DUSSELDORF, Germany (Thomson Financial) - Henkel AG & Co. KGaA's
second-quarter adjusted EBIT rose a lower-than-expected 7.8 percent to 372
million euros on strong demand for its industrial glues.
The company's shares rose, boosted by plans to lift sales prices by as much
as 10 percent this year and by a statement that a cost-cutting initiative is
progressing well, traders said.
The quarterly EBIT figure -- excluding costs from an ongoing round of job
cuts and from the integration of newly acquired adhesives businesses -- fell
short of the average forecast of 388.6 million euros in a Thomson Financial News
survey of nine analysts as surging raw-material prices weighed on results.
The German maker of shampoos, detergents and industrial adhesives posted a
net profit of 38 million euros, down from 234 million euros a year earlier, on
integration and restructuring costs.
One-off charges amounted to 256 million euros, almost a third of the 770
million euros to 780 million euros in special charges Henkel plans to incur in
the full year.
Henkel has said it will slash up to 3,000 jobs to counter a surge in
feedstock prices and fierce competition, an initiative that accounts for most of
the reported one-offs.
Henkel, which is the world's largest producer of glues, in April completed
the takeover of National Starch's adhesives and electronic materials businesses
from Akzo Nobel NV, which handed them on to Henkel as part of its takeover of
Imperial Chemical Industries.
Quarterly sales rose 11.4 percent to 3.668 billion euros, boosted by the
acquisition, but less than the 3.743 billion euros expected by analysts.
Excluding acquisitions and currency effects, revenue increased by 6.1
percent.
"We achieved highly encouraging second-quarter organic sales growth, despite
a difficult economic environment still characterized by significantly increasing
raw material costs and a weak U.S. dollar," said Chief Executive Officer Kasper
Rorsted.
He also specified that he plans to lift sales prices by 5 percent to 10
percent in the second half, to pass rising costs along to clients further.
The restructuring programme is progressing faster than initially planned,
resulting in 30 million euros in savings in 2008, he added.
The shares rose 1.04 euros, or 4 percent, to 27.23 euros as per 12:20 p.m.,
while the benchmark DAX was just 7.39 points, or 0.1 percent higher at 6,511.31.
"The organic sales growth rate was stronger than expected," Merck Finck &
Co. analyst Carsten Kunold commented in a note to investors, adding that
profitability was below his projections because Henkel did not translate all of
the costs increases into higher sales prices.
Looking ahead, Henkel said it now aims for an gain in operating profit "at
the lower end of the mid-teens percentage range" when adjusted for restructuring
charges and one-time effects but including cost savings from an ongoing
overhaul.
It previously cited a mid-teens percentage range.
The company earlier this year started a restructuring programme that will
result in about 3,000 job cuts. That compares with a total staff of about 53,000
at the end of 2007.
Earnings per preferred share, adjusted for restructuring charges and
one-time effects, are set to rise by "the lower end of mid-single-digit
percentage range" the company added.
The previous guidance was for a mid-single-digit percentage range.
The guidance for revenues was lifted, however, with a target range of 3
percent to 5 percent of organic growth in 2008, up from a previous range of 3
percent to 4 percent range.
In addition, the company said it still owns its 29.4 percent stake in U.S.
cleaning contractor Ecolab Inc. and that the holding was worth about 2 billion
euros at the end of June, little changed from three months earlier.
Henkel, which is controlled by fifth-generation descendants of founder Fritz
Henkel, repeated that it will sell the holding in part or in whole by the end of
this year to finance the 2.7 billion-pound purchase of the National Starch
businesses.
ludwig.burger@thomsonreuters.com
lb/jfr/lb/jfr/lb/rw
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