Henkel FY22 Profit Down, Sees Slower Organic Sales Growth In FY23; Stock Down

Shares of Henkel AG & Co. KGaA were losing around 3 percent in the morning trading in Germany after the chemical and consumer goods firm reported Tuesday weak earnings in its fiscal 2022, despite increased sales. Further, the company maintained its dividend, and said it sees slower organic sales growth in fiscal 2023.

For fiscal 2023, Henkel expects organic sales growth would be between 1.0 and 3.0 percent, compared to fiscal 2022 organic sales growth of 8.8 percent.

Adjusted earnings per preferred share at constant exchange rates for the new year would move in a range of down 10 percent to up 10 percent. Adjusted return on sales would be in the range of 10 to 12 percent, higher than last year.

Henkel CEO Carsten Knobel said, “Based on these assumptions, we expect subdued industrial demand compared to the previous year, as well as weakening growth dynamics in consumer demand in segments which are relevant for Henkel.”

The company noted that the exceptionally volatile and challenging market environment that were present in fiscal 2022 will also continue to impact its businesses in 2023.

In the mid-term, the company aims to realize gross savings of around 500 million euros. The company sees significant synergy potential arising from adapted sales and administrative structures, a stronger focus in advertising and marketing, and an optimized supply chain.

Henkel plans implementation to take place in two phases. In the first phase, measures being implemented by the end of 2023 will result in net savings of around 250 million euros on an annual basis from 2024 onwards.

As a second step, the company will optimize the business unit’s production and logistics network. The first measures will start in 2023 and aim for implementation by the end of 2025.

Further, Henkel said its Management Board, Supervisory Board and Shareholders’ Committee will propose to the Annual General Meeting on April 24 a stable dividend relative to the previous year of 1.85 euros per preferred share and 1.83 euros per ordinary share.

In fiscal 2022, net income attributable to shareholders of Henkel dropped 23 percent to 1.26 billion euros from last year’s 1.63 billion euros.

Earnings per preferred share were 2.95 euros, down 22 percent from 3.78 euros a year ago. Adjusted earnings per preferred share were 3.90 euros, compared to 4.56 euros in the prior year.

Adjusted operating profit or adjusted EBIT for fiscal year 2022 declined 13.7 percent to 2.32 billion euros from 2.69 billion euros in fiscal 2021. Adjusted EBIT margin was 8.1 percent, down 2.9 percentage points.

The earnings were mainly hit by the impact of significantly higher prices for raw materials and logistics.

Group sales were 22.40 billion euros in fiscal 2022, a growth of 11.6 percent from last year’s 20.07 billion euros, driven by price increases across all business units.

Organic sales increased 8.8 percent as a 13.2 percent rise Adhesive Technologies and 6.3 percent growth in Laundry & Home Care sales offset a 0.5 percent drop in beauty care.

In the fourth quarter, Henkel sales were 5.51 billion euros, a growth of 6 percent organically, driven by a 11.5 percent rise Adhesive Technologies and 3 percent growth in Laundry & Home Care sales. Meanwhile, sales dropped 4 percent in beauty care.

In Germany, Henkel shares were trading at 67.34 euros, down 2.7 percent.

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