Cosmetics drive growth for Henkel

By Simon Pitman

- Last updated on GMT

Related tags: Cent, Henkel, Organic growth

Germany-based cosmetics and home care producer Henkel has announced
strong results, driven higher by a particularly good performance
from its cosmetics division.

Overall sales grew 3.8 per cent to €3.26bn, with net profit up 9.0 per cent to reach €217m. Growth in sales excluding divestments and acquisitions, as well as taking into affect the impact of foreign currencies was 5.6 per cent.

Breaking the results down, the company's cosmetics and toiletries division outstripped the performance of the laundry and home care division, due many to increased orders for the company's Dial skin and body care brand.

"This success is largely due to improved performance in Western Europe and the launch of further new and innovative products,"​ said Ulrich Lehner, Henkel chairman.

"We are also greatly encouraged by the continued strength in our growth regions. Given this positive development, we expect to achieve organic sales growth of around 5 per cent for the full fiscal year. We expect operating profit to increase by around 10 per cent."

Sales for the company's cosmetic and toiletries division grew 9.1 per cent to reach €742m, compared to the same quarter last year. The company said that as well as the success of its Dial brand, the figure had also been driven by the successful integration of its former Gillette deodorant brand.

Organic growth came in at 3 per cent, but was boosted by particularly strong performances in the company's Eastern European and Latin American markets, which both rose by double digit figures.

Likewise, the company also pointed out that its Western European operations, which form the mainstay of the division, reported positive sales growth for every category.

The company highlighted a strong performance from its Brillance, Palette and Natural & Easy hair colour ranges, as well as the continued growth of the Fa and Dial brands helping to boost the body care category.

The growth of these two brands was underscored through added value, with Fa Speeder for Men and the Dial for Men lines, proving particularly popular.

But in the company's laundry and home care division, the picture was not quite so rosey, as sales fell by 3.4 per cent to reach €1.05bn following a series of divestments in the course of the year. Organic sales looked better though, growing by 3.8 per cent.

The company said that its consumer and craftsmen adhesives business sector increased sales by 11.4 percent to €536 million, while the Henkel Technologies business sector increased sales by 4.9 percent to 872 million euros.

On a regional basis sales in the Europe/Africa/Middle East region rose by 7.7 per cent to €2,063 million euros, but in North America they fell by 8.2 percent to €709 million euros due a the strong prior-year quarter.

In Latin America, where the cosmetics and toiletries division posted double-digit growth rates, sales increased by 10.3 percent to €166 million euros. Sales in Asia-Pacific were 262 million euros, 8.7 percent above the prior-year quarter.

Given the results Henkel says it will be able to grow faster than the average market rates, anticipating organic sales growth of around 5 per cent for 2006 and earnings to rise by around 10 per cent.

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