Strong organic growth at Henkel

Henkel AG & Co. said second-quarter profit declined 84 percent on costs for job cuts and lowered its full-year earnings forecast because of rising raw-materials expenses.

 Revenue rose 11 percent to 3.67 billion
euros as the company passed on increased costs by raising prices.
Ebit fell by two-thirds to 113 million euros. Adjusted for one-time
costs, earnings on that basis rose 7.8 percent, the statement shows.
Costs for restructuring were 256 million euros, about a third of the
total forecast for the year by Henkel.

“We will continue raising prices by 5
to 10 percent in the second half,'' Chief Financial Officer Lothar
Steinebach told reporters on a conference call today. He expects
raw-material purchase costs to rise at a “high single-digit pace''
this year, faster than the previous 4 percent to 6 percent forecast.

“High raw-material prices and Henkel's
strategy to pass them along to consumers will remain a topic for the
second half,'' Noss said before the figures were released.

The full-year profit forecast excludes
currency movements, reorganization costs and one-time items. Annual
sales will increase 3 percent to 5 percent excluding currency
movements, disposals and acquisitions, up from a previous forecast of
3 percent to 4 percent, the company said.

Henkel said it still expects one-time
expenses of about 750 million euros for the year, of which most of
the rest will be booked in the current quarter, according to
Steinebach. Costs for job cuts will be about 500 million euros, and
the company will spend about 250 million euros combining National
Starch & Chemical Co., purchased in April, with its other units.

The changes should generate annual
savings of 150 million euros starting in 2011, Henkel said in
February. It predicts 30 million euros of savings this year from the
changes, the CFO said.

Henkel still plans to raise funds for
repaying debt related to the National Starch acquisition by selling
some or all of its stake in U.S. chemical maker Ecolab Inc.
Steinebach said he expects a disposal by the end of the year, calling
the process “relatively complicated.''

Operating profit at the adhesives unit
rose 21 percent to 195 million euros as revenue gained 26 percent to
1.82 billion euros. Loctite and other glues represent about 44
percent of annual sales.

Henkel has raised prices for consumer
and industrial adhesives as higher commodity markets add to expenses
across the household-goods industry. It started selling an anti-aging
hair color globally during the quarter and Persil Black detergent for
chador-wearing women in the Middle East.

The beauty division, which includes
skin, body and hair care, increased operating profit by 2 percent to
99 million euros on a 1.2 percent gain in sales to 779 million euros.
Operating profit in the home-care unit dropped 14 percent to 96
million euros as revenue fell 1.1 percent to 1.01 billion euros.

Sales excluding acquisitions and
disposals and adjusted for currency movements rose 45 percent in Asia
and gained 6.2 percent in Europe, Africa and the Middle East. In
North America, revenue on that basis advanced 3.8 percent.