Henkel reports a very good start to fiscal 2021 overall, achieving significant organic sales growth of 7.7 percent in the first quarter – despite the impacts of the global coronavirus crisis that continue to adversely affect the social and economic environment in numerous markets around the world. Group sales reached around 5 billion euros, an increase of 0.8 percent in nominal terms, significantly impacted by currency headwinds.
“We achieved a very good business performance in the first quarter, to which all our business units contributed. With industrial demand recovering at a stronger rate than originally expected, we are optimistic about business development over the rest of the year, despite the continued uncertainty in our markets. Following the strong start to the year, we have today raised our sales and earnings guidance,” said Henkel CEO Carsten Knobel.
“The significant increase in sales in the first quarter was in particularly driven by our Adhesive Technologies business unit, which saw a strong recovery across all business areas and regions, generating double-digit organic sales growth. Our Beauty Care and Laundry & Home Care consumer businesses also generated organic sales growth. From a regional perspective, the very good sales performance in the first quarter was driven primarily by the emerging markets, with all regions posting double-digit organic growth rates,” Knobel added.
“Henkel’s performance in the first quarter is testament to our robust and balanced portfolio with successful brands and innovative technologies for our customers in the industrial and consumer businesses. At the same time, the very good development overall in the first quarter is also the result of our strong global team, which – in this unprecedented and challenging time for all of us – is showing enormous commitment as it continues to contribute to the long-term success of Henkel.”
Looking ahead to the rest of fiscal 2021, Knobel said: “After the strong start to the year, we have raised our guidance and now expect higher growth in both sales and earnings for the full year. At Group level, Henkel now anticipates organic sales growth of 4 to 6 percent and an adjusted return on sales (EBIT margin) in the range of 14 to 15 percent. For adjusted earnings per preferred share (EPS) at constant exchange rates, Henkel now expects an increase in the high single-digit to mid-teens percentage range.”
Outlook for the Henkel Group
Based on business development in the first three months of 2021 and the assumptions
regarding business performance in the remaining three quarters, the Management Board of Henkel AG & Co. KGaA has decided to raise its guidance for fiscal 2021.
Following the sharp decline in global economic growth in 2020 resulting from the COVID-19 pandemic, it is assumed based on current estimates that industrial demand will recover significantly in 2021 and that demand for numerous categories of consumer goods will return to normal as the year progresses. At the same time, uncertainty prevails about the further development of infection rates and vaccination progress, and thus of the restrictions imposed to contain the pandemic.
Given these circumstances, our guidance is based on the assumption that industrial demand and areas of the consumer goods business of relevance to Henkel – the hair salon business in particular – will recover, in some cases significantly. We expect those categories in our consumer goods businesses that witnessed increased demand in 2020 in the wake of the pandemic to return to normal as the year progresses. We further assume that there will be no widespread closures of retail and industrial businesses or production facilities in our core regions – unlike the second quarter of 2020 in particular – as the year progresses.
Taking these factors into account, we expect the Henkel Group to generate organic sales growth of between 4 and 6 percent in fiscal 2021 (previous guidance: 2 to 5 percent).
We expect the Henkel Group to generate an adjusted return on sales (EBIT margin) of between 14 and 15 percent (previous guidance: 13.5 to 14.5 percent). We expect adjusted return on sales for the Adhesive Technologies business unit of between 16 and 17 percent (previous guidance: 15.5 to 16.5 percent), for Beauty Care of between 10.5 and 12 percent (unchanged) and for Laundry & Home Care of between 14.5 and 15.5 percent (previous guidance: 15 to 16 percent).