German chemical and consumer goods firm Henkel has forecasted a drop in sales, citing a ‘difficult environment’.
The company, which is behind brands such as Persil and Dial, blamed falling demand from automotive businesses and greater challenges in its consumer-facing beauty care division than initially anticipated.
In its updated outlook for 2019, Henkel reported that it had expected organic sales growth of between 2 and 4% for all three business units (adhesive technologies, beauty care and laundry and home care). However, it now anticipates growth of 0 to 2%.
The firm’s adjusted earnings per share fell by 9.5% year on year in the second quarter of this year to €1.43, missing analysts’ expectations of €1.45. Henkel blamed an “increasingly difficult market environment” for its performance. In a statement, CEO Hans Van Bylen said: “The development in the second quarter was mainly characterised by a significant decline in demand in key industries such as the automotive industry. This particularly affected our industrial business.
“Nevertheless, our adhesive technologies business delivered a robust performance, achieving sales almost on prior-year level and an excellent EBIT-margin.”
Van Bylen also addressed the fact that its beauty care retail business did not perform as well as it hoped. He added: “On the one hand, this was due to not satisfying developments in mature markets such as North America and Western Europe.
“In China, the retail business was impacted by ongoing stock adjustments. In addition, marketing and sales expenses were higher overall. The professional business, however, continued its strong performance.”