Henkel’s beauty division posts 0.4% organic growth in Q2 as group revises earnings per share guidance downwards

Last Thursday, Henkel revised downwards its annual earnings per share growth target, after weaker exchange rates in emerging markets and rising raw material prices affected its results in the second quarter.

According to stockbrokers Lang & Schwarz, Henkel’s share price has gradually recovered after the German consumer products group admitted last March it had delivery problems in North America.

Henkel, producer of the Persil detergent and the Loctite glue, stated that its quarterly revenue recorded an organic growth of 3.5%, reaching €5.143 billion, a little higher than the figure expected by financial analysts.

Earnings per share rose 2% to €1.58, just below the €1.61 forecast, owing to the negative impact of adverse exchange rate effects and rising raw material prices.

Equally, adjusted quarterly operating income, at €926 million, was below the forecast of €937 million.

Henkel has confirmed its annual organic growth objective of between 2% and 4%, but revised downwards its earnings per share growth guidance, from 5-8% to 3-6%.

Last week, Henkel’s competitor Beiersdorf raised its revenue growth forecast for 2018 by one percentage point, up to 5%, after posting a better than forecast organic growth in the first half of the year.

The President of Henkel’s executive committee, Hans van Bylen, said that published revenue was reduced by about €310 million - minus 6.1% - due to adverse exchange rate effects. He added that, without the latter, earnings per share rose by 7.7%.

The negative exchange rate impact was felt especially in emerging markets such as Turkey, Russia and Mexico, whose currencies all weakened, while in the second quarter the dollar’s impact was lower than in the first.

Henkel stated that its North America operations are now back to normal, having recovered from earlier delivery issues.

Henkel’s beauty division, including Schwarzkopf haircare products, posted a 0.4% organic growth, while the household products and detergents division grew by 2.9%.