German consumer goods group Henkel on Friday said it expects organic revenue to drop between 1% and 2% this year as customers’ appetite for its adhesive products decreased sharply in the wake of the coronavirus.
The group expects to achieve an adjusted margin on earnings before interest and tax in a range between 13% and 13.5%.
The group, best known for its Schwarzkopf hair care products and Persil detergents, had presented a new strategy to turn around its fortunes after a string of profit warnings in March, shortly before the coronavirus outbreak in Europe.
At the time Henkel had forecast organic sales to increase up to 2% this year. The plan involved the sale of some consumer businesses and the lookout for acquisition opportunities at its adhesives unit.
The picture has changed for Henkel with the pandemic. Sales at its adhesives business, which accounted for around half of group sales last year and largely relies on demand from industrial customers, are now expected to drop between 5.5% and 6.5% this year.
The hair salon business, which the new strategy had defined as a segment for acquisitions, has also been suffering significantly from lockdowns around the world.
The detergents and home care business, in contrast, has been booming and is now forecast to grow up to 5.5% this year.
Banking on the assumption that there will be no far-reaching lockdowns in its core regions, the group now expects an adjusted margin on earnings before interest and tax in a range between 13% and 13.5% this year after 16% in 2019.
