Henkel Shares Drop as Growth Prospects Fade
13 August 2019 - 11:30AM
Dow Jones News
By Anthony Shevlin
Shares in Germany's Henkel AG & Co. KGaA (HEN.XE) trade
sharply lower after the company cut its full-year growth guidance
on Tuesday, as previous expectations of an increase in industrial
demand in the second half have dissipated.
The German consumer-goods company--which makes Dial soap and
Purex laundry detergent--now sees full-year organic sales growth
between 0% and 2%, down from previous guidance of between 2% and
4%.
At 0859 GMT, shares in Henkel traded 5.7% lower at EUR86.22.
The company said earnings in the second quarter fell due to a
decline in key industries such as automotive. Earnings before
interest and taxes came to 756 million euros ($846.4 million)
compared with EUR814 million the year prior.
Henkel is the latest in a line of German companies to lower
targets in light of a slowdown in the automotive sector.
Last month Daimler AG (DAI.XE) issued its second profit warning
in less than a month. The same week German chemical giant BASF SE
(BAS.XE) slashed its profit forecasts, citing sluggish demand in
the automotive market. Bernstein analysts said BASF could face more
pain in the second half due to the declining sector.
Schaeffler AG (SHA.XE) in July lowered its views for the full
year as a result of weakness in the global automotive business and
Continental AG (CON.XE) last week said it doesn't expect any upturn
in the market over the short to medium term.
Bernstein analysts said Henkel's second-quarter results were
another disappointment.
"The new big question is if the sustained terrible operating
results will induce dramatic changes, which we do not anticipate in
the short term," it said.
Jefferies said Henkel's misery continues following a poor second
quarter, with no recovery in industrial production expected in the
second half--a key demand engine for its adhesives unit.
Despite the troubled economic outlook, Henkel said it will
continue to implement its strategic priorities and execute its
planned growth investments.
"We focus on strengthening our businesses and will further
increase our competitiveness to deliver sustainable profitable
growth," said Henkel Chief Executive Hans Van Bylen.
Write to Anthony Shevlin at anthony.shevlin@dowjones.com;
@anthony_shevlin
(END) Dow Jones Newswires
August 13, 2019 05:15 ET (09:15 GMT)
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