Henkel: More positives than negatives
Henkel: (BUY, Fair Value EUR134 vs. EUR137 (+25%))More positives than negatives
Yesterday, Henkel reported a relatively good set of results, despite a slight miss on the margin side (18% vs consensus +18.3%). Organic sales surprised positively, up 3.5% in Q2 (vs consensus +3.2%). Performance was mainly driven by Adhesives (+5.2%) but both Beauty and Laundry&Home Care recovered from the logistics issue that took place in North America in Q1. The market proved to be disappointed (stock was stable yesterday) by the cut in the 2018 EPS growth guidance from 5-8% to 3-6% on the back of more negative FX effects from EMs currencies. It ignored two positive points: 1/ the top line target was reiterated (organic sales growth of 2-4% this year) and 2/ the 2018 EBIT margin objective was raised from >17.5% to "around 18%, implying an expansion of 110bp in H2 after +40bp in H1. We adjust downwards our 2018e EPS growth forecast from +7% to +4.2% and our Fair Value from EUR137 to EUR134. Our Buy recommendation is maintained.
Henkel business comprised of Laundry & Home Care, Beauty Care, and Adhesive Technologies. Co.'s Laundry & Home Care business unit include laundry and home care Branded Consumer Goods business. The Laundry Care business includes heavy-duty and specialty detergents, fabric softeners, laundry performance enhancers, and other fabric care products. Co.'s Beauty Care business unit is active in the Branded Consumer Goods business with Hair Cosmetics, Body Care, Skin Care, Oral Care, and professional Hair Salon business. Co.'s Adhesive Technologies business unit provides solutions with adhesives, sealants and functional coatings in two business areas: Industry; and Consumer, Craftsmen and Building.
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