By Ellen Emmerentze Jervell
FRANKFURT--Henkel & Co. KGaA (HEN.XE) said fourth-quarter
net profit fell slightly, hurt by extraordinary costs related to
its restructuring.
The German manufacturing company said net profit in the three
months to end-December fell to 298 million euros ($333.67 million)
from EUR320 million for the same period a year earlier. The fall
was caused by one-time costs in conjunction with Henkel's
conversion of users to a digital workplace, the creation of an
integral global supply chain and an expansion of its global
sourcing hubs network. Adjusted operating profit, also called
earnings before interest and taxes, or EBIT, rose 3.1%.
Henkel met its financial targets for 2014.
Henkel is known for laundry and homecare products, beauty care
and adhesives, including its Persil laundry detergent and
Schwarzkopf shampoos.
In the fourth quarter, sales rose 7.1% to EUR4.1 billion, helped
by a strong performance at all its three business units. Although
the weak Russian ruble knocked the shine off Henkel's earnings in
Eastern Europe, its sales in the region increased by 4.5% for the
full year, when adjusted for currency fluctuations. Stripping out
exchange-rate fluctuations, Henkel's fourth-quarter sales rose
3.9%.
"The emerging markets were once again the main growth drivers
for Henkel," said Chief Executive Kasper Rørsted.
Despite negative currency effects and political instability in
some countries in Africa and the Middle East, Henkel's currency
neutral sales jumped 16.9% in the region last year, again helped by
positive performances at all business units.
North American sales decreased 2.9% to EUR2.8 billion in 2014,
when adjusted for currency fluctuations. Henkel has long struggled
to grow in the American consumer goods industry's competitive
landscape, and it was the fourth largest producer of laundry care
products in the U.S. last year. According to data from market
research firm Euromonitor, Henkel held 5.7% of the laundry market
in 2014, lagging far behind market leader P&G, which had a
55.9% market share. In 2013, Henkel held 6.2% of the market. Henkel
said solid laundry sales in Western Europe compensated for its
decline in North America.
Henkel's management has been praised by analysts and investors
for its handling of the complicated economic environment in Eastern
Europe, particularly in Russia. Looking at 2015, Kasper Rørsted
said Henkel expects "stagnation" in the region, and increased
pressure on the Russian currency and economy. He said he is focused
on meeting the company's ambitious targets for the next couple of
years.
"We will continue to adapt our processes and structures, making
us more flexible and efficient," Mr. Rørsted said.
This year, Henkel said it expects to grow 3-5% on a currency
neutral basis. It expects both its home care and laundry range and
its adhesives business to grow in this size range. In its beauty
care division, it expects a sales growth of about 2%. Henkel
expects EBIT to rise approximately 16% in 2015.
For the full year 2014, net profit reached EUR1.62 billion, up
from EUR1.58 million in 2013, on a currency-neutral 4.4% rise in
sales to EUR16.4 billion.
Write to Ellen Emmerentze Jervell at ellen.jervell@wsj.com
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