August 16, 2018 / 6:22 AM / 3 months ago

UPDATE 2-Henkel trims profit outlook on emerging market currency woes

* Full-year earnings seen rising 3-6 pct

* Emerging markets account for 41 pct of sales

* North American operations recover from delivery problems

* Share price down 3.1 pct (Adds CFO comments, analyst, shares)

By Emma Thomasson

BERLIN, Aug 16 (Reuters) - German consumer goods company Henkel lowered its full-year earnings forecast after weak emerging market currencies and costlier raw materials dented quarterly results, sending its share price down 3 percent.

Henkel’s shares, which have been in gradual recovery mode since they dipped in March on reports of North American delivery problems, touched a three-month low of 104.05 euros on Thursday and were down 3.1 percent at 104.15 euros by 0920 GMT.

The maker of Persil detergent and Loctite adhesives had earlier reported second-quarter group sales up 3.5 percent to 5.14 billion euros ($5.85 billion), stripping out acquisitions and the hit from currencies.

Though those sales numbers were just above average analyst forecasts, earnings per share (EPS) missed expectations with a rise of only 2 percent to 1.58 euros, with Henkel citing the currency effects and raw materials prices.

Henkel reiterated its 2018 guidance for organic sales growth of 2-4 percent and slightly raised it outlook for operating profit margin but said it now expects adjusted EPS to rise by 3-6 percent, down from 5-8 percent.

“The headline change to EPS guidance may drive a negative stock reaction, but the details behind it are not that bad,” said Bernstein analyst Andrew Wood, noting that quarterly organic growth was the highest since early 2017.

EMERGING MARKETS

Almost two thirds of the exchange rate impact came from weaker currencies in emerging markets such as Turkey, Mexico and Russia, Henkel said, while it suffered a lesser impact from the U.S. dollar than in the first quarter. Emerging markets account for 41 percent of group sales.

Finance chief Carsten Knobel said he expects emerging market currencies to remain highly volatile, adding that full-year sales would be hit by a mid-single-digit percentage if exchange rates now hold steady.

Henkel said its North America consumer goods business was back to normal after recovering from delivery problems, with organic sales growth at 4.9 percent despite tough competition from Procter & Gamble in laundry care.

P&G last month posted fourth-quarter sales that missed Wall Street estimates, hurt by lower pricing and weak demand for its Pampers diapers and Gillette shaving products.

Henkel’s laundry and home care business lifted sales by 2.9 percent as it recovered from the first-quarter delivery problems, while beauty care, which includes the Schwarzkopf shampoo brand, was up 0.4 percent.

The adhesives unit, which accounts for about half of sales and provides glue to makers of appliances, electronics and packaging, lifted organic sales growth to 5.2 percent.

Henkel said it now expects the unit to record full-year organic sales growth of 4-5 percent, up from 2-4 percent. ($1 = 0.8785 euros) (Reporting by Emma Thomasson and Matthias Inverardi Editing by Emelia Sithole-Matarise and David Goodman)

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