UPDATE 1-German consumer goods group Henkel says no plans to withdraw from Russia, Ukraine

Fri Apr 4, 2014 8:16am EDT

* CEO says to meet challenges "head-on"

* Expects weak foreign currencies will continue to hurt results

* CEO confirms outlook for the current year (Adds comments on currencies, impact on rivals)

DUESSELDORF, Germany, April 4 (Reuters) - German consumer goods group Henkel said the weak Russian rouble would hurt its first-half earnings but it had no plans to withdraw from Russia or Ukraine in spite of uncertainty following Moscow's annexation of Crimea.

Investing in emerging markets with high growth inevitably meant risk and volatility, Chief Executive Kasper Rorsted told the company's annual shareholders' meeting on Friday.

Russia is Henkel's fourth-largest market with annual sales of around 1 billion euros ($1.4 billion) last year.

Rorsted said that while the weak rouble was hurting business, it was too early to quantify the impact on first-half earnings.

The rouble has lost 20 percent against the dollar since protests against the now toppled government in Ukraine began in November.

"Not that this changes anything in our strategy - quite the opposite, in fact. We are determined to meet these challenges head-on," he told shareholders at the meeting in Duesseldorf.

The German company, maker of Persil washing powder and Schwarzkopf hair products, employs about 2,500 staff in Russia and also runs several factories in Ukraine with about 1,000 employees, and Rorsted said pulling out of the region was not on the agenda.

Analysts at Kepler Chevreux estimate that Russia and the Ukraine accounted for 10 percent of Henkel's total sales of 16.4 billion euros last year.

Russia's annexation of Crimea has worried companies with assets in the region as it is unclear how the change and sanctions imposed by Western countries may affect business.

Several top German executives have criticised the strategy of the United States and European Union in dealing with Russia as they fear the consequences for their business.

The depreciation of emerging market currencies has weighed on the earnings of other consumer goods groups.

Industry leader Procter & Gamble cut its outlook reflecting unfavourable exchange rates in Venezuela and other developing markets in February, while Nivea-maker Beiersdorf reported lower-than-expected sales due to currency effects.

Henkel has a target to generate half of its sales from emerging markets by 2016. In 2013, that proportion stood at around 44 percent, up from 43 percent the previous year.

Rorsted also on Friday confirmed the company's targets of a slight increase in its adjusted operating margin this year to 15.5 percent and organic sales growth of 3 to 5 percent. ($1 = 0.7291 euros) (Reporting by Matthias Inverardi; Writing by Kirsti Knolle; Editing by Susan Fenton)

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