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MarketScreener Homepage  >  Equities  >  Xetra  >  Henkel AG & Co. KGaA    HEN3   DE0006048432

HENKEL AG & CO. KGAA

(HEN3)
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Henkel cuts outlook on weakest sales momentum in a decade

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08/13/2019 | 06:28am EDT
A logo of consumer goods group Henkel is pictured in Duesseldorf

BERLIN (Reuters) - Persil maker Henkel cut its full-year outlook on Tuesday after posting its first fall in sales in a decade as the popularity of its beauty products waned and weaker industrial production hit its adhesives business.

Its shares fell 6.9 percent to the bottom of the STOXX600 <.STOXX> index of top European companies as the German consumer-goods group experienced another disappointing quarter under Chief Executive Hans van Bylen.

The maker of Schwarzkopf shampoo, Dial soap and Loctite glue has underperformed rivals such as Procter & Gamble Co (P&G) and Unilever in recent years.

It warned in January that earnings would fall as it ramps up marketing to try to revive growth.

In the second quarter, sales fell by a like-for-like 0.4% to 5.121 billion euros (£4.76 billion), the weakest since the third quarter of 2009. Earnings per share dropped 9.5% to 1.43 euros. Both figures were below average analyst forecasts.

"Could it get any worse? It just did," said Bernstein analyst Andrew Wood. "All businesses missed expectations and saw medium-term or long-term lows."

Analysts have suggested Henkel should consider selling or spinning off its struggling beauty business but the founding family, which owns around 60 percent of the company's voting shares, is seen as unlikely to take such a radical step.

Van Bylen declined to answer directly when asked if he had the full support of the Henkel family.

"Henkel is not in a crisis," he told journalists. "We have a strategy that is working."

Asked whether Henkel should consider selling the beauty business, he said: "We see good chances with beauty care to come back to profitable growth."


GRAPHIC: Henkel quarterly like-for-like sales growth -

MARKETING BOOST YET TO BEAR FRUIT

Second-quarter beauty care sales fell 2.4%, sagging in western Europe and North America while stock issues hit China, although the professional haircare business kept growing strongly.

Earlier this month, German rival Beiersdorf reported slowing sales growth for its Nivea skin care brand in the second quarter, but confirmed its outlook for full-year group sales growth of 3-5%.

Van Bylen, a Belgian who previously led Henkel's beauty care business, took over as CEO in 2016, replacing Kasper Rorsted, who moved to become chief executive of sportswear maker Adidas.

During Rorsted's eight years at the helm, Henkel's share price soared as the Dane cut costs and drove up profits. However, some analysts suggest he pared marketing too much, paving the way for the firm's current troubles.

Van Bylen said there were signs of improvement in European haircare after Henkel spent more on advertising to revive older brands and launched new ones like Nature Box shampoo, which he said was doing well in Germany.

The group has also seen strong growth for Got2b styling products although Dial body care is still struggling in North America.

Henkel, which makes half of its sales from adhesives, was also hit by a significant fall in demand from industries like the automotive and electronics sectors and said it no longer expected industrial demand to pick up in the second half.

Sales at the adhesives unit fell by an underlying 1.2%, which Van Bylen described as a "robust" performance given the weaker market, helped by its offerings for the aerospace and paper industries.

He said he saw no prospect in the second half for recovery in the automotive industry, which accounts for about 20 percent of the unit's sales.

Henkel said it now expects group organic sales growth, stripping out the impact of currencies and acquisitions, of between zero and 2% for fiscal year 2019, down from 2-4% previously, with the adhesive unit showing growth of -1 to 1% and beauty care between 0 and -2%.

The adhesive business should benefit from lower materials prices in the second half, finance chief Carsten Knobel said.

The laundry and home care division is still expected to grow 2-4% in the full year after expanding 2% in the second-quarter, helped by a global relaunch of Persil detergent and a drive to sell more online-friendly products.

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.

(Reporting by Emma Thomasson; Editing by Michelle Martin, Kirsten Donovan and Georgina Prodhan)

Stocks mentioned in the article
ChangeLast1st jan.
BEIERSDORF AKTIENGESELLSCHAFT -0.32% 107.6 Delayed Quote.18.03%
HENKEL AG & CO. KGAA 0.47% 93.1 Delayed Quote.-2.41%
PROCTER & GAMBLE COMPANY 0.28% 122.24 Delayed Quote.32.99%
STOXX EUROPE 600 0.29% 392.95 Delayed Quote.16.04%
UNILEVER PLC -2.54% 4795 Delayed Quote.16.71%
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Financials (EUR)
Sales 2019 20 215 M
EBIT 2019 3 244 M
Net income 2019 2 220 M
Debt 2019 1 938 M
Yield 2019 2,05%
P/E ratio 2019 17,9x
P/E ratio 2020 16,8x
EV / Sales2019 1,98x
EV / Sales2020 1,88x
Capitalization 38 184 M
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Technical analysis trends HENKEL AG & CO. KGAA
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TrendsBullishBullishNeutral
Income Statement Evolution
Consensus
Sell
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Mean consensus HOLD
Number of Analysts 28
Average target price 92,84  €
Last Close Price 92,42  €
Spread / Highest target 32,0%
Spread / Average Target 0,45%
Spread / Lowest Target -27,7%
EPS Revisions
Managers
NameTitle
Hans van Bylen Chief Executive Officer
Simone Bagel-Trah Chairman-Supervisory Board
Carsten Knobel Chief Financial Officer, EVP-Finance & Purchasing
Michael Kaschke Member-Supervisory Board
Jutta Bernicke Member-Supervisory Board
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