By Anthony Shevlin
Shares in Germany's Henkel AG & Co. KGaA (HEN.XE) trade sharply lower after the company cut its full-year growth guidance on Tuesday, as previous expectations of an increase in industrial demand in the second half have dissipated.
The German consumer-goods company--which makes Dial soap and Purex laundry detergent--now sees full-year organic sales growth between 0% and 2%, down from previous guidance of between 2% and 4%.
At 0859 GMT, shares in Henkel traded 5.7% lower at EUR86.22.
The company said earnings in the second quarter fell due to a decline in key industries such as automotive. Earnings before interest and taxes came to 756 million euros ($846.4 million) compared with EUR814 million the year prior.
Henkel is the latest in a line of German companies to lower targets in light of a slowdown in the automotive sector.
Last month Daimler AG issued its second profit warning in less than a month. The same week German chemical giant BASF SE slashed its profit forecasts, citing sluggish demand in the automotive market. Bernstein analysts said BASF could face more pain in the second half due to the declining sector.
Schaeffler in July lowered its views for the full year as a result of weakness in the global automotive business and Continental AG last week said it doesn't expect any upturn in the market over the short to medium term.
Bernstein analysts said Henkel's second-quarter results were another disappointment.
"The new big question is if the sustained terrible operating results will induce dramatic changes, which we do not anticipate in the short term," it said.
Jefferies said Henkel's misery continues following a poor second quarter, with no recovery in industrial production expected in the second half--a key demand engine for its adhesives unit.
Despite the troubled economic outlook, Henkel said it will continue to implement its strategic priorities and execute its planned growth investments.
"We focus on strengthening our businesses and will further increase our competitiveness to deliver sustainable profitable growth," said Henkel Chief Executive Hans Van Bylen.
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