Henkel Shares Fall After It Warns on Raw-Material Costs, Supply-Chain Issues -- Update

   By Ed Frankl 
 

Shares in Henkel AG fell Thursday after it warned that raw-material costs and supply-chain issues would weigh heavily on the second half of the year, amid a mixed picture for full-year guidance.

At 0810 GMT, shares in the German chemicals and consumer-goods company were down 2.8% at EUR85.98.

Despite raising its 2021 organic-sales outlook, Henkel ticked down its earnings before interest and taxes margin guidance to 13.5%-14.5% from 14.0%-15.0% previously, and kept its earnings-per-share outlook.

Growth rates are likely to be significantly lower in the second half of 2021, even after the recovery in industrial demand and a continued economic recovery, the maker of Persil and Schwarzkopf said.

"The exceptionally sharp rise in raw material prices and strained supply chains will weigh heavily on the economy in the further course of the year," Chief Executive Carsten Knobel said.

Mr. Knobel said the company was engaged in extensive measures to limit the impact on its business and profitability.

"There is still great uncertainty about how the pandemic will develop and how consumption and industrial output will be impacted," he said.

Henkel now says its 2021 organic sales growth will be between 6% and 8%, from previous guidance of 4%-6% and earnings-per-share will increase in the high single-digit to mid-teen-percentage range at constant exchange rates.

The Dusseldorf-based company's industrial adhesive technologies unit achieved strongest sales growth of more than 20% in 1H, as industrial demand rebounded, though in Henkel's consumer-goods business, sales were below the level of the prior-year period, the company said.

Weaker margins seem most acute in Henkel's beauty & laundry and home divisions, the company's "perennial drags," according to analysts at Jefferies.

But overall, first-half earnings before interest and taxes rose to 1.30 billion euros ($1.53 billion) from EUR1.09 billion a year earlier.

Adjusted EBIT rose to EUR1.43 billion from EUR1.19 billion a year earlier.

Sales for the six months to the end of June rose 11% to EUR9.93 billion. For the second quarter, organic sales growth was 15% at EUR4.96 billion.

Despite continuing to be affected by the coronavirus, sales exceeded pre-pandemic levels of 2019 when adjusted for currency effects, Henkel said.

Write to Ed Frankl at [e-mail]

(END) Dow Jones Newswires

August 12, 2021 04:40 ET (08:40 GMT)

Copyright (c) 2021 Dow Jones & Company, Inc.