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Henkel achieves strong organic sales growth in 2023

 Thursday, April 4, 2024

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Henkel has recently declared the they have delivered very strong organic sales growth and significant earnings improvement last year.

“Despite a persistently challenging market environment, we consistently drove our growth strategy forward in 2023 and even accelerated its implementation. We delivered very strong organic sales growth and significantly improved profitability. By that, we exceeded the outlook made at the beginning of the year. This successful development was driven by both Adhesive Technologies and Consumer Brands,” said Henkel CEO Carsten Knobel.

What are the positive results?

“We have also made faster progress than initially planned with the merger of the two former consumer businesses, Laundry & Home Care and Beauty Care, to form the new Consumer Brands business unit. The savings from the integration and the continued portfolio measures also contributed to the strong business performance of the business unit. In the Adhesive Technologies business, we have aligned our organization even more closely to our customers under a new management. We have increased sales organically and significantly improved earnings in a generally volatile industrial environment. In addition, we have further strengthened both business units through targeted acquisitions. Based on this performance and in line with our dividend policy, we will propose a stable dividend to our shareholders at the Annual General Meeting.”

“I would like to sincerely thank all Henkel employees for their teamwork and dedication which enabled us to navigate our company through these challenging times. Together as a strong global team we managed to successfully drive our Purposeful Growth Agenda forward, delivered tangible progress across all our strategic priorities, and developed our businesses. This makes me proud and very confident for our future.”

Group sales and earnings performance in fiscal 2023

Henkel Group sales reached 21,514 million euros in fiscal 2023, a nominal decrease of -3.9 percent compared to the prior year. Foreign exchange effects negatively impacted the sales development by -4.3 percent. At -3.9 percent, acquisitions/divestments had a negative impact on sales, which was mainly due to the divestment of the business activities in Russia. Organic sales growth was very strong at 4.2 percent. This development was driven by a price increase in the high single-digit percentage range, while volumes declined. In the second half of the year, however, there was a clear sequential improvement in the volume development.

The Adhesive Technologies business unit generated strong organic sales growth of 3.2 percent, which was driven by the business areas Mobility & Electronics, as well as Craftsmen, Construction & Professional. The Consumer Brands business unit achieved very strong organic sales growth of 6.1 percent, driven particularly by the Laundry & Home Care and Hair business areas.

Adjusted operating profit (adjusted EBIT) significantly increased by 10.2 percent to 2,556 million euros (previous year: 2,319 million euros). Positive selling price developments, ongoing measures to reduce costs and enhance production and supply chain efficiency, and portfolio optimisation measures more than offset negative impacts on Group profitability from continued high prices for direct materials and logistics.

Outlook 2024
Moderate growth in global economic output is expected for 2024. This assumes a moderate increase in both industrial demand and consumer demand in key areas of the consumer goods business for Henkel. According to current estimates, global inflation is forecasted to be lower in fiscal 2024 than in the previous year, although it will remain at a high level overall. In addition, interest rates are expected to remain higher than in previous years.

Henkel expects the translation of sales in foreign currencies to have a negative impact in the mid-single-digit percentage range. Prices for direct materials are expected to remain flat versus the annual average for 2023.

Considering these assumptions, Henkel expects to generate organic sales growth of between 2.0 and 4.0 percent in fiscal 2024, with both business units anticipated within this range. Adjusted return on sales (adjusted EBIT margin) is expected in the range of 12.0 to 13.5 percent.

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