Aug 5, 2009
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Henkel second quarter beats estimates, outlook upbeat

Aug 5, 2009

FRANKFURT, Aug 5 (Reuters) - Henkel (HNKG_p.DE) said it expects its adhesives business to remain at least stable after the division's sales decline slowed in the second quarter.


Second-quarter group earnings beat analyst estimates both at the top line and the bottom line as the company's cost-cutting measures gained traction.

Henkel said on Wednesday 5 August it was still confident it would outperform its markets in organic sales growth this year, but that it could not give a more specific 2009 outlook due to economic uncertainties in the fourth quarter.

The maker of detergents, Loctite glues and Schwarzkopf hair products posted second-quarter adjusted earnings before interest and tax (EBIT) of 308 million euros ($443.2 million), compared with 372 million euros in the year-earlier period.

That figure was better than the 266 million euro average analyst estimate in a Reuters poll of analysts.

The Adhesives Technologies business posted a 15.4 percent drop in organic sales - still 2.8 percentage points narrower than in the first quarter - as demand from the automotive, metal and electronics industries remained weak. The business generated almost half of Henkel's 2008 operating profit.

Rival adhesives maker Tesa, owned by Beiersdorf (BEIG.DE), is also suffering from the downturn in the automotive and electronics industries. Beiersdorf said on Tuesday 4 August Tesa's second-quarter sales fell almost 19 percent.

Beiersdorf, the maker of Nivea skin care products, also said it suffered a sharp drop in profitability in its consumer products business as customers deserted its products.

Henkel said it expects its consumer businesses to continue to perform well in the third quarter, albeit with some deceleration from the second quarter.

It said it could not yet give an outlook for 2009 as there were too many economic uncertainties about the fourth quarter.

According to StarMine, which weights analysts' forecasts by their track records, Henkel trades at about 14.0 times estimated 12-month forward earnings, at a slight discount to Procter & Gamble (PG.N) and Unilever (ULVR.L), which trade at multiples of 14.8 and 14.2, respectively.

(Reporting by Maria Sheahan)

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