Henkel Shares Tumble as Earnings Increase Fails to Impress Some Investors
Henkel AG, the maker of Loctite glues and Persil detergent, fell the most in more than a year in Frankfurt as a profit increase failed to impress some investors and the company forecast higher raw-material prices.
The shares fell as much as 6.3 percent, the most since April 9, 2009. They were down 1.14 euros, or 2.9 percent, to 38.51 euros at 12:33 p.m., the steepest decline on Germany’s benchmark DAX index. The stock has added 5.7 percent this year.
First-quarter net income more than doubled to 259 million euros ($336 million) from 117 million euros a year earlier, the Dusseldorf-based company said today. Sales increased 7.8 percent to 3.51 billion euros. The company also raised its profit forecast for the year.
“Investor expectations are much too high and a lot of the good news had been priced in already,” said Joerg Frey, an analyst at M.M. Warburg in Hamburg, who rates the stock a “hold.”
Henkel expects raw-material prices to increase “substantially” later this year, Chief Financial Officer Lothar Steinebach said today on a conference call. The company’s adhesives unit, as well as its home and beauty-care businesses, depend on oil derivatives and other commodities.
Henkel, the world’s largest maker of adhesives, gets almost half its revenue from that business, where demand is increasing as economies emerge from recession. Adjusted operating profit and earnings per preferred share will rise more than 15 percent, Henkel said today, up from an earlier growth forecast of “at least 10 percent.”
“Comparing Henkel with our chemical universe, we see more attractive plays within the recovery,” Lutz Grueten, a Frankfurt-based analyst at Kepler Capital Markets, wrote in a note to investors. He has a “hold” rating on the stock.