Germany’s Henkel Group Grew Business In Russia On Increased Demand For Washing Powders, Beauty Products and Industrial Adhesives

Posted: November 11, 2014 in Econ 101, Sanctions on Russia Meaningless


Henkel raises margin forecast, feels no impact from Ukraine crisis

By Kirsti Knolle

FRANKFURT, Nov 11 (Reuters) – German household goods and industrial glue maker Henkel raised its full-year forecast after posting double-digit quarterly growth in China and Russia, its No.3 and 4 markets, pushing its shares to a two-month high.

Analysts said the guidance was a surprise after earnings from rivals such as Procter & Gamble and L’Oreal disappointed, partly due to weaker demand in emerging markets. Unilever even reported a 20 percent drop in sales in China.

Henkel’s business in China has by contrast been consistent, and tensions between the West and Russia have also not harmed the maker of Persil washing powder and Schwarzkopf hair products.

“We have not felt the ongoing crisis in Ukraine in our Russian business, quite the contrary,” Chief Executive Kasper Rorsted said on a conference call.

In Russia, the company had benefited from an experienced, local management team which knew the market well, he said. Strong brands had helped the business in China.

The group expects a full-year adjusted EBIT margin – operating profit as a percentage of sales – of just under 16.0 percent. The group had targeted 15.5 percent after 15.4 percent in 2013.

Henkel shares rose more than 5 percent and were up 3.7 percent at 1345 GMT, leading the German blue-chip index DAX which was 0.2 percent higher.

But Rorsted also struck a cautious note on growth prospects, echoing comments by peer companies. “Overall, the economic outlook is becoming increasingly challenging,” he said.

Henkel’s quarterly adjusted earnings before interest and tax (EBIT) rose 3.1 percent to 693 million euros ($860 million), beating the average analyst forecast for 683 million.

The group also reported the strongest quarterly growth in its home market Germany, its second biggest after the United States, since 2012.

On an unadjusted basis, though, its operating profit missed analyst expectations, partly because it set aside 34 million euros in provisions related to a French antitrust investigation.

The investigation relates to suspected antitrust violations between 2003 and 2006, Henkel Finance Chief Carsten Knobel said, adding several European consumer products groups would be affected. In 2011, Henkel was fined with 92.3 million euros for collusion in detergents by the French cartel authority.

($1 = 0.8054 euro) (Reporting by Kirsti Knolle; Editing by Victoria Bryan and Susan Thomas)


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