Rising raw material and transport costs continue to determine market environment
In the third quarter of fiscal 2021, Henkel continued on its growth path and achieved group sales of around 5.1 billion euros. This was driven predominantly by the Adhesive Technologies business unit where sales increased by 7.1% to 2,442 million euros. Organically (ie, adjusted for foreign exchange and acquisitions/divestments), sales increased by 7.0%,
In the first nine months of 2021, sales in the Adhesive Technologies business unit rose by 11.8% to 7,194 million euros. “We achieved organic sales growth of +15.5%, driven by higher volume and increasingly positive price development as the year progressed,” says Henkel.
In the third quarter, developments in the individual business areas of the Adhesive Technologies business unit varied. Organic sales development in Automotive & Metals was slightly lower, year on year. Here, the business was negatively impacted by lower automotive production levels, mainly caused by the global shortage of semiconductors.
The Electronics & Industrials business area achieved double-digit organic sales growth in both businesses. The Packaging & Consumer Goods business area benefited from ongoing high customer demand and likewise generated double-digit sales growth, driven by the Packaging and Lifestyle businesses in particular.
Organic sales growth very strong
Organic sales growth in the Craftsmen, Construction & Professional business area was very strong, compared to the third quarter of the prior year. Performance in the Consumers & Craftsmen business was negative, following double-digit growth in the prior-year quarter. This was more than offset by the growth in the Construction and General Manufacturing & Maintenance businesses.
From a regional perspective, sales generated by Adhesive Technologies in the emerging markets were significantly higher than in the third quarter of the prior year. The Eastern Europe and Latin America regions recorded double-digit growth, particularly driven by the Packaging & Consumer Goods business area. The Africa/Middle East and Asia (excluding Japan) regions generated a very strong increase in sales.
This corresponds to a strong organic sales growth of +3.5%, driven in particular by positive pricing in all business units. The stable volume development was characterised by a normalisation of demand in consumer businesses and by the ongoing recovery in industrial production. In nominal terms, sales increased by +1.9%.
Good performance in tough times
Comments Henkel CEO Carsten Knobel: “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%. All business units exceeded the respective pre-crisis level.”
Successful innovations, particularly in the area of sustainability, and the further expansion of Henkel’s digital business activities were important growth drivers, he adds. “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.
“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. We now expect these metrics to come in at the lower end of our previous guidance ranges.”