Henkel Brings Forward Financial Targets After Profit Soars — Update

By Pierre Bertrand

Henkel brought forward its financial targets after price increases and cost savings helped the company report a sharp rise in net profit for the first half.

The German chemical and consumer-goods company said Tuesday that it was confident in reaching the targets it outlined in January 2022 in the mid term. A spokesman said this referred to within two to four years, when approached by Dow Jones Newswires.

Henkel hadn't previously defined a specific timeframe, saying these were ambitions for the mid to long term. The targets call for adjusted earnings before interest and taxes margin of around 16%, organic sales growth of 3% to 4% and mid- to high-single-digit percentage growth in adjusted earnings per preferred share.

The maker of Loctite adhesives, Persil detergent and Schwarzkopf shampoos said it faced a challenging economic environment in the first six months of the year, echoing comments from other consumer-goods companies that have experienced a pullback in consumer spending in many parts of the world. Nevertheless, Henkel said its results benefited from an internal restructuring launched in 2022.

At the time, the company merged its former laundry-and-home care and its beauty care businesses to create its consumer brands unit. The consumer unit was the main growth driver at Henkel in the first half and the company cited strength in the business as the reason for an increase to its full-year guidance last month.

The company said it made 1.03 billion euros ($1.13 billion) in net profit for the period compared with 564 million euros a year ago.

Sales fell 1% to 10.81 billion euros, in line with preliminary figures released last month. On an organic basis, however, sales grew 2.9%. Henkel reiterated that its sales were boosted by higher pricing.

As disclosed last month, the company managed to achieve an adjusted EBIT margin of 14.9% in the first half of the year. The company targets an adjusted EBIT margin between 13.5% to 14.5% this year.

Sales at Henkel's consumer brands business grew 4.3% organically. Meanwhile, sales at its adhesive technologies business grew 2% organically, driven by the mobility and electronics, the craftsmen and the construction and professional business areas, the company said.

The acceleration in the company's long-term guidance was the main update in the results, but investors need to see steady volume and market-share improvements in its home-care business to have full confidence in its strategy, analysts at Jefferies said in a research note.

Write to Pierre Bertrand at pierre.bertrand@wsj.com

(END) Dow Jones Newswires

August 13, 2024 06:11 ET (10:11 GMT)

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