Henkel AG and CO. ((HENKY)) has held its Q2 earnings call. Read on for the main highlights of the call.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Henkel AG & CO. Earnings Call Reveals Mixed Performance Amidst Macroeconomic Challenges
The recent earnings call for Henkel AG & CO. presented a mixed performance for the first half of 2025. While the company celebrated positive developments in its Adhesive Technologies segment and a strong EBIT margin improvement, it faced challenges such as flat organic sales growth and a decline in Consumer Brands volume, particularly in North America. These issues underscore the ongoing macroeconomic challenges impacting the company.
Adhesive Technologies Positive Growth
Adhesive Technologies was a bright spot for Henkel, with positive pricing and volume development leading to an organic sales growth of 1.2% in the first half of 2025. The segment continued to show resilience with a slight increase in organic sales growth in the second quarter, highlighting its robust performance amidst challenging market conditions.
Strong EBIT Margin Increase
Henkel reported a strong EBIT margin increase, reaching 15.5% for the group, marking a 60 basis point improvement. This was driven by very strong gross margins and a favorable mix, demonstrating the company’s ability to enhance profitability even in a challenging economic environment.
Consumer Brands Top 10 Growth
The top 10 Consumer Brands of Henkel showed more than 3% organic sales growth, driven by a balanced development in both price and volume. This growth reflects the strength of Henkel’s leading brands and their ability to capture market share despite broader market challenges.
Successful Share Buyback
Henkel’s share buyback program, announced in the first quarter of 2025, is progressing well. By June 30, the company had repurchased shares worth more than EUR 400 million, signaling confidence in its financial health and commitment to returning value to shareholders.
EPS Growth
Earnings per share (EPS) at constant currencies grew strongly by 5% compared to the previous year. This solid achievement is noteworthy given the strong baseline set in 2024, showcasing Henkel’s ability to deliver consistent shareholder value.
Flat Organic Sales Growth
The first half of 2025 saw flat organic sales growth, reflecting high prior year comparables and ongoing macroeconomic challenges. This stagnation highlights the hurdles Henkel faces in maintaining growth momentum in a volatile economic landscape.
Challenges in North America
The Consumer Brands segment in North America was particularly affected by subdued consumer sentiment and customer destocking, especially in the first quarter. This regional challenge underscores the broader economic pressures impacting consumer behavior and inventory management.
Negative Impact from Foreign Exchange
Foreign exchange posed a significant headwind, with a negative impact of 2.8% in the first half of 2025. Henkel anticipates this challenge to persist, with expectations of a low to mid-single-digit percentage range impact for the full year.
Consumer Brands Volume Decline
Consumer Brands experienced a volume decline of 1.6% in the first half of 2025, attributed to supply chain challenges and high prior year comparables. This decline highlights the operational challenges Henkel faces in maintaining volume growth.
Forward-Looking Guidance
Looking ahead, Henkel provided updated guidance, narrowing its range for organic sales growth to 1% to 2% for the full year. The adjusted EBIT margin is expected to be between 14.5% and 15.5%, with adjusted EPS growth at constant currencies anticipated to increase in the low to high single-digit percentage range. The company remains optimistic about the second half of the year, anticipating stronger top-line performance and continuing its strategic initiatives focused on innovation and sustainability.
In summary, Henkel AG & CO.’s earnings call highlighted a mixed performance for the first half of 2025. While there were positive developments in certain segments and a strong EBIT margin increase, challenges such as flat organic sales growth and regional difficulties in North America were evident. The company’s forward-looking guidance reflects cautious optimism, with expectations of improved performance in the latter half of the year.