RPT-UPDATE 2-Henkel flags emerging market concerns, sticks to 2013 targets

Thu Aug 8, 2013 9:19am EDT

* Q2 sales 4.29 bln eur vs Rtrs poll avg 4.30 bln

* Q2 opg profit 660 mln eur vs poll avg 646 mln

* CEO says emerging markets remain strong for Henkel

* Says in no rush for acquisitions

FRANKFURT, Aug 8 (Reuters) - German consumer goods company Henkel, which makes washing powder, shampoos and cleaning products, joined rivals in taking a more cautious view of growth in emerging markets.

It said on Thursday it had revised its growth forecast for emerging market economies downwards slightly and now expected consumer spending in those countries to rise by 4 percent in 2013, compared with a previous forecast for 5 percent.

The firm, which makes Persil washing powder in Germany and Schwarzkopf hair products, however maintained its group profit and sales targets for 2013 and Chief Executive Kasper Rorsted said emerging markets remained its driving force in the quarter.

Faced with recession-hit demand at home, European firms have been expanding heavily in emerging markets, which are expected to account for a third of sales this year, according to a Morgan Stanley analysis of 505 leading European groups.

That has attracted investors - but it makes businesses vulnerable if the boom loses momentum.

Henkel's rival Unilever last month spoke of slowing growth in emerging markets, and Beiersdorf on Wednesday said there were concerns among consumer goods companies.

Henkel's overall sales from emerging market countries rose 8.9 percent year-on-year in the second quarter, adjusted to strip out the effects of currency movements and acquisitions. They now account for 45 percent of sales, compared with 43 percent a year ago.

The sales increase accelerated slightly from 8.2 percent growth in the first quarter and an 8.1 percent rise in the second quarter of 2012.

Rorsted said sales growth in Brazil, India and China was above 10 percent, while growth remained strong in Russia.

ACQUISITIONS

Henkel's shares rose 3 percent to 76.86 euros, making it the fourth-biggest gainer on the Dax index of leading German shares, which rose 1 percent. The company was the second highest gainer among shares of European personal and household goods firms .

"The company printed another robust set of numbers. We expect consensus estimates (for full-year results) to be revised up by around 1-2 percent this morning," Nomura analyst Guillaume Delmas wrote in a note.

Henkel expects earnings per share to rise 10 percent this year, adjusted for one-off items and restructuring charges, and sales to rise between 3 and 5 percent.

Henkel has around 4 billion euros ($5.3 billion) available for acquisitions and recently said it was looking at around 80 different targets. Analysts expect Henkel will announce a deal this year, possibly in the United States.

Henkel's last major purchase was that of National Starch in 2008 for 3.7 billion euros to expand its adhesives division.

Responding to questions from journalists, Chief Financial Officer Carsten Knobel said the group was in no rush.

The group reported second-quarter sales of 4.29 billion euros, up 4 percent adjusted for currency effects and driven by emerging markets, and an 8 percent gain in operating profit to 660 million euros.

That compares with expectations for 4.30 billion euros and 646 million euros in a Reuters poll.

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