Release Date: May 08, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Henkel AG & Co KGaA (HELKF, Financial) reported strong gross and EBIT margins in Q1 2025, indicating robust financial health.
- Adhesive Technologies delivered organic net sales growth of 1.1%, with a good balance between volumes and pricing.
- The company successfully closed the divestment of its retailer brands business in North America earlier than anticipated, completing its strategic portfolio optimization program.
- Henkel AG & Co KGaA (HELKF) is launching a new share buyback program of up to EUR1 billion, demonstrating confidence in its financial position.
- The company has a well-filled M&A pipeline and continues to invest in tech-driven innovations, particularly in its consumer brands segment.
Negative Points
- Henkel AG & Co KGaA (HELKF) reported a minus 1% organic net sales growth for Q1 2025, reflecting a softer start to the year.
- The consumer business experienced a decline of 3.5% in organic sales, impacted by muted consumer sentiment and customer destocking, particularly in the US.
- Volume development was negative, influenced by supply chain challenges and high prior year comparables.
- The company faces a challenging macroeconomic environment with increased volatility and uncertainty, particularly in North America.
- Henkel AG & Co KGaA (HELKF) anticipates continued headwinds from foreign exchange effects and raw material prices throughout 2025.
Q & A Highlights
Q: Can you explain the factors affecting volume growth in consumer brands for Q1, and do you still expect positive volumes for the year?
A: The volume decline was due to subdued consumer sentiment, customer destocking, particularly in the US, and supply chain challenges, which have mostly been resolved. We still expect positive volume growth for the year, supported by a strong innovation pipeline in the second half. (Carsten Knobel, Chairman of the Management Board)
Q: Why haven't you updated your 2025 margin guidance despite strong Q1 performance?
A: We are well within our guidance range, but due to the volatile and uncertain macro environment, we prefer to maintain a wider range for now. (Carsten Knobel, Chairman of the Management Board)
Q: What are the drivers behind the decline in Fabric & Home Care in Europe, and how do you plan to compete with private labels?
A: The decline is due to pressure on household budgets and elevated private label shares. We plan to compete with innovations and better product quality. In Europe, private label share is about 20%, compared to 5% in North America. (Carsten Knobel, Chairman of the Management Board)
Q: How do you view the outlook for industrial end markets, particularly autos and electronics?
A: Automotive remains challenging, but we see strong growth in electronics and industrials. We are confident in our adhesives guidance due to our broad market presence and strong product pipeline. (Carsten Knobel, Chairman of the Management Board)
Q: With all companies expecting a better H2, how much of your improvement is expected from sell-out versus sell-in?
A: We expect improvement from both sell-out and sell-in, supported by a strong innovation pipeline and the resolution of supply chain challenges. Destocking in North America is also leveling out. (Carsten Knobel, Chairman of the Management Board)
Q: If the US macro environment continues to deteriorate, would you delay innovation launches?
A: We do not plan to delay innovation launches. Our pipeline is set for the year, and we expect the consumer sentiment to improve in the second half. (Marco Swoboda, Executive Vice President - Finance, Purchasing, Global Business Solutions)
Q: Can you confirm if you expect acceleration in Adhesives even if autos remain weak?
A: Yes, we expect acceleration in Adhesives due to strong performance in other segments like electronics and industrials, despite challenges in automotive. (Carsten Knobel, Chairman of the Management Board)
Q: How do you plan to address the competitive environment in consumer brands with all companies increasing innovation and marketing spend?
A: We focus on impactful innovations and strong marketing investments to drive growth. Our top 10 brands have been outperforming, and we have resolved supply chain issues. (Carsten Knobel, Chairman of the Management Board)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
