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Henkel Q3 Profit Climbs 29%, Confirms Outlook

German household consumer products maker Henkel AG & Co. KGaA (HENKY.PK, HENOY.PK) Friday reported about 29 percent rise in third-quarter profit, as sales and margins improved with contributions from all of its business sectors. The company said it is well on track to achieve its targets for full fiscal 2012.

Separately, Henkel said it aims 10 percent earnings per preferred share growth at compound annual growth rate and achieve 20 billion euros in sales by 2016.

However, Henkel expects the volatility and uncertainties in its markets to persist, but said it will continue to adapt and improve its processes and structures.

Kasper Rorsted, CEO of the company stated, "Although the market environment became more difficult in the third quarter of 2012, Henkel continued its strong performance with key financials reaching record levels. We generated profitable growth in all our business sectors and realized another substantial increase in our EBIT margin - reaching an all-time high."

According to the company, emerging markets contributed to the improvements in sales, with particular momentum from Asia, excluding Japan, and Eastern Europe. Sales in Africa/Middle East experienced a solid development, while sales in Latin America and Western Europe declined from last year. The company's businesses in North America showed an improvement in sales.

In the third quarter, net income attributable to shareholders increased to 397 million euros or 0.91 euros per share from 307 million euros or 0.70 euros per share in the previous year. Adjusted earnings per preferred share were 0.99 euros for the quarter.

Operating profit or EBIT was 586 million euros, compared to 451 million euros in the same quarter a year earlier. Excluding one-time gains, one-time charges and restructuring charges, adjusted operating profit for the recent quarter was 631 million euros.

Adjusted return on sales or EBIT margin increased 1.3 percentage points to 14.7 percent.

Quarterly sales improved 6.6 percent to 4.29 billion euros. Organic sales, which exclude the impact of foreign exchange and acquisitions/divestments, rose 2.5 percent from last year.

Laundry & Home Care posted organic growth of 4.6 percent and Beauty Care business sector grew 3.3 percent organically. Adhesive Technologies business sector had an organic sales growth of 1.0 percent.

For the full year 2012, Henkel continues to expect organic sales growth of between 3 and 5 percent. The company said it is confident of continued growth in its consumer goods businesses, with organic sales increase in the low single-digit percentage range.

Henkel confirmed its forecast for an adjusted return on sales or EBIT margin of 14 percent. Further, the company continues to expect growth in adjusted earnings per preferred share of around 15 percent.

Separately, Henkel announced its growth strategy and financial targets for 2016. It sees strong potential for increased growth and profitability in all of its three business sectors. The company aims expansion in emerging markets and leverage strong positions in mature markets.

For adjusted earnings per preferred share, Henkel targets a compound annual growth rate of 10 percent until 2016. It aims to grow sales to 20 billion euros.

On Frankfurt's Xetra, Henkel shares are currently trading at 48.18 euros, down 4.06 percent.

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by RTT Staff Writer

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