February 22, 2018 / 9:06 AM / a year ago

UPDATE 2-Henkel gives cautious outlook after beauty sales fall

* 2018 organic sales seen up 2 to 4 pct

* 2018 adj earnings per preferred share seen up 5 to 8 pct

* Dividend 1.79 euros per preferred share vs 1.75 consensus

* Q4 adhesives sales higher than analyst consensus

* Shares rise to top of German blue-chip index (Adds shares, comments from analyst call)

By Emma Thomasson

BERLIN, Feb 22 (Reuters) - German consumer good company Henkel reported a strong performance in its adhesives business on Thursday, although the producer of Schwarzkopf haircare products saw falling beauty sales and gave a cautious outlook for 2018.

The maker of Persil detergent and Loctite adhesives expects adjusted earnings per preferred share to grow 5 to 8 percent in 2018, noting ongoing currency pressures. Organic sales growth should come in at its usual target of 2 to 4 percent.

“As expected, 2018 guidance was nothing special ... but Henkel tends to start low and beat, as we saw in 2016 and 2017,” wrote Bernstein analyst Andrew Wood.

Henkel shares, which have been under pressure since it reported disappointing third-quarter results, were up 1.2 percent at the top of the German blue-chip DAX index at 0841 GMT.

Henkel’s fourth-quarter sales rose an organic 3.2 percent to 4.9 billion euros. Earnings before interest and taxes (EBIT) adjusted for one-offs rose 5 percent to 801 million euros ($982.67 million), slightly below average analyst forecasts .

Sales at its adhesives business accelerated to an organic 6.4 percent in the quarter, ahead of analyst consensus.

However, the company has been grappling with a price war in the United States with Procter & Gamble and competition in its beauty business, and it saw laundry sales growth slip to 1.2 percent. Sales of beauty care products declined 1 percent.

The decline in beauty sales was mainly due to destocking in the Chinese market. Its laundry business was hit by weakness in the Middle East and Africa, finance chief Carsten Knobel told a conference call for analysts.

Rival Unilever, which reported a bigger-than-expected acceleration in fourth-quarter sales growth, helped by the launch of new brands, has forecast underlying sales growth of 3 to 5 percent for 2018.

Beiersdorf, the maker of Nivea and other skin care products, posted a 5.7 percent rise in organic group sales in 2017, faster than the 4 to 5 percent gain it had previously forecast, and said it was optimistic for 2018.

Henkel said it would pay a dividend of 1.79 euros per preferred share, ahead of average forecasts for 1.75 euros.

$1 = 0.8151 euros Additional reporting by Matthias Inverardi; Editing by Maria Sheahan

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