Henkel second-quarter profits surge driven by emerging markets


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Henkel second-quarter profits surge driven by emerging markets

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Henkel has posted high second-quarter profits and an increase in beauty sales, driven largely by emerging market growth.

The German cosmetic, home care and adhesive company reported that organic earnings before interest and taxes rose 8.2 percent to €663.95m ($881m), above Bloomberg analysts’ predictions of €645.66m ($856.73m). Organic revenue also increased by 4 per cent.

The company recorded a total beauty revenue growth of 2.8 per cent, including a 2.3 per cent increase in volume and a 0.5 per cent increase in profits, outperforming the relevant markets throughout the quarter.

In an interview with Bloomberg, CEO Kasper Rorsted said: “The share of sales in emerging markets rose substantially, reaching 45 per cent for the first time.”​ He also described “double digit” ​growth in Brazil, India and China.

Lars Witteck, a spokesperson for Henkel Beauty Care said:“we are continuously growing with excellent performance in Europe and also in skin care, which has shown a positive development.”

Beauty sales

The Beauty division reported a 0.5 per cent improvement in return on sales thanks to a solid performance and strict cost management, bringing their margins to an all-time high of 14.9 per cent.

The division also reported its highest ever absolute sales figures with retail sales continued to have a strong growth path, even in flat to negative markets.

Witteck said that the company was “crowding out the competition with massive investments, both promotion and media, especially in the haircare division.”

Henkel credits their increased sales and revenue growth in the beauty division to continued innovations in their products and the introduction of new brands such as Color Ultimate and Million Color.

Middle Eastern promises

Emerging markets were a big factor in Henkel’s success, with the company posting a double-digit increase in overall revenue of 18.3 per  cent in Africa and the Middle East, along with solid increases in Latin America and Eastern Europe.

The company gave particular credit to the solid sales of their beauty care and laundry and home care divisions for helping them to achieve this performance.

However, despite a strong performance overall profits for the MENA region decreased by over 150 per cent due to an increase in liabilities held for sale.

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