Henkel H1 Profit Down, Backs FY22 Adj. Earnings View; Lifts Sales Forecast

German consumer goods maker Henkel AG & Co. reported Monday weak profit in its first half amid increasing costs, despite growth in sales. Further, the company maintained its adjusted earnings forecast for fiscal 2022, but raised outlook for organic sales growth.

For fiscal 2022, the company continues to expect adjusted earnings per preferred share to decline in the range of 15 percent to 35 percent at constant exchange rates. Adjusted EBIT margin at Group level is expected to remain unchanged in the range of 9.0 to 11.0 percent.

Further, Henkel now expects organic sales growth of 4.5 to 6.5 percent in fiscal 2022 compared to the prior outlook of 3.5 to 5.5 percent growth.

Organic sales growth of 8 to 10 percent is still expected for the Adhesive Technologies business unit. For Beauty Care, Henkel now anticipates organic sales to be down 1 percent to 3 percent, compared to previously expected decline of 3 percent to 5 percent.

For the Laundry & Home Care business unit, Henkel now expects organic sales growth of 4 to 6 percent, up from previously expected growth of 2 to 4 percent.

For the first half, net income attributable to shareholders declined 52.5 percent to 447 million euros from last year’s 942 million euros.

Earnings per ordinary share were 1.03 euros, down 52.5 percent from 2.17 euros a year ago. Earnings per preferred share fell 52.3 percent to 1.04 euros from 2.18 euros a year ago.

Adjusted earnings per preferred share were at 1.95 euros, compared to 2.40 euros in the prior year.

Operating profit or EBIT declined 47.2 percent year-over-year to 684 million euros. Adjusted EBIT for the first half declined 18.5 percent to 1.17 billion euros mainly due to significantly higher prices for direct materials.

EBIT margin dropped 6.8 percentage points from last year to 6.3 percent, and adjusted EBIT margin dropped 3.7 percentage points to 10.7 percent.

Group sales for the first half were 10.91 billion euros, up 9.9 percent from the prior-year’s 9.93 billion euros, driven by all business units and regions.

Adhesive Technologies recorded 15 percent rise in sales to 5.47 billion euros. Sales in Beauty Care edged up 0.2 percent and Laundry & Home Care grew 6.7 percent.

Group organic sales growth was 8.9 percent with 12.2 percent rise in Adhesive Technologies, 0.4 percent growth in Beauty Care and 7.4 percent increase in Laundry & Home Care.

In Germany, Henkel shares were trading at 65.14 euros, up 0.56 percent.

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