Henkel delivered strong organic sales growth of 3.9 percent in the third quarter of fiscal 2020 – despite the continued challenging economic envi-ronment as a result of the COVID-19 pandemic. Group sales totaled around 5 billion euros, corresponding to a nominal change of -1.5 percent. 

 

“The impacts of the global coronavirus crisis continue to determine the market environ-ment. Nevertheless, Henkel achieved a good business performance in the third quarter, with all three business units contributing. This is evidence of our robust, diversified port-folio comprised of successful brands and innovative technologies for our customers in the industrial and consumer goods businesses. Furthermore, our additional investments in marketing, innovation and digitalization are paying off. Plus, we significantly expanded our digital sales in the third quarter, increasing their total sales share to more than 15 per-cent,” said Henkel CEO, Carsten Knobel. 

 

“The good performance in the third quarter is also partly due to catch-up effects from the second quarter, where the negative impacts of the COVID-19 pandemic were particularly severe. But above all, it is the result of our strong global team, which in this unprecedented and challenging time for all of us, is showing enormous commitment as it continues to contribute to the long-term success of Henkel.” 

 

Henkel performed well in this challenging market environment in the third quarter. The Adhesive Technologies business unit was able to record a recovery in demand across all business areas compared to the second quarter and achieved positive organic sales growth overall compared to the same quarter of the previous year. In the Beauty Care business unit, the Hair Salon business also showed a recovery compared to the second quarter. Its organic sales development year on year was, however, slightly negative. Conversely, the retail business achieved very strong organic sales growth compared to the third quarter of 2019. With demand for laundry detergents and household cleaners remaining strong and thanks to catch-up effects from the second quarter, the Laundry & Home Care business unit was able to record significant organic sales growth, and thus continued its successful development. 

 

“During the coronavirus crisis, we adapted flexibly and quickly to changes while continu-ing to vigorously pursue the agenda for purposeful growth that we introduced in March this year. With our new full-year guidance, we provided our expectations for our devel-opment over the remainder of the year. Although we assume that we will continue to feel the negative impacts of the pandemic in the fourth quarter, we do not expect to see fur-ther extensive lockdowns – such as those witnessed in the second quarter – in the core regions essential for Henkel. We are convinced that, with our strategic focus on purpose-ful growth, we are well positioned to emerge stronger from the crisis,” Knobel added. 

 

In the third quarter of 2020, sales of the Henkel Group decreased nominally by -1.5 percent to 4,999 million euros. Organically (i.e. adjusted for foreign exchange and acquisitions/divestments), sales increased by 3.9 percent. At Group level, the increase was driven by volume, with price and volume developments differing between the business units. Acquisitions and divestments accounted for an increase of 0.1 percent in sales. Foreign ex-change effects had a negative impact of -5.5 percent on the sales performance. 

 

In the first nine months of 2020, sales decreased nominally by -4.5 percent to 14,485 million euros. Organically, Henkel registered a negative sales development of -2.1 percent, primarily due to volume effects. Over the first nine months of this year, price trends were only slightly negative. Henkel’s business performance was influenced, especially in the first six months of the year, by the negative impacts of the COVID-19 pandemic on its Industrial and Hair Salon businesses in particular. After recording the strongest decline in demand in the second quarter, Henkel’s businesses recovered significantly in the third quarter.

 

The emerging markets achieved organic sales growth of 8.8 percent in the third quarter. Organic sales development in the mature markets was positive at 0.6 percent. In the Western Europe region, sales declined organically by -1.2 percent year on year. By contrast, we were able to increase sales in the Eastern Europe region by 10.4 percent. In the Africa/Middle East region, we achieved organic sales growth of 13.9 percent in the third quarter of 2020. Organic sales growth was 2.9 percent in the North America region and 13.8 percent in the Latin America region. Organic sales development in the Asia-Pacific region was positive at 1.2 percent.

 

In the first nine months of 2020, the emerging markets posted organic sales growth of 1.3 percent, whereas sales development in the mature markets was negative at -4.4 percent. 

 

In regional terms, the Adhesive Technologies business unit posted very strong organic sales growth in the emerging markets. Sales increased in the double-digit percentage range in the Latin America and Eastern Europe regions, with significant growth being posted in the Africa/Middle East region. The Packaging & Consumer Goods and the Craftsmen, Construction & Professional businesses were the main contributors to this development. Sales performance remained stable overall in the Asia (excluding Japan) region. Very strong growth in China was not able to offset the negative developments in the other countries in the region.

 

Based on business development in the first nine months of 2020 and assumptions regarding the business performance in the fourth quarter, the Management Board of Henkel AG & Co. KGaA approved a new outlook for fiscal 2020 on October 9, 2020.

 

Due to the effects of the COVID-19 pandemic, a strongly negative development of the global economy is expected in fiscal 2020. The new outlook is based on the assumption that, in the fourth quarter, industrial demand and business activity in areas of importance to Henkel will be below prior year but will not deteriorate significantly. The decisive factor in this context will be the further development of global infection rates and pandemic-related restrictions. In formulating its guidance, Henkel assumes that, in the core regions essential for the company, there will be no far-reaching lockdowns in the fourth quarter of 2020. 

 

Taking these factors into account, the Henkel Group expects organic sales growth of between -1.0 and -2.0 percent in fiscal 2020. 

 

We expect the contribution to nominal sales growth of the Henkel Group from acquisitions in 2019 and 2020 to be in the low single-digit percentage range. The translation of sales in foreign currencies is expected to have a negative effect in the low to mid-single-digit percentage range. 

 

At Group level, Henkel expects to achieve an adjusted return on sales (adjusted EBIT margin) in the range between 13.0 and 13.5 percent. For the Adhesive Technologies business unit, Henkel expects an adjusted EBIT margin in the range between 14.5 and 15.0 percent, for Beauty Care in the range between 10.0 and 10.5 percent and for Laundry & Home Care in the range between 15.0 and 15.5 percent. The decline in sales in the Industrial and the Hair Salon businesses due to the pandemic will have a negative impact on the adjusted EBIT margin.

 

As announced at the beginning of the year, Henkel is also increasing investments in marketing, advertising, digitalization and IT.