Henkel reports mixed results for its first quarter of 2014

12-May-2014 - Last updated on 13-May-2014 at 10:14 GMT

Germany-based personal care manufacturer Henkel has reported good growth in revenues, particularly in emerging markets, but gains were undermined by the negative effects of foreign exchange rates.

Like-for-like sales for the quarter fell by 2.6% to €3.93bn, but reflecting the significant impact from foreign exchange rate, organic sales growth was 4.3%.

The company said that the organic sales growth reflected increased revenues in all three of its business units, as well as improved profitability, despite difficulties in the market environment.

Adjusted net income rose by 8.4% to €452m, which included a tax deduction of €7m.

A strong performance hit by currency exchange

“We delivered a very strong performance in our emerging markets, while we also grew in our mature markets. However, negative foreign exchange effects had an even stronger impact on reported sales than in the previous year,” said Henkel CEO Kasper Rorsted.

The company said that in its beauty care division reported the slowest organic sales growth of the three divisions, with revenues increasing by 3.0% to €856m, while in the laundry and home care division sales were up 6.0% to €1.15bn and the adhesives division posting an increase of 4.1% to €1.9bn.

In the beauty segment, like-for-like sales fell by 2.0%, reflecting the negative impact of currency translations.

Emerging markets peform well, mature markets don't

Growth in the beauty division came mainly from emerging markets, primarily the Asia Pacific region, which reported double-digit growth, while in Africa/Middle East and Eastern Europe, the results were also highlighted as being strong.

However, the company also pointed out that Latin America fell short of expectations, while in the mature markets the company faced up to the problem of continued declining sales, further compounded by pricing pressures.

The company did also point to its innovation pipeline, highlighting Schwarzkopf Nectra Color, as well as the launch of the Essence Ultime brand as being highlights in the hair care category, while in skin care Diadermine brand was given a boost by a new anti-ageing line, Dieadermine No110.

Looking ahead to rest of 2014, Rorsted confirmed the outlook, stating: “For the fiscal year 2014, we anticipate organic sales growth of 3 to 5%.”