UPDATE 4-Henkel disappoints with cautious 2010 outlook

* Q1 sales 3.51 billion euros, vs forecast 3.43 billion

* Q1 adjusted EBIT 421 mln euros, vs forecast 388 million

* Sees full-year adjusted EBIT, EPS to rise more than 15 pct

* Expects 2010 sales to outperform relevant markets

* Shares fall as much as 6.3 percent in flat market

(Adds CEO, CFO comments, updates share price)

By Eva Kuehnen

FRANKFURT, May 5 (BestGrowthStock) – Henkel (HNKG_p.DE: ), the maker
of Dial soap, gave a reserved outlook for the full year on
Wednesday pointing to the Greek debt crisis and rising raw
material costs, taking the shine off stellar quarterly results.

Henkel raised its 2010 earnings targets and now expects
adjusted operating earnings and earnings per share to grow more
than 15 percent this year, having initially aimed at a 10
percent increase. Organic sales should outpace relevant markets.

But its fresh guidance was still a far cry from what
analysts had pencilled in for 2010, and Henkel shares were 3
percent lower at 1019 GMT, while the STOXX Europe 600 Personal &
Household Goods Index (.SXQP: ) was broadly flat.

Bernstein analyst Andrew Wood said Henkel’s guidance “is
silly and almost embarrassing” considering the company reported
a 79 percent rise in first-quarter earnings before interest and
tax (EBIT) and 94 percent EPS growth.

“It implies basically flat growth in every quarter in the
balance of year,” Wood said.

Henkel chief executive Kasper Rorsted told analysts not to
take first-quarter results and multiply them by four. “We expect
a significant increase in raw material costs in the second half
of the year and that’s reflected in our guidance,” Rorsted said.

Chief financial officer Lothar Steinebach said it was not
clear how the situation in Greece would turn out and whether
further political instability would follow. “So, I think that
our guidance is cautious, but sensibly cautious,” he said.

Family-controlled Henkel, which makes about half its sales
from products like Persil detergent, Pril washing up liquid and
Fa shower gel, kept its 2012 targets for annual organic sales
growth of 3-5 percent, an adjusted operating margin of 14
percent and more than 10 percent growth in adjusted EPS.

Its first-quarter EBIT adjusted for restructuring charges
and one-off items rose to 421 million euros ($561 million),
easily beating the 388 million forecast in a Reuters poll.

Sales rose 8.8 percent to 3.5 billion, also above estimates.


A rebound in Henkel’s world-leading adhesives business, with
clients in the automotive, electronics and construction
industries in particular, bolstered earnings as such industries
are among the first to pick up in an economic recovery.

Adhesives Technologies accounts for almost half of Henkel’s
overall revenue, and its glues — with brands like Loctite and
Pritt — are used for example to hold together Nike (NKE.N: )
sneakers, John Deere tractors, and Pampers diapers.

Private consumption benefited significantly less from the
economic revival than industry, which was also reflected in
Henkel’s results, it said.

Adhesives sales grew 14.5 percent in the first quarter,
while its Laundry & Home Care and its Cosmetics/Toiletries
businesses grew 3.6 percent and 5.5 percent respectively.

Henkel said the outlook for private consumption was somewhat
better in the United States than in Europe, where a rise in
unemployment could not be ruled out.

Data showed on Tuesday that retail sales in Germany —
Europe’s biggest economy — declined unexpectedly in March,
falling for two of the first three months of the year and acting
as a drag on growth over the period. [ID:nLDE64307T]

Just like international rivals, such as Unilever Plc/NV
(ULVR.L: ) (UNc.AS: ), Procter & Gamble (PG.N: ) and Colgate-Palmolive
(CL.N: ), Henkel also benefited from strong growth in developing
markets in the first quarter. [ID:nN29161737]

Henkel shares trade at 15.9 times forecast 2011 earnings, a
slight premium to Unilever’s multiple of 15.2 and P&G’s 15.4.

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(Editing by Michael Shields and Louise Heavens)
($1 = 0.7508 euro)

UPDATE 4-Henkel disappoints with cautious 2010 outlook