German consumer goods group Henkel stuck to its 2012 margin target despite posting quarterly results at the low end of market expectations, hurt by a slowdown in its adhesives business in Asia.
Henkel, whose consumer brands include Persil detergent in most of Europe and Schwarzkopf hair products, said fourth-quarter adjusted earnings before interest and tax (EBIT) rose 12.3 per cent year-on-year to 502 million euros ($658.7 million), compared with a forecast for 516 million.
Chief Executive Kasper Rorsted said the situation in Asia was temporary and that it would not affect the group’s target for to reach an adjusted EBIT margin of 14 per cent in 2012.
“We have no indication or intention of changing direction,” Chief Executive Kasper Rorsted told analysts, seeking to reassure them the group would achieve a target that investors see as over-optimistic given poor global economic growth rates.
Henkel, whose industrial adhesives are used in the electronics and auto industries, said it had been hurt in China as customers used up stock levels and in Thailand, where flooding affected car production.
Emerging markets currently account for 47 per cent of its adhesives business, which had been growing strongly. Organic sales at its adhesives unit slowed to 4.2 per cent in the fourth quarter from 8.7 in the previous quarter.
“We do expect China to come back in 2012. Even the government’s reduced growth forecast of 7.5 per cent is in line with our expectations,” Rorsted told analysts.
Henkel’s shares, which have gained almost 30 per cent over the last six months, were up 1.3 per cent, compared with a 2.1 per cent rise in the Dax index at 1313 GMT.