Tuesday, August 20, 2019
Henkel experienced mixed response in the second quarter of 2019. Henkel was affected by the growing competition in the market. Product sales were on priority for past few months, however, failed to meet expectations. The adjusted EBIT margin, adjusted EBIT and adjusted earnings per preferred share (EPS) were below the level of the prior year. In the first half of 2019, Henkel achieved a slightly positive organic sales development, while margin decreased – in line with expectations following the announcement of increased growth investments at the beginning of the year.
“The development in the second quarter was mainly characterised by a significant decline in demand in key industries such as the automotive industry. This particularly affected our industrial business. Nevertheless, our Adhesive Technologies business delivered a robust performance, achieving sales almost on prior-year level and an excellent EBIT-margin,” said Henkel CEO Hans Van Bylen.
“The development of the Beauty Care Retail business was significantly below our expectations. On the one hand, this was due to not satisfying developments in mature markets such as North America and Western Europe. In China, the Retail business was impacted by ongoing stock adjustments. In addition, marketing and sales expenses were higher overall,” commented Hans Van Bylen.
“The Professional business, however, continued its strong performance.” “In the Laundry & Home Care business we achieved good organic sales growth. Despite the announced investments, adjusted EBIT margin remained at a high level. The newly launched innovations also contributed to the overall good development in this business unit.” Investments in growth and digitalisation “Despite the difficult economic outlook, we will continue to implement our strategic priorities and execute our planned growth investments as announced. We focus on strengthening our businesses and will further increase our competitiveness to deliver sustainable profitable growth,” Hans Van Bylen continued.
“At the same time, we considered the changing economic environment in our full year guidance 2019.” Updated outlook for fiscal year 2019 Henkel does not anticipate industrial demand to increase in the second half of the year – in contrast to previous expectations. In addition, it is expected that the Beauty Care business unit will develop below our initial expectations in the course of the year. Against this background, Henkel has updated the guidance for the fiscal year.
Previously, Henkel had expected organic sales growth of between 2 and 4 percent for the Group and all three business units. Now, Henkel anticipates for the Group an organic sales growth of 0 to 2 percent. For Adhesive Technologies, Henkel expects an organic sales growth of -1 to 1 percent. For Beauty Care, Henkel anticipates an organic sales development of -2 to 0 percent. For Laundry & Home Care, Henkel continues to expect organic growth in the range of 2 to 4 percent. Henkel continues to expect adjusted return on sales on Group level in the range of16 to 17 percent. For adjusted earnings per preferred share (EPS), Henkel now anticipates a development in the mid- to high single-digit percentage range below prior year at constant exchange rates (previously: mid-single-digit percentage range below prior year at constant exchange rates).
Sales and earnings performance in the second quarter 2019At 5,121 million euros, sales in the second quarter 2019 were almost on prior-year level. Organic sales, which exclude the impact of currency effects and acquisitions/divestments, showed a slightly negative development of -0.4 percent. The contribution from acquisitions and divestments amounted to 0.5 percent. Currency effects had a negative impact of -0.5 percent on sales. The Adhesive Technologies business unit reported a slightly negative organic development in sales of -1.2 percent. In the Beauty Care business unit, sales were organically -2.4 percent below the level of the prior-year quarter. The Laundry & Home Care business unit achieved a good organic sales growth of 2.0 percent. The emerging markets achieved a strong organic sales growth of 3.9 percent. Africa/Middle East and Latin America achieved double-digit growth. The mature markets showed a negative organic sales development of -3.2 percent.
In a highly competitive market environment, sales in Western Europe showed a negative organic development of -1.8 percent. Eastern Europe achieved organic growth of 8.0 percent. In Africa/Middle East,sales grew organically by 16.5 percent. North America recorded organic sales development of -5.0 percent.
Tags: 2019, beauty care, CEO Hans Van Bylen, fiscal report, Henkel, organic sales
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