The Düsseldorf Consumer Goods Group Henkel has announced a stable dividend of 1.85 euros per preferred share for the past fiscal year. This corresponds to the value of the previous year and is to be distributed to shareholders in 2023. In addition, the DAX-listed company announces moderate objectives for the current fiscal year. With its two segments - Consumer Brands and Adhesive Technologies - Henkel is aiming for an organic sales growth of 2.0 to 4.0 percent in the year 2024. The adjusted EBIT margin is expected to be between 12.0 and 13.5 percent at the group level. The adjusted earnings per preferred share are also expected to increase by 5 to 20 percent by 2024 compared to the previous year.

Henkel Successfully Operates in Its First Fiscal Year with Two Segments, Consumer Brands and Adhesive Technologies. Profit Increased Disproportionately to Revenue, and Self-Imposed Targets Were Met. The Reported Net Profit Amounted to 1.32 Billion Euros, and Adjusted Operating Profit Rose to 2.56 Billion Euros. Total Revenue Was 21.5 Billion Euros. The Company Also Managed to Improve Margins. In Particular, the Reorganization and Merger of the Former Laundry & Home Care (LHC) and Beauty Care Segments, Which Ultimately Led to the Formation of the Consumer Brands Segment, Contributed to These Successes.

Due to the faster than expected restructuring into the new mega-segment Consumer Brands, Henkel has raised its cost-saving targets. The company now aims to save 525 million euros annually from 2026, instead of the previous target of 400 million euros. In the first phase, which is to be completed by the end of 2024, annual savings of 275 million euros are already expected. More than 200 million euros have already been achieved. In the second phase, annual savings of 250 million euros are now targeted, instead of the original plan of at least 150 million euros. To achieve these goals, sales and administrative structures will be primarily optimized, the advertising and marketing strategy strengthened, and the supply chain improved.

In the Course of Supply Chain Optimization, Jobs Will Be Cut. By the End of 2025, the Respective Measures Should Be Implemented Across the Entire Production and Logistics. A Total of 45 Production Sites, 140 Warehouses, and the Cooperation with 470 External Contract Manufacturers Worldwide Are to Be Reviewed and Restructured. The Job Cuts Will Mainly Affect the Second Phase of the Corporate Restructuring in the Consumer Brands Segment. In the First Phase, Approximately 2,000 Positions Were Already Eliminated Globally, Including 300 in Germany. The Exact Number of Positions Affected in the Second Phase is Still Being Determined.

Henkel has also made progress in portfolio streamlining. Since the announcement of the consolidation of consumer businesses in early 2022, brands and activities within the Consumer Brands division, accounting for total sales of around 650 million euros, have been divested or discontinued. In total, the company put consumer business activities with sales of up to 1 billion euros under review in 2022.

The announcements and details of the new year's objectives caused Henkel's preferred shares to drop significantly on Monday. In XETRA trading, the shares temporarily fell by 4.57 percent to 67.18 euros after they had previously risen in early trading. The decline in price to an October low of 66.86 euros also highlights the market's reaction to the company's statements.

Currency Headwinds Cited as Main Reason for Share Price Losses, More Pronounced than Expected

Despite the management's mention of a strong start to the new year, pressure from currency exchange effects is also anticipated. These are expected to have an impact on both revenue and profit. Analysts believe that the average EPS estimate for the current year will need to be adjusted accordingly. Goldman Sachs commented that the figures for 2023 meet expectations and the outlook is even optimistic. However, the unfavorable currency exchange situation overshadows these positive projections. Consensus estimates are expected to be revised downwards accordingly.