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Material costs, Ukraine war lead Henkel to expect lower profits
Global Banking & Finance Review®
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DUESSELDORF, Germany (Reuters) – German consumer goods group Henkel said on Friday it was lowering its profit forecasts for 2022 in light of stronger-than-expected increases in materials costs and the consequences of the Russian invasion of Ukraine.
DUESSELDORF, Germany (Reuters) – German consumer goods group Henkel said on Friday it was lowering its profit forecasts for 2022 in light of stronger-than-expected increases in materials costs and the consequences of the Russian invasion of Ukraine.
However, the maker of Persil washing detergents and Pritt glue is more optimistic than before about sales growth thanks to rising prices, especially for its adhesives.
Henkel brought in total sales of around 5.3 billion euros ($5.59 billion) in the first quarter, it said on Friday. This represented a 7.1% increase in organic sales, mainly due to flourishing business in the adhesives division.
For the full year, Henkel now expects organic sales growth of 3.5% to 5.5%. Previously the range had been from 2% to 4%.
Profits, however, will be impacted by rising material and logistics costs, as well as the group’s withdrawal from Russia and Belarus.
Henkel now expects a lower adjusted return on sales, between 9% and 11%, compared to between 11.5 and 13.5% previously. Adjusted earnings per preferred share (EPS) are now expected to see a decline in the range from -35% to -15%.
($1 = 0.9480 euros)
(Reporting by Matthias Inverardi; Writing by Miranda Murray; Editing by Paul Carrel)
Material costs refer to the expenses incurred for raw materials and components used in the production of goods or services.
Adjusted return on sales is a financial metric that reflects a company's profitability after accounting for certain adjustments, providing a clearer picture of operational efficiency.
Organic sales growth measures the increase in sales generated by a company's existing operations, excluding any revenue from acquisitions or divestitures.
Logistics cost refers to the expenses associated with the transportation, warehousing, and distribution of goods, impacting overall profitability.
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