German detergent maker Henkel AG & Company, KGaA (HENOY.PK,HENKY.PK) Wednesday said its annual profit increased from last year, with strong performance in the emerging markets, despite adverse currency. The company announced an increase in dividends, adding that it expects improved profit and sales this year.
Commenting on the results, Henkel CEO Kasper Rorsted said, "All three business units contributed with profitable organic growth to our good performance. The emerging markets were once again the main growth drivers for Henkel, with very strong organic sales growth of almost 8 percent. But also in mature markets, organic sales were up slightly."
Attributable profit increased to 1.628 billion euros from 1.589 billion euros in the prior year. Adjusted net income improved 7.5 percent from last year.
Sales for the year edged up to 16.428 billion euros from 16.355 billion euros during the corresponding period last year. Organic sales, which exclude the impact of foreign exchange and acquisitions/divestments, showed a 3.4 percent growth.
All business units posted solid organic sales growth and increased market share in the relevant markets. The Laundry & Home Care business unit achieved organic sales growth of 4.6 percent. Sales in the Beauty Care business unit grew organically by 2.0 percent and the Adhesive Technologies business unit recorded organic sales increase of 3.7 percent.
In the Laundry & Home Care business unit, sales rose 1 percent to 4.626 billion euros. Organic sales grew 4.6 percent with a double-digit increase in the emerging market.
The Beauty Care business unit reported sales growth of 1 percent at 3.547 billion euros, and organic sales growth was 2 percent with particularly strong performance in the emerging markets, aided by significant contribution of operations in China.
In the Adhesive Technologies business unit, sales improved marginally to 8.127 billion euros. Organic sales growth was 3.7 percent, and the Africa/Middle East region achieved the highest growth rate with a double-digit increase in sales.
Henkel noted that its sales in North America, which dropped 1.5 percent, were hurt by fierce price and promotional competition in the consumer goods businesses.
Adverse currency led to only a small increase in sales in the emerging markets of Eastern Europe, Africa/Middle East, Latin America and Asia (excluding Japan). However, organic sales climbed 7.8 percent, driven by all three business units.
For the fourth quarter, attributable profit decreased to 298 million euros from 320 million euros, while sales rose 7.1 percent to 4.126 billion euros. Organic sales increased 3.9 percent from last year.
The boards intends to propose an increase of 7.4 percent in dividend per preferred share to 1.31 euros, and an increase of 7.5 percent in dividend per ordinary share to 1.29 euros at the Annual General Meeting.
For the full fiscal year 2015, the company expects organic sales growth of 3 to 5 percent. Adjusted EBIT margin is expected to rise to around 16 percent and adjusted earnings per preferred share are estimated to increase by about 10 percent.
Due to the continuing conflict between Russia and Ukraine, the company expects stagnation in Eastern Europe in 2015 as well as further pressure on the Russian economy and currency.
The company aims to improve its performance again in 2015 and is working on defining new interim targets for 2020.
The stock closed up 0.2 percent on Tuesday in Frankfurt at 106.30 euros.
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