The global economy recovers with Henkel adhesives business

The consumer goods group Henkel is raising its forecast for the year after significant growth in the adhesives business. "We made a strong start to the year," said CEO Carsten Knobel. Adjusted for acquisitions and currency effects, Henkel was able to achieve 7.7 percent more sales for the year from January to the end of March. The adhesives division - by far the largest of the three Henkel divisions - even recorded an increase of 13 percent. As a result, Knobel set his goals for 2021 higher: For the full year he is now anticipating organic sales growth of four to six percent. So far, the group had promised an increase of two to five percent. In addition, Henkel should work more profitably -he is now more optimistic about the targets for adjusted return on sales and earnings per share (EPS). The adhesives business is cyclical and depends heavily on customers from the automotive and electrical industries. They ordered more than expected in the first quarter, and the packaging industry, which is profiting from the booming online trade, also ordered more adhesives from the Düsseldorf company, reported Knobel: "The industrial demand has developed more strongly than expected." The competitor Beiersdorf had a similar experience. This started the year with an organic increase in sales of 6.3 percent, and the Tesa business even increased by over 23 percent. The upturn in demand also has a downside. The raw material prices are rising, and the costs for the supply chains, which are repeatedly under pressure in the pandemic, are rising, said the Henkel boss. Henkel wants to pass the higher costs on to customers where possible. Last year, Henkel still posted declines in sales and operating income during the Corona crisis. At that time, the adhesives division in particular suffered, but business with hairdressers was also not going well because salons were temporarily closed. That changed now. The hairdressing business grew primarily in North America during the quarter.