Henkel Records 6.6% Sales Increase for Q3 2012

In reporting its third quarter 2012 financial results, Henkel also fully committed to achieving its 2012 targets. For the quarter, the company saw sales rise 6.6% to €4.294 billion (organic sales, which exclude the impact of foreign exchange and acquisitions/divestments, increased 2.5%), while its sales share of emerging markets increased 44%. Adjusted operating profit was up 16.7% to €631 million and the adjusted EBIT margin increased 1.3 percentage points to 14.7%.

“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. Our performance is based on our clear commitment to our strategic priorities. We are well on track and fully committed to achieving our targets for full fiscal 2012,” said Henkel CEO Kasper Rorsted.

Rorsted also added, “We expect that the volatility and uncertainties in our markets will persist. Hence, we will continue to adapt and improve our processes and structures. Based on our strong performance in the first nine months, we are fully committed to achieving our targets for 2012. We expect organic sales growth to be between 3–5% and to increase adjusted EBIT margin to 14%. And we continue to expect growth in adjusted earnings per preferred share of around 15%.”

All three business sectors contributed to this performance: the company’s laundry and home care posted solid organic growth of 4.6%, while the adhesive technologies business generated organic sales growth of 1%. And the beauty care division likewise achieved solid organic sales growth amounting to 3.3%.

Specifically looking at Henkel’s beauty care business, the division again continued its uptrend in profitable growth during the third quarter. Nominal sales totaled €908 million, 5.6% above the €860 million generated in the prior-year quarter. Organic sales rose by 3.3%. Adjusted operating profit for the period for the division increased by 8.6% to €133 million. At 14.7%, adjusted return on sales improved by 0.4 percentage points compared to the third quarter of 2011. Reported operating profit totaled €114 million compared to €111 million in the comparable prior-year quarter.

As in the preceding quarters, the emerging markets made a particularly important contribution to the beauty care division’s solid sales performance. Asia (excluding Japan) and the Africa/Middle East region continued to experience rapid expansion, generating double-digit growth rates. The growth dynamics in Latin America eased somewhat. Overall, sales in the mature markets increased. There was solid sales growth in Western Europe, despite the negative economic conditions and persistently weak market environment. And North America developed very positively with a strong increase in sales compared to the prior-year quarter. However, the mature markets in the Asia-Pacific region remained below the level of the third quarter of 2011.

Regionally, in a highly competitive market environment, sales in Western Europe, which accounts for around one third of total Henkel sales, amounted to €1.423 billion, matching the level of the prior-year quarter. Organically, sales decreased slightly, by 0.8%, attributable primarily to the recessive trend in economic activity prevailing in Southern Europe. Sales in the Eastern Europe region rose by 6.5% to €825 million. Organic growth came in at 4.3%, with the company’s businesses in Turkey and Russia making a major contribution. Sales in the Africa/Middle East region rose by 12.2% to €265 million, and organic sales growth was 6.3%, with all the company’s business sectors contributing.

Sales for the North America region rose by 13% to €790 million. Organically, sales grew by 2.8% despite a reluctant consumer climate. At €272 million, sales in the Latin America region remained roughly at the prior-year level. Organic sales growth amounted to 1.5%, with business performance in Mexico making a particularly important contribution. The Asia-Pacific region registered sales growth of 16.1% to €680 million. In organic terms, sales rose by 6.6%, driven in particular by double-digit growth in China.

Sales growth was again given a major boost by the emerging markets of Eastern Europe, Africa/Middle East, Latin America and Asia (excluding Japan), where sales rose by 10.1% to €1.885 billion. Organic sales rose by 5.9%. The share of sales attributable to the emerging markets increased from 43% of consolidated sales in the prior-year quarter to 44%.

More information about Henkel’s Q3 2012 financial report is available here.

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