Consumer goods giant Henkel has reported organic sales growth of 4.2% in its full financial year 2023 with group sales amounting to €21.5 billion.
The Schwarzkopf maker noted that this growth was driven by price increases implemented by the company in the high single-digit percentage range.
Overall group sales declined 3.9%, mainly due to the divestment of the business activities in Russia.
'Challenging Market Environment'
Henkel CEO Carsten Knobel stated, “Despite a persistently challenging market environment, we consistently drove our growth strategy forward in 2023 and even accelerated its implementation.
“We delivered very strong organic sales growth and significantly improved profitability. By that, we exceeded the outlook made at the beginning of the year. This successful development was driven by both Adhesive Technologies and Consumer Brands.”
Henkel reported a double-digit increase in adjusted operating profit of 10.2% to €2.6 billion, driven by higher prices and ongoing measures to reduce costs and enhance production and supply chain efficiency.
Portfolio optimisation measures more than offset negative impacts on group profitability due to continued high prices for direct materials and logistics, the company added.
Consumer Brands Division
The company's Consumer Brands division reported organic sales growth of 6.1% in full-year 2023 due to double-digit price increases, while volumes declined partially due to continued portfolio optimisation measures.
Sales in the business unit amounted to €10.6 billion and was 3.3% below the prior financial year in nominal terms.
Foreign exchange effects resulted in a sales decline of 4.4%, while acquisitions/divestments also had a negative impact of 5.1% on sales, including the divestiture of business activities in Russia.
Adjusted operating profit for the period was €1.12 million, up from €910 million in full-year 2022.
Knobel commented, “We have also made faster progress than initially planned with the merger of the two former consumer businesses, Laundry and Home Care and Beauty Care, to form the new Consumer Brands business unit.
“The savings from the integration and the continued portfolio measures also contributed to the strong business performance of the business unit.“
Adhesive Technologies
The Adhesive Technologies unit generated €10.8 billion in sales, registering a 4.0% decline in nominal terms.
On an organic basis, sales increased by 3.2%, while adjusted operating profit was slightly above the previous year at €1.6 billion.
Knobel added, “In the Adhesive Technologies business, we have aligned our organisation even more closely to our customers under a new management. We have increased sales organically and significantly improved earnings in a generally volatile industrial environment.“
Outlook
Henkel has forecast organic sales growth in the range of 2.0% and 4.0% in fiscal 2024 for both business units.
Prices for direct materials are expected to remain flat versus the annual average for 2023, the company added.
The adjusted earnings per preferred share (EPS) at constant exchange rates is expected to increase in the range of 5.0 to 20.0%.
