Henkel keeps 2012 margin target as Q4 falls short
BERLIN (Reuters) - German consumer goods group Henkel (HNKG_p.DE) stuck to its 2012 margin target despite posting quarterly results at the low end of market expectations, hurt by a slowdown in its adhesives business in Asia.
Henkel, whose consumer brands include Persil detergent in most of Europe and Schwarzkopf hair products, said on Thursday fourth-quarter adjusted earnings before interest and tax (EBIT) rose 12.3 percent year-on-year to 502 million euros ($658.7 million), compared with a forecast for 516 million.
Chief Executive Kasper Rorsted said the situation in Asia was temporary and that it would not affect the group's target for to reach an adjusted EBIT margin of 14 percent in 2012.
"We have no indication or intention of changing direction," Chief Executive Kasper Rorsted told analysts, seeking to reassure them the group would achieve a target that investors see as over-optimistic given poor global economic growth rates.
Henkel, whose industrial adhesives are used in the electronics and auto industries, said it had been hurt in China as customers used up stock levels and in Thailand, where flooding affected car production.
Emerging markets currently account for 47 percent of its adhesives business, which had been growing strongly. Organic sales at its adhesives unit slowed to 4.2 percent in the fourth quarter from 8.7 in the previous quarter.
"We do expect China to come back in 2012. Even the government's reduced growth forecast of 7.5 percent is in line with our expectations," Rorsted told analysts.
Henkel's shares, which have gained almost 30 percent over the last six months, were up 1.3 percent, compared with a 2.1 percent rise in the Dax index .GDAXI at 1313 GMT.
Analysts currently forecast Henkel will make a margin of 13.5 percent in 2012, according to Thomas Reuters I/B/E/S. Its 2011 margin was 13.2 percent.
Like rivals Unilever (ULVR.L) (UNc.AS) and Procter & Gamble (PG.N), Henkel described the economic environment as challenging and said it expected a further increase in raw material prices of around 5 percent.
Henkel said it would therefore continue to work on reducing costs and that it expected restructuring charges of 100 million euros in 2012.
Fourth-quarter sales grew 2.8 percent to 3.8 billion euros, compared with expectations for sales of 3.9 billion euros, in a Reuters poll.
The company is due to give a longer-term strategy update in November, when it will reveal targets for the period beyond 2012.
"We will again be aiming to achieve profitable growth in 2013," it said in its annual report published on Thursday. ($1 = 0.7622 euros)
(editing by Jane Baird)
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