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Material costs, Ukraine war lead Henkel to expect lower profits

Henkel spins off its Russia business
Henkel spins off its Russia business Copyright Thomson Reuters 2022
Copyright Thomson Reuters 2022
By Reuters
Published on Updated
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DUESSELDORF, Germany - German consumer goods group Henkel said on Friday it was lowering its profit forecasts for 2022 in light of stronger-than-expected increases in materials costs and the consequences of the Russian invasion of Ukraine.

However, the maker of Persil washing detergents and Pritt glue is more optimistic than before about sales growth thanks to rising prices, especially for its adhesives.

Henkel brought in total sales of around 5.3 billion euros ($5.59 billion) in the first quarter, it said on Friday. This represented a 7.1% increase in organic sales, mainly due to flourishing business in the adhesives division. 

For the full year, Henkel now expects organic sales growth of 3.5% to 5.5%. Previously the range had been from 2% to 4%.

Profits, however, will be impacted by rising material and logistics costs, as well as the group's withdrawal from Russia and Belarus.

Henkel now expects a lower adjusted return on sales, between 9% and 11%, compared to between 11.5 and 13.5% previously. Adjusted earnings per preferred share (EPS) are now expected to see a decline in the range from -35% to -15%.

($1 = 0.9480 euros)

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