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Henkel Takes Earnings Hit From Raw Material Prices

By Donna Ahern
Henkel Takes Earnings Hit From Raw Material Prices

German consumer goods group Henkel trimmed its full-year earnings outlook on Monday, saying it could not fully compensate for a spike in raw material prices and it also expects an impact from changes in foreign exchange rates.

"Tight supply chains and rising raw material and transport costs are proving to be particularly challenging," Carsten Knobel, chief executive, said in a statement.

Organic Sales Growth

The maker of Persil detergent and Schwarzkopf hair care products said it still expects 2021 organic sales growth of 6% to 8% after third-quarter sales rose by an organic 3.5% to €5.1 billion ($5.89 billion), in line with average analyst forecasts.

But it trimmed its forecast for 2021 adjusted earnings per preferred share at constant exchange rates to a percentage rise in the high single digits, from a previous range of high single-digits to mid-teens.


It said it now expects an adjusted operating earnings margin of around 13.5% of sales compared to a previous 13.5% to 14.5%.

Higher Raw Materials Impact 

In addition to the impact of higher raw material prices, it said it also expected changes in exchange rates to adversely affect earnings.

Henkel's adhesives unit, which supplies the automotive and electronics industries and accounts for almost half of sales, reported organic sales growth of 7%, even though it said the automotive and metals business saw a slight contraction.

The laundry and home care unit saw sales rise by 2%, but the beauty care business reported a 3% fall, mainly due to a drop in the body care category, even as sales were strong for professional hair care products.

News by Reuters edited by Donna Ahern, Checkout. For more A Brands stories click here. Click subscribe to sign up for the Checkout print edition.

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