Henkel has recently confirmed its upgraded outlook during an announcement made on Tuesday, following a remarkable surge in profits during the first half of the year. The company's primary business segments, adhesive technologies and consumer brands, demonstrated impressive organic sales growth rates that have bolstered its financial results.
For the six months ending June 30, Henkel reported a notable increase in net income, climbing to 1.04 billion euros, compared to 574 million euros in the same period the previous year. Furthermore, sales exceeded the 10 billion-euro threshold once again, driven primarily by a 4.3% organic sales increase in the consumer brands division.
The company's reported sales of 10.81 billion euros were in line with the Visible Alpha consensus estimate of 10.78 billion euros, though they fell slightly short of last year's figure of 10.93 billion euros. When excluding foreign currency fluctuations and adjustments for acquisitions or divestments, group sales still showed a healthy improvement of 2.9%.
Carsten Knobel, the Chief Executive Officer of Henkel, elaborated on the contributing factors behind the sales growth during an earnings call. He highlighted rising automotive demands, a recovery within the electronics sector, strategic pricing, and sequential improvements in volume as key elements fostering this upward trajectory.
Henkel's portfolio of recognizable brands includes popular household names such as Persil laundry detergent, Schwarzkopf hair cosmetics, and the Loctite line known for adhesives, sealants, and surface treatments. "In parallel, we are committed to investing in our brands, especially the top 10 leading brands that present significant growth opportunities looking ahead.
This year, we have already increased our investments by a double-digit percentage, and we are set to elevate our marketing expenditure substantially in the second half compared to the first half of the year to bolster our innovations and strengthen brand equity," Knobel asserted. "We have a robust pipeline of innovations, and you can expect to see a variety of these enter the market in the upcoming quarters." In anticipation of heightened profitability within its consumer brands sector, the German multinational reiterated its recently raised guidance for organic sales growth, projecting an increase of 2.5% to 4.5% for the year 2024.
Additionally, the adjusted earnings per preferred share is expected to rise by another 20% to 30% at consistent exchange rates. Following Henkel’s pre-announcement last month, where both margin and earnings per share (EPS) growth forecasts were increased, RBC Capital Markets indicated that there was little more to be clarified regarding the company’s financial direction.
"Gross margin saw a striking increase of 600 basis points during the first half of the year, outpacing all other companies we monitor in this space," they reported. They anticipate that while the pace of margin increases may level off in the second half, it will still witness a substantial year-on-year rise, facilitating further boosts in investment toward marketing, sales, and distribution efforts.
In the stock market, Henkel shares experienced a modest increase of 1% during morning trade on Tuesday, elevating the price to $70.70 with a change of $+0.60, reflecting a percent change of +0.86%..