Henkel & Co. KGaA AG posted today a 5.5% rise in net profit in the second quarter, but warned that it expects the Russian-Ukrainian conflict, combined with the political instability in the Middle East to negatively affect profit during the second half of the year.
According to the companys statement, its net profit over the second financial quarter increased by 5.5% to 441 million euros ($590 million) from 418 million euros during the same period a year ago.
Henkel, however, reported a revenue decline over the period. The companys sales fell to 4.14 billion from 4.29 billion euros during the same period last year, short of analysts forecasts of 4.2 billion euros. The adjusted earnings before interest and taxes margin over the second three months of the fiscal year amounted to 16.3%.
The sales of the company, excluding currency effects, acquisitions and divestments, were reported to have increased by 3.3% in the period with all of its divisions and regions contributing to the results.
In addition, Henkel AG also shared a projection for the second half of the year, and explained that it expects slower earnings growth over the period due to the conflicts in Ukraine and the Middle East. The company also confirmed its projection of organic sales growth of between 3 and 5%, with the adjusted earnings before interest and taxes margin increasing to about 15.5% of revenue.
Mr. Kasper Rorsted, the Chief Executive Officer of the company, said in the statement, which was cited by Reuters: “We expect the escalation of the Russian/Ukrainian conflict as well as the persisting political turmoil in the Middle East to have a negative impact on the market environment.” Mr. Rorsted also added: “Therefore, we anticipate a slower growth of adjusted earnings per preferred share in the second half of this year compared to the first half.”
Despite the challenging geopolitical environment, Mr Rorsted said the company will stick to its full-year targets and will also try to increase revenue to 20 billion euros in 2016, from 16.5 billion euros last year. About half of the companys sales are generated by emerging markets.
Henkel & Co. KGaA AG was 5.02% down to trade at 78.35 euros per share by 8:58 GMT. According to the information published on the Financial Times, the 31 analysts offering 12 month price targets for Henkel & Co. KGaA AG have a median target of 90.00 euros, with a high estimate of 100.00 euros and a low estimate of 70.00 euros. The median estimate represents a 9.10% increase from the last price of 82.49 euros.
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