Henkel's operating profit for the first half of 2022 has 18.5% year-on-year decline
- Chaileedo Press
- Aug 17, 2022
- 3 min read
Updated: Aug 25, 2022
Abstract: Henkel's operating profit for the first half of 2022 was 1.166 billion euros, which decreased 18.5 percent year on year. The Asia-pacific region has become a significant layout area for Henkel.
On August 15, Henkel reported its mid-term results for 2022. According to the report, Henkel's sales amount grew organically by 8.9% to €10.913 billion ($11.105 billion), and adjusted operating profit was €1.166 billion($1.186 billion), declined 18.5% year-on-year.
Specifically, the Beauty Care department achieved only 0.4% year-on-year organic growth with sales amount of €1.842 billion euros ($1.874 billion). Henkel's professional Hair Care business has a leading market status in various international market segments and is one of the top three Beauty and Hair Care corporates in the world. The core brands in this category include Schwarzkopf, Syoss, Dial, and others. In particular, the hair salon business still achieved double-digit organic sales growth, based on the powerful performance of the previous year. That business department is a whole new multi-category platform that will be created in early 2023 by combining Henkel's Detergents & Home Care Department with the Cosmetics/Beauty Supplies Department in early 2023.
On the other hand, however, growth in the Consumer Products business was below the previous year's level, which Henkel said was mainly due to the implementation of portfolio and improvement measures for 2022 and the discontinuation of a part of activities that are not belonging to its core business for the future. Based on the first-half year performance, Henkel revised its forecast for the division to -3.0% to -1.0% from the previous estimate of -5.0% to -3.0%.
The Laundry & Home Care department achieved significant increase of 7.4% conversely, with sales amount of €3,494 million ($3,555 million), and even double-digit growth in the Asia-pacific region. Among all categories, the core brands of the laundry business, such as Persil, also recorded double-digit organic growth. The performance of the home care division benefited from the business growth of brands such as Bref, Pril, and Somat in the toilet cleaning and dishwashing categories.
Simontaneously, as part of its portfolio management, Henkel has reviewed its businesses and brands with total sales amounting up to 1 billion euros. In the near future, Henkel possibly chooses to divest businesses that do not match Henkel's growth and profitability criteria, while further strengthening its product portfolio through acquisitions, such as the successful completion of the acquisition of Shiseido's hairdressing professional business in the Asia-Pacific region in July. The acquisition targets include Sublimic, Primience, and other core brands.It is known that the business areas covered by this Henkel acquisition action have annual revenues of more than 100 million euros in 2021.
David Tung, President of Henkel's Consumer Brands Business Division in Asia, said that with this acquisition, Henkel has become one of the dominant companies in the professional hairdressing business in that region and has significantly enhanced its market status in Japan and China. Meanwhile, Henkel has successfully entered the South Korean market and has established a leading position in Thailand.
In addition, to further extend its business in Asia-pacific, Henkel will open a Japanese-style Simple Beauty (J-beauty) Innovation Center in Tokyo, which will also serve as a base for the development of new products and formulations for the Shiseido Professional and Schwarzkopf brands, in order to create more products for Asian consumers.
Henkel Chief Executive Officer, Carsten Knobel, said that sales performance in the first six months exceeded previous full-year expectations, while overall profits were in line with the Group's forecast for the fiscal year 2022. Henkel's future goal is to establish its consumer products business by 2023 at the latest, thus further driving high growth in the business.
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