"The effects of the global corona crisis, the extremely tense situation on raw material markets and disruptions in global supply chains continued to have a strong impact on our market environment in the third quarter. Nevertheless, Henkel achieved a good business performance. Comparing this development to the pre-crisis level in the third quarter of 2019, we achieved an average annual organic growth rate of +3.7 percent. All business units exceeded the respective pre-crisis level," said Henkel CEO Carsten Knobel.
"Successful innovations, particularly in the area of sustainability, and the further expansion of our digital business activities were important growth drivers. The strong organic sales increase in the third quarter is also a testament to our robust and balanced portfolio of successful brands and innovative technologies. It is, above all, the result of the strong performance by our global team, which is contributing with great commitment to Henkel's long-term success in these challenging times."
The strong sales growth in the third quarter was driven predominantly by the Adhesive Technologies business unit. Three of its four business areas achieved very strong or even double-digit organic sales growth, while the Automotive & Metals business area recorded a slightly negative development.
Performance also differed among our Beauty Care and Laundry & Home Care consumer businesses. Beauty Care organic sales development in the third quarter was below prior year due to a continued negative sales development in the Body Care category resulting from significantly weaker markets. By contrast, the Professional business area recorded strong organic sales growth compared to the prior-year quarter. The Laundry & Home Care business unit recorded good organic sales growth, driven mainly by Laundry Care.
From a regional perspective, we achieved organic sales growth in all regions in the third quarter - with the exception of North America. The Group's strong sales performance was mainly driven by the emerging markets. Here, all regions recorded high single-digit organic growth.
"While the coronavirus pandemic continues, we have to constantly respond flexibly and quickly to changes in our markets. Tight supply chains and rising raw material and transport costs are proving to be particularly challenging. Despite these difficult conditions which require our full attention, we stay focused on our strategic priorities to deliver on our purposeful growth agenda," explained Carsten Knobel.
Outlook for fiscal 2021 updated
Looking ahead to the rest of fiscal 2021, Knobel said: "There is still great uncertainty as to how the pandemic will develop and how consumption and industrial output will be impacted. In particular, the further strong increases in raw material prices and logistics costs are affecting the economy to a stronger extent than previously assumed. We are working hard with extensive measures to limit the impact on our business and profitability."
"Based on our strong sales performance in the first nine months of the year, we confirm our guidance for organic growth. However, due to the additional negative impacts occurring from further increased raw material and transport costs, we are updating our guidance for adjusted EBIT margin and adjusted earnings per share."
At Group level, the company continues to anticipate organic sales growth of +6.0 to +8.0 percent and now expects an adjusted return on sales (EBIT margin) of around 13.5 percent.
"We continue to operate in a very challenging market environment. However, with our strategic framework for purposeful growth and our strong global team, we are very well positioned to emerge stronger from the crisis and successfully shape our future."
Source: 124 Communications Consulting