German consumer and chemical goods manufacturer Henkel has said its earnings for the fiscal year 2021 will be on the low end of previous guidance as it is battling rising raw materials costs and ongoing supply issues.
Its third-quarter results, published on Monday, showed year-on-year sales growth of 1.9% to €5.1bn ($5.9bn, £4.8bn), up 3.5% on an organic basis and 7.5% higher than in the third quarter of 2019.
However, Henkel’s chief executive, Carsten Knobel, said the “extremely tense situation on raw material markets and disruptions in global supply chains” had impacted the period.
Sales growth was driven by strong performance in adhesive technologies (up 7.1%) and laundry and home care (up 2%), as well as in emerging markets, which were up by 8.3%.
Beauty-care sales fell by 3%, while sales also declined in the North American market, which accounts for 27% of the company’s business.
The company – whose brands include well-known consumer brands Persil and Schwarzkopf, as well as various industrial products – said its overall growth was due to positive pricing in all its units, the normalisation of demand in consumer businesses and the ongoing recovery of industrial production.
The company said it still expected its previously forecast sales growth of 6%–8% in fiscal year 2021. However, it also said it expected adjusted return on sales of 13.5%, at the low end of its forecast of 13.5%–14.5%, and an adjusted earnings per share within the high single-digit percentage range – also at the low end of its forecast.
Henkel blamed “exceptionally sharp” price increases for materials, which it believes will be in the low- to mid-teens percentage range for the full year, and for which it will not be able to offset costs fully.
It also cited changes in foreign-currency exchange rates as a headwind.
“While the coronavirus pandemic continues, we have to constantly respond flexibly and quickly to changes in our markets,” said Knobel.
“Tight supply chains and rising raw material and transport costs are proving to be particularly challenging. Despite these difficult conditions, which require our full attention, we stay focused on our strategic priorities to deliver on our purposeful growth agenda.”
Knobel continued: “There is still great uncertainty as to how the pandemic will develop and how consumption and industrial output will be impacted. In particular, the further strong increases in raw material prices and logistics costs are affecting the economy to a stronger extent than previously assumed.
“We are working hard with extensive measures to limit the impact on our business and profitability.”
The company’s share price was down more than 5% to €76.40 at 09:30 CET on the Frankfurt Stock Exchange, leading company losses reflected in the DAX stock market index.