Manufacturer Henkel increased its revenues in the first quarter.
(Photo: Bloomberg)
Dusseldorf At the Annual General Meeting a week and a half ago, Henkel boss Carsten Knobel promised his shareholders a good start to the year. In fact, the Persil and Pril manufacturers exceeded expectations for sales growth: In the first quarter, Henkel generated 5.6 billion euros from its own resources, 6.6 percent more than in the same period last year, the Dax group announced on Thursday. Analysts had expected an increase of five percent.
“We got off to a good start in the year – and that in an economic market environment that continues to be challenging,” said Knobel. Other consumer goods groups such as Unilever (Axe, Dove), Beiersdorf (Nivea) and Reckitt Benckiser (Sagrotan) have recently shown stronger sales growth than expected.
The industry has higher costs for freight, raw materials or energy, at the same time consumers have demanded less expensive branded products due to the high cost of living. The situation now seems to be easing a little: the cost pressure on companies is easing, and in view of the political aid programs, consumer spending is increasing.
Henkel: Higher prices, falling sales
Manufacturers of consumer goods are currently increasing their revenues primarily because they pushed through price increases in retail. Henkel also increased its prices in the consumer goods business by 12.7 percent. However, the group sold significantly less goods, with sales falling by 5.7 percent. Henkel’s competitors, on the other hand, reported lower volume declines than expected in the first quarter. Unilever’s sales fell by just 0.2 percent.
Volume is declining as many consumers have switched to lower-priced private labels. In addition, not all Henkel products can currently be found in some supermarkets because the company no longer supplies some products after price negotiations with retailers failed. Edeka boss Markus Mosa said that Henkel had stopped delivering at least part of the range.
A careful look at the rest of the year
These are the first figures that Henkel is providing an insight into its new structure. Henkel boss Knobel has restructured the group, he merged the ailing cosmetics business (Dial, Syoss) with the better-performing detergents and cleaning agents division and its well-known brands Persil and Pril.
“We got off to a good start in the year – and that in an economic market environment that remains challenging.”
(Photo: Henkel)
Analysts see advantages in the restructuring on the cost side, but do not necessarily expect increasing margins and profits, as CEO Knobel promises. At the general meeting, the manager defended the step: This approach creates the greatest value. In this way, Henkel can negotiate more effectively with dealers.
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After the restructuring, Henkel stands on two pillars – the consumer business known as Consumer Brands and the adhesives division. Revenues in this area increased by 11.4 percent to 2.8 billion euros in the first quarter. Henkel produces adhesives for consumers (Pritt) but also for industry. The adhesives business is considered a growth market, and Henkel’s technologies are used in electric cars in particular. When it comes to adhesives, the Düsseldorf company is the market leader.
Despite the growth in sales, Henkel is cautious about the year. CEO Knobel continues to expect organic sales growth of between one and three percent. Competitor Beiersdorf recently raised its forecast and indicated that there could be a further increase.
At Henkel’s Annual General Meeting, shareholder representatives had criticized the company’s weak profitability. In fact, Henkel achieved significantly weaker margins than its competitors last year. On the occasion of the quarterly figures, however, the group does not comment on its profits.
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