Aug 10, 2011
Reading time
2 minutes
Download the article
Click here to print
Text size
aA+ aA-

Price hikes boost Q2 profits at Henkel

Aug 10, 2011

August 10 - German consumer goods group Henkel said it was increasing product prices to battle rising input costs as it reported an 8 percent rise in quarterly core profit and tweaked its sales outlook for the year.

Gliss Kur Ultimate Repair by Schwarzkopf.

Henkel, whose brands also include Schwarzkopf hair products Loctite glue and Persil detergents in most of Europe, said it managed to increased selling prices across all divisions and further rises were planned, along with cost-cutting measures.

"In laundry and homecare we saw recovery, coming back to growth driven by price and volume, and this was the first time we increased prices since 2009," Chief Executive Kasper Rorsted said on Wednesday.

Rivals Procter & Gamble, whose products include Gillette razors and Olay skin creams, and Unilever, home to the Dove, Knorr and Lipton brands, have also increased prices this year in response to soaring commodity costs.

Henkel shares rose 8.3 percent to 45 euros by 0845 GMT while the Dax bluechip index was up 2.1 percent , after the group it said it now expected underlying sales growth of 5 percent in 2011, at the top end of a previous range of 3-5 percent.

It confirmed guidance for an adjusted EBIT margin -- earnings before interest and tax as a percentage of sales -- of around 13 percent, and for adjusted earnings per preferred share to rise by about 10 percent.

DZ Bank analyst Thomas Maul said there had been fears Henkel may cut its guidance as a result of higher input costs.

In a video statement, Rorsted also confirmed the group's target for an adjusted EBIT margin of 14 percent for 2012. He declined to provide targets for the period after next year.

"Our first priority is to hit targets for 2012. Actual targets for what will happen after 2012 will be communicated by end of 2012," he said.

Group second-quarter sales rose 6.3 percent on an underlying basis to 3.95 billion euros ($5.56 billion), driven by emerging markets. Adjusted operating profit (EBIT) rose 8 percent to 514 million euros.

Analysts were expecting second-quarter sales of 4.03 billion euros and adjusted EBIT of 513 million, according to a Reuters poll.

(Reporting by Victoria Bryan; Editing by Mike Nesbit and David Jones)

© Thomson Reuters 2023 All rights reserved.