totalled € 100 million, compared to € 151 million in the prior-year quarter. Due to increased material costs and a decline in selling price levels, adjusted operating profit at € 133 million remained slightly below the levels of the first quarter 2010.


Cosmetics/toiletries started with a very strong quarter to fiscal 2011. Sales exceeded the already strong prior-year period by 7.7 per cent and reached € 821 million. In organic terms, sales increased by 5.7 per cent and was once more well above that of the relevant markets. Operating profit rose by 12.6 per cent to € 112 million. Adjusted operating profit increased by even 15.1 per cent to € 113 million.


The adhesive technologies business sector continued to drive dynamic growth through the first quarter of 2011, posting a substantial increase in sales of 14.1 per cent to a total of € 1,884 million. Organic growth, achieved through appreciable volume increases accompanied by a rise in selling prices, reached 11.5 per cent, significantly exceeding market development.


Although the rising raw material and packaging prices had a significant negative impact, operating profit rose versus the prior-year quarter by 31.6 per cent to € 244 million, with efficiency enhancement measures and selling price rises more than offsetting cost increases. Adjusted operating profit also underwent a disproportionate rise of 22.6 per cent to € 247 million.


Following a solid first quarter, Henkel is confident of again outperforming its relevant markets in terms of organic sales growth. Henkel now expects an increase in organic sales at the upper end of the range of 3 to 5 per cent. Henkel confirms its forecast for an adjusted return on sales (EBIT) of around 13 per cent (2010: 12.3 per cent) and an increase in adjusted earnings per preferred share of around 10 per cent. Henkel bases this guidance on anticipated increases of its selling prices and the ongoing adaptation of its structures to the constantly changing market conditions. Through these activities and the maintenance of its strict cost discipline, Henkel intends to more than offset the effects of further rising raw material costs on its earnings.

(C) WOC News




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