Henkel updates full year outlook

Henkel delivers good Q2 performance

VIAPSA Desk
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Henkel
Hans Van Bylen, chief executive officer, Henkel

Henkel, a global leader in the adhesives market across all industry segments worldwide, recently shared its sales figures for 2018. In the first half of 2018, Henkel generated sales of EUR 9,978 million. Organic Sales Growth, which excludes the impact of currency effects and acquisitions/divestments, was at 2.3%. Foreign exchange effects reduced sales by -7.4%.

Speaking on the results, Henkel CEO Hans Van Bylen said, “Henkel delivered a strong performance in the second quarter despite significant negative currency effects and higher material prices. This was driven by strong organic growth. We increased quarterly sales to an all-time high; further improved our adjusted EBIT margin and achieved the highest quarterly adjusted earnings to date.”

“We grew organic sales across all regions, with a very strong performance in emerging markets and a good development in mature markets. Excluding the impact of currency effects, we delivered a strong operational EPS increase of 7.7 percent,” he added.

Sales and earnings performance in the second quarter 2018

At EUR 5,143 million, sales in the second quarter of 2018 reached a new all-time high and grew nominally by 0.9% compared to the prior-year quarter. Organic sales showed a strong increase of 3.5%. The contribution from acquisitions and divestments amounted to 3.5%. This resulted in a growth of 7%. Currency effects had a negative impact of -6.1 percent on sales.

The Adhesive Technologies business unit reported a very strong organic increase in sales of 5.2%. In the Beauty Care business unit, organic sales were 0.4% above the level of the prior-year quarter. The Laundry & Home Care business unit reported a healthy increase in organic sales of 2.9%.

Sales growth was also supported by a double-digit increase in digital sales on group level, driven by particularly strong performance in the consumer business units.

The emerging markets also made an above-average contribution to the organic growth of the group, with a very strong increase in organic sales of 5.4%. The mature markets achieved an organic sales growth of 2.2%.

Adjusted operating profit (EBIT) improved by 1.8% from EUR 909 million in the prior-year quarter to a new high of EUR 926 million. Adjusted return on sales (EBIT) rose by 0.2% to 18.0%.

Moreover, adjusted earnings per preferred share grew by 1.9% from EUR 1.55 to EUR 1.58. EPS growth was negatively impacted by currency effects of -5.8%. Excluding the impact of currency effects, adjusted earnings per preferred share increased by 7.7%.

With 6.3%, net working capital as a percentage of sales was above the level of the second quarter 2017 (5.2%).

Updated outlook for fiscal year 2018

Updating its guidance for fiscal 2018, Henkel confirmed its expectation for organic sales growth of 2 to 4% for the Henkel Group. Henkel expects organic sales growth in the Adhesive Technologies business unit of 4 to 5% from previously 2 to 4%. In the Laundry & Home Care business unit, Henkel continues to expect growth in the range of 2 to 4%. In the Beauty Care business unit, the company confirms its expectation of positive organic sales growth of 0 to 2%.

For adjusted return on sales (EBIT), Henkel anticipates an increase year on year to around 18% from previously more than 17.5%. All three business units are expected to contribute to this positive performance. Reflecting the development of currencies and material prices, Henkel expects an increase of between 3 and 6% in adjusted earnings per preferred share from previously between 5 and 8%.

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