Henkel shares are up: Henkel reports a fall in profits in the first half of the year – sales forecast for the full year has been raised

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However, increased raw material and logistics costs are weighing on results, so the company continues to expect falling profits in 2022. Meanwhile, the planned merger of the consumer goods businesses is making progress.

The share was very volatile via XETRA until early Monday afternoon. The paper listed in the DAX initially fell by more than two percent and then swung to the plus and minus. Most recently, the course turned positive again and was listed 0.8 percent higher at EUR 65.30. Analysts praised the numbers, which beat market expectations. All divisions performed better than expected, according to Barclays expert Iain Simpson, who mentioned sales in the adhesives business and the margin in the cosmetics division as highlights. JPMorgan’s Celine Pannuti noted that it may disappoint investors that Henkel did not upgrade earnings guidance despite the wide range.

Henkel now expects organic growth of 4.5 to 6.5 percent for the current year. That is one percentage point more than previously promised. This excludes currency effects and purchases and sales. In the first half of the year, sales rose by almost 10 percent to 10.9 billion euros, as the company announced in Düsseldorf. Organic growth was 8.9 percent, which was better than analysts’ expectations. The development accelerated in the second quarter.

Henkel also benefited from positive currency effects and price increases, while sales volumes changed little. From the second quarter, the announced cessation of activities in Russia and Belarus also had a negative impact. The group continues to examine all options here, from the cessation to the sale of activities. Henkel is showing great interest in the business, said CEO Carsten Knobel in a conference call. Expressions of interest are currently being examined. The process should be completed by the end of the year. According to CFO Marco Swoboda, Henkel wrote off almost 200 million euros on the business.

Henkel’s adhesives business in particular proved robust in the first half of the year, posting double-digit growth rates. However, Knobel justified the unchanged sales forecast for the area with an expected weakening of industrial demand and the high basis for comparison in the previous year.

In the consumer goods business, the detergents and cleaning agents business continued to develop more strongly than the cosmetics area. For example, the Persil brand has achieved double-digit growth and further gains in market share, Henkel said. The cosmetics area, on the other hand, grew slightly thanks to good hairdressing shops. For both areas, Henkel was more optimistic about the sales development in the current year. Knobel also sees “clear potential” for the margin targets set to reach the upper half of the ranges.

According to Henkel, the merger of the two consumer businesses is progressing. As already known, the company also put brands and businesses with a total turnover of up to one billion up for sale. In the first six months, Henkel said it had already divested itself of some non-core businesses in the cosmetics sector.

Earnings fell significantly due to higher costs. Adjusted operating profit fell by 18.5 percent to just under 1.2 billion euros in the first half of the year, with the corresponding margin falling from 14.4 to 10.7 percent. Henkel performed slightly better than analysts had expected. Net profit fell by more than half to 447 million euros, with write-downs on activities in Russia and cosmetics stores available for disposal also having a negative impact.

For 2022, Henkel continues to expect an adjusted return on sales of nine to eleven percent. Adjusted earnings per preferred share at constant exchange rates are expected to decrease by 15 to 35 percent. So far, after six months, there has been a decline of a good fifth. The forecast does not include possible effects of gas bottlenecks in Europe. However, Henkel is not a very energy-intensive company, said Knobel. In addition, one produces locally, which reduces the dependence on European gas bottlenecks. Henkel is in the process of replacing gas with other energy sources. However, if suppliers had problems due to possible cuts, then this would also affect Henkel, according to Knobel.

Bernstein leaves Henkel on ‘Market-Perform’ – target 74 euros

The US analysis company Bernstein Research has left the rating for Henkel at “Market-Perform” with a price target of 74 euros after the half-year figures. Like its competitors, the consumer goods group has exceeded market expectations, analyst Bruno Monteyne wrote in a study published on Monday. The group initially gave no answers to important questions such as the consequences of a possible gas bottleneck.

Henkel CEO: Gas alternatives ready at European locations from the end of August

According to CEO Carsten Knobel, Henkel is preparing for possible gas supply bottlenecks and is keeping an eye on various scenarios. As Knobel explained in the media conference call, the group is currently in the process of replacing gas with other energy sources in production and setting up emergency plans.

For example, the group is working on being able to replace gas with other energy sources at all European production sites later this month.

Overall, Henkel is not a company with high energy consumption, energy makes up a small single-digit percentage of the production cost base.

In addition, the group has an international production network with around 170 production sites in 56 countries.

However, the group had “done its homework” in terms of production security, Knobel had previously said in the investor webcast.

According to Knobel, Henkel’s forecast for the year does not yet include any possible production downtimes due to gas shortages in Europe.

In the “hypothetical case” that the gas would be completely shut off, companies in many countries would be affected – including Henkel’s suppliers and customers – as well as Henkel in the case of basic chemicals. According to Knobel, a gas stop would have the greatest impact on the adhesives business Adhesive Technologies. Henkel is now continuing to operate a coal-fired boiler at its Düsseldorf headquarters, which was actually supposed to go offline in the fall. For the time being, Henkel wants to run a power plant 50 percent on gas and 50 percent on coal and oil instead of around 70 percent on gas and 30 percent on coal.

“We’re doing everything in our power,” Knobel told journalists. A gas supply freeze would have far-reaching macroeconomic effects for the chemical industry and, of course, for Henkel as well. The concrete effects on individual companies are not predictable.

DUSSELDORF / NEW YORK / LONDON (dpa-AFX) / FRANKFURT (Dow Jones)

Image sources: Henkel AG