DÜSSELDORF (dpa-AFX) – Price increases and an improvement in volume development are making consumer goods manufacturer Henkel (Henkel vz) once again more optimistic for the current year. Management raised the lower end of the previously targeted range for organic growth and the operating margin, as the group announced on Thursday when presenting its quarterly figures in Düsseldorf. The Düsseldorf-based share price rose by 2.7 percent in the morning shortly after the start of trading, reaching its highest level since mid-September.
Henkel now expects organic growth of between 3.5 and 4.5 percent in the current year. So far, in the worst case scenario, the group has only recorded an increase of 2.5 percent. The margin for operating profit before interest and taxes (via EBIT) adjusted for special effects is now expected to be 11.5 to 12.5 percent. Previously the low end was only 11 percent. Adjusted earnings per preferred share (EPS) are expected to grow in a range of 15 to 25 percent. The previous range was between 5 and 20 percent. The group had already adjusted its forecast upwards in the first half of the year.
In terms of internal sales growth, Henkel exceeded analysts’ expectations in the third quarter. In nominal terms, revenues were roughly in line with expectations. However, analyst Celine Pannuti from the US bank JPMorgan also points to the volume decline of 5.5 percent within a year, which was higher than expected – even if the volume development has improved again since the second quarter.
In the three months up to the end of September, the group continued to grow organically. Internal sales rose by 2.8 percent. “We successfully continued our growth course in the third quarter despite a continued challenging economic environment,” said CEO Carsten Knobel, according to the statement. In nominal terms, however, sales fell by nine percent to a total of 5.4 billion euros compared to the same period last year. The decline was primarily due to the sale of business activities in Russia in the second quarter and negative exchange rate effects.
Both business areas contributed to organic growth, with the consumer division increasing significantly more. In both cases, the continued strong price development was the driver. In the consumer division, the group is also making much faster progress than planned with the merger of the consumer businesses.
Of the net savings of around 250 million euros targeted in a first step by the end of 2024, more than 80 percent are expected to be realized by the end of the current year. The adhesives business also benefited from a takeover. “We are on the right track to generate further growth and expand our leading global market positions,” said Knobel.
In both divisions, volume development improved significantly in the third quarter compared to the previous quarter. “Our expectations that we set when we published the half-year results have been confirmed – and we expect further sequential improvement in the coming quarter,” said Knobel./knd/lew/stk
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