Henkel FY24 Profit Climbs, Outlook Positive; But Stock Drops On View Of Slower Start

(RTTNews) - German chemical and consumer goods major Henkel AG & Co. KGaA reported Tuesday higher profit in fiscal 2024 amid slight growth in sales. The company also issued positive outlook for fiscal 2025, and announced a double-digit percentage increase in the dividend, and up to 1 billion euros share buyback.

Meanwhile, shares of Henkel were down around 10 percent in the German trading after the firm predicted a slower start to the year. However, it is also expected that organic sales growth will accelerate in the course of the year leading to a stronger second half of fiscal 2025 versus the first half.

According to the firm, the outlook reflects a currently challenging industrial environment and subdued market growth and consumer sentiment in some of its markets; especially in North America.

Henkel CEO Carsten Knobel said, "The results of the past year are a clear evidence that Henkel's transformation is progressing successfully and that, with our strategic agenda for purposeful growth, we are on the right path to best position the Company for the future. This is also reflected in the outlook for fiscal 2025, in which we expect further sales and earnings growth despite a business environment that remains challenging."

For the new year, the company anticipates adjusted earnings per preferred share to increase in a range from low to high single-digit percentages at constant exchange rates.

Adjusted return on sales or adjusted EBIT margin is expected in the range of 14.0 to 15.5 percent, compared to 14.3 percent last year.

Henkel expects organic sales growth to be between 1.5 and 3.5 percent in fiscal 2025. Organic growth of between 2.0 and 4.0 percent is expected for the Adhesive Technologies business unit and between 1.0 and 3.0 percent for Consumer Brands.

For the full year 2025, a further margin and thus profitability improvement versus the prior year is expected for both business units. The development in the first two months of fiscal 2025 shows that Henkel and both business units are well underway.

With regard to the prices for direct materials, Henkel expects an increase in the low to mid single-digit percentage range compared to the annual average of 2024.

Further, the Management Board, Supervisory Board and Shareholders' Committee will propose to the Annual General Meeting on April 28 a dividend increase of 10.3 percent compared to the previous year, amounting to 2.04 euros per preferred share and 2.02 euros per ordinary share.

Separately, Henkel announced that its Management Board has resolved to launch a share buyback program with a total value of up to 1 billion euros. In the program, Henkel preferred shares with a total value of up to 800 million euros and ordinary shares with a total value of up to 200 million euros are to be repurchased.

Based on current stock market prices, the proposed buyback corresponds to a share of about 2.7 percent of the company's capital stock. The buyback program is expected to start during the month of April 2025 and to be carried out until March 31, 2026, at the latest.

In fiscal 2024, net income attributable to shareholders increased to 2.007 billion euros or 4.78 euros per share from 1.318 billion euros or 3.13 euros per share in the prior year.

Adjusted earnings per ordinary share were 5.34 euros, compared to 4.33 euros in the previous year. Adjusted earnings per preferred share increased 23.2 percent to 5.36 euros from previous year's 4.35 euros.

Adjusted operating profit or adjusted EBIT climbed 20.9 percent from last year to 3.09 billion euros, and adjusted EBIT margin was significantly higher at 14.3 percent, compared to 11.9 percent last year.

Net sales for the year were 21.586 billion euros, up 0.3 percent from 21.514 billion euros last year. Adjusted for the foreign exchange effects, sales growth was 2.1 percent.

Organic sales growth showed a good development at 2.6 percent, driven by both good price and positive volume development.

Sales in the Adhesive Technologies business unit totaled 10.97 billion euros in fiscal 2024, an increase of 1.7 percent year on year in nominal terms. Organically, sales increased by 2.4 percent.

Sales in the Consumer Brands business unit totaled 10.47 billion euros, 0.9 percent below the prior year. Organically, sales increased 3 percent.

In Germany, on the XETRA, Henkel shares were trading at 69.70 euros, down 10.4 percent.

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