Germany's Henkel reports 14% rise in sales

Reuters with CNBC.com
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German consumer goods group Henkel reported a 14 percent increase in second-quarter sales and core profit, helped by solid demand for its detergents and adhesives in emerging markets and currency effects.

However, organic sales growth in Henkel's adhesives business, which accounts for half of its group sales, slowed down in the second quarter compared to the first quarter, driven by lower demand in the key North American market.

Shares of the firm traded 5.2 percent lower in early trade on Wednesday, after the earnings report was out.

"We expect the current difficult global economic environment to persist," Chief Executive Kasper Rorsted said in a statement on Wednesday.

Henkel reiterated it expected 2015 organic sales growth of 3-5 percent and a flat operating profit margin.

Speaking to CNBC on Wednesday, Rorsted sounded a more positive note about sales growth in emerging markets, despite market volatility in China and a surprise devaluation of the yuan on Tuesday.

"In China, we saw two very different directions in our business: We continue to see very strong, double-digit growth rates in our consumer business and we saw low, single-digit growth rates in our industrial business. So we are seeing a resetting of the industrial growth rates in China," he told CNBC on Wednesday.

"I am quite optimistic and confident that the targets we set ourselves for the full-year will be reached, despite what you're seeing right now in China," Rorsted added.

In its laundry and home care business, the group saw growing sales in North America, helped by increasing appetite of U.S. consumers for its newly launched Persil detergent, which competes with Procter & Gamble's Tide, the market leader.

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Looking to reclaim lost ground, Henkel in spring launched its high-end Persil laundry detergent, which is a billion-euro global brand in 60 countries outside the United States, through an exclusive tie-up with WalMart.

Henkel reported second quarter adjusted earnings before interest and tax (EBIT) of 768 million euros ($851 million) on sales of 4.7 billion euros, in line with analysts' expectations.

Henkel's shares were indicated to open 1.4 pct lower at brokerage Lang & Schwarz ahead of the Frankfurt market open, in line with the DAX.

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