Henkel blames beauty unit, slower industry for outlook cut
today Aug 13, 2019
German consumer goods company Henkel lowered its full-year outlook for sales and earnings on Tuesday, blaming disappointing performance at its beauty unit and a hit to its adhesives business from falling industrial production.
Shares in Henkel were down 8.2% in pre-market trade at brokerage Lang & Schwarz.
The maker of Schwarzkopf shampoo and Persil detergent saw second-quarter sales fall by an organic 0.4% to 5.121 billion euros (£4.75 billion), while earnings per share fell 9.5% to 1.43 euros, both below average analyst forecasts.
Chief Executive Hans van Bylen said Henkel was hit by a significant fall in demand in key industries like the automotive sector and it no longer expected industrial demand to increase again in the second half of the year.
Sales at the adhesives unit, which account for almost half of total sales, fell by an underlying 1.2%, while sales of beauty care fell 2.4%, sagging in western Europe and North America, and hit by stock issues in China.
Henkel has underperformed rivals such as Procter & Gamble Co (P&G) and Unilever in recent years. It warned in January that earnings would fall in 2019 as it hikes investment in brands and digital technology to try to revive growth.
Henkel said it now expects organic sales growth, stripping out the impact of currencies and acquisitions, of between zero and 2% for the fiscal year 2019, down from a previous 2-4%, with the adhesive unit showing growth of -1 to 1% and beauty care between 0 and -2%.
The laundry and home care division is still expected to grow 2-4%.
Henkel forecast adjusted earnings per preferred share (EPS) to fall by a mid- to high single-digit percentage at constant exchange rates, down from a previous outlook for a fall of a mid-single-digit percentage range.
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