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Henkel posts decline in adhesives revenue, organic sales for 2020 expected to drop

November 10/2020

MOSCOW (MRC) -- Henkel delivered strong organic sales growth of 3.9 percent in the third quarter of fiscal 2020 despite the continued challenging economic environment as a result of the COVID-19 pandemic, said Chemweek.

Group sales totaled around 5 billion euros, corresponding to a nominal change of -1.5 percent. At the beginning of October, Henkel published preliminary figures for its sales performance in the third quarter and presented its new guidance for fiscal 2020.

"The impacts of the global coronavirus crisis continue to determine the market environment. Nevertheless, Henkel achieved a good business performance in the third quarter, with all three business units contributing. This is evidence of our robust, diversified portfolio comprised of successful brands and innovative technologies for our customers in the industrial and consumer goods businesses. Furthermore, our additional investments in marketing, innovation and digitalization are paying off. Plus, we significantly expanded our digital sales in the third quarter, increasing their total sales share to more than 15 percent, said Henkel CEO, Carsten Knobel.

"The good performance in the third quarter is also partly due to catch-up effects from the second quarter, where the negative impacts of the COVID-19 pandemic were particularly severe. But above all, it is the result of our strong global team, which in this unprecedented and challenging time for all of us, is showing enormous commitment as it continues to contribute to the long-term success of Henkel."

Henkel performed well in this challenging market environment in the third quarter. The Adhesive Technologies business unit was able to record a recovery in demand across all business areas compared to the second quarter and achieved positive organic sales growth overall compared to the same quarter of the previous year. In the Beauty Care business unit, the Hair Salon business also showed a recovery compared to the second quarter. Its organic sales development year on year was, however, slightly negative. Conversely, the retail business achieved very strong organic sales growth compared to the third quarter of 2019. With demand for laundry detergents and household cleaners remaining strong and thanks to catch-up effects from the second quarter, the Laundry & Home Care business unit was able to record significant organic sales growth, and thus continued its successful development.

"During the coronavirus crisis, we adapted flexibly and quickly to changes while continuing to vigorously pursue the agenda for purposeful growth that we introduced in March this year. With our new full-year guidance, we provided our expectations for our development over the remainder of the year. Although we assume that we will continue to feel the negative impacts of the pandemic in the fourth quarter, we do not expect to see further extensive lockdowns such as those witnessed in the second quarter in the core regions essential for Henkel. We are convinced that, with our strategic focus on purposeful growth, we are well positioned to emerge stronger from the crisis, Knobel added.

In the third quarter of 2020, sales of the Henkel Group decreased nominally by -1.5 percent to 4,999 million euros. Organically (i.e. adjusted for foreign exchange and acquisitions/divestments), sales increased by 3.9 percent. At Group level, the increase was driven by volume, with price and volume developments differing between the business units. Acquisitions and divestments accounted for an increase of 0.1 percent in sales. Foreign exchange effects had a negative impact of -5.5 percent on the sales performance.

In the first nine months of 2020, sales decreased nominally by -4.5 percent to 14,485 million euros. Organically, Henkel registered a negative sales development of -2.1 percent, primarily due to volume effects. Over the first nine months of this year, price trends were only slightly negative. Henkels business performance was influenced, especially in the first six months of the year, by the negative impacts of the COVID-19 pandemic on its Industrial and Hair Salon businesses in particular. After recording the strongest decline in demand in the second quarter, Henkels businesses recovered significantly in the third quarter.

The emerging markets achieved organic sales growth of 8.8 percent in the third quarter. Organic sales development in the mature markets was positive at 0.6 percent. In the Western Europe region, sales declined organically by -1.2 percent year on year. By contrast, we were able to increase sales in the Eastern Europe region by 10.4 percent. In the Africa/Middle East region, we achieved organic sales growth of 13.9 percent in the third quarter of 2020. Organic sales growth was 2.9 percent in the North America region and 13.8 percent in the Latin America region. Organic sales development in the Asia-Pacific region was positive at 1.2 percent. In the first nine months of 2020, the emerging markets posted organic sales growth of 1.3 percent, whereas sales development in the mature markets was negative at -4.4 percent.

As MRC informed earlier, Henkel AG & Co. KGaA (Dusseldorf, Germany) announced that Henkel Adhesives Technologies has officially inaugurated its new production facility in Kurkumbh, India.

Henkel are also partnering with Borealis and plastics solutions company Borouge to develop  flexible packaging solutions for detergents containing both virgin polyethylene (PE) and high amounts of post-consumer recyclate (PCR) in efforts to increase sustainability.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,496,500 tonnes in the first eight months of 2020, up by 5% year on year. Shipments of all ethylene polymers increased, except for linear low desnity polyethylene (LLDPE). At the same time, PP shipments to the Russian market reached 767,2900 tonnes in the eight months of 2020 (calculated using the formula - production minus exports plus imports - and not counting producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.
Author:Anna Larionova
Tags:petroleum products, PP, PE, neftegaz, petrochemistry, Henkel.
Category:General News
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