Henkel First-Quarter Profit Beat Estimates on Emerging Markets

Henkel AG, the German maker of Dial soap and Loctite glue, reported first-quarter profit that beat estimates as rising sales in emerging markets offset revenue declines in western Europe and north America.

Adjusted earnings before interest and taxes rose 8.9 percent to 600 million euros ($786 million) from 551 million euros a year earlier, the Dusseldorf-based company said in a statement today. That beat the 582.1 million-euro average estimate of seven analysts compiled by Bloomberg.

“We expect the global economic environment to remain difficult,” Chief Executive Officer Kasper Rorsted said in the statement. “We anticipate industrial demand to improve during the second half of the year.”

Sales coming from emerging markets accounted for 43 percent of Henkel’s revenue last year, helping reduce the company’s reliance on western Europe, where government austerity measures to counter the debt crisis deepened a recession. The jobless rate in the euro area rose to a record of 12.1 percent in March.

Net income rose 8.9 percent from a year earlier to 403 million euros, Henkel said. Sales rose 0.6 percent to 4.03 billion euros, missing the 4.14 billion-euro average of 10 analyst estimates, as adhesives sales declined 1.2 percent organically amid “weaker” demand from industrial customers.

Sales grew 2.5 percent organically, missing the 3.6 percent average estimate of seven analysts compiled by Bloomberg. Organic sales growth, which excludes the impact of foreign exchange and acquisitions or divestments, was the slowest since 2011.

Middle East

Organic sales rose 7.3 percent in Eastern Europe and 18.2 percent in Africa and the Middle East region, while they fell 1 percent in western Europe. Sales in North America dropped 0.4 percent organically.

Adjusted Ebit as proportion of sales rose to 14.9 percent from 13.7 percent a year earlier.

The maker of Schwarzkopf shampoo reiterated its forecast for sales growth of 3 percent to 5 percent this year. The company predicts Ebit as a proportion of revenue will widen to about 14.5 percent from 14.1 percent last year, and adjusted earnings per preferred share will rise by about 10 percent.

Henkel shares have gained 15 percent this year.

To contact the reporter on this story: Julie Cruz in Frankfurt at jcruz6@bloomberg.net

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net

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