Henkel Reports In-Line Fourth-Quarter FY 2021 as Inflation Takes a Bite From Margins

Henkel reported an in-line fourth quarter with few surprises, as margins began to contract in the face of rising cost inflation. Management's outlook for 2022 is also consistent with our expectations, with continued pressure from raw material costs likely to subdue margins for another year. We are reiterating our narrow moat rating and EUR 98 fair value estimate for both the ordinary and preferred shares, and consider it to be a lower quality franchise relative to some of its larger peers, but undervalued at current market prices.