Henkel KGaA, the maker of Purex detergent and Dial soap, said third-quarter profit rose 7.7 percent as acquisitions fueled growth in the United States.
Net income increased to 195 million euros (US$234 million) from 181 million euros a year earlier, Henkel said yesterday. Revenue climbed 13 percent to 3.14 billion euros, lifted by a 32 percent gain in North America and advances of more than 10 percent from Eastern Europe and Latin America, the Dusseldorf, Germany-based company said.
Chief Executive Ulrich Lehner, 59, bought brands including Soft Scrub last year and completed the US$2.9 billion purchase of Dial Corp. Those products help Henkel compete with Procter & Gamble Co, its biggest rival, by giving the 129-year-old company a greater share of the North American market. The region produced five times as much sales growth than Europe in the third quarter.
"There had been doubt recently if they could make their growth target for this year, and these concerns have now been put to rest," said Silke Stegemann, an analyst at Landesbank Rheinland-Pfalz. "There were no skid marks in the quarterly earnings from the increased raw-material costs."
Operating profit will increase almost 20 percent this year, while sales will gain 3 percent to 4 percent, Henkel reiterated.
Organic growth, which excludes swings from acquisitions or sales, rose 5.8 percent in the third quarter, bringing organic growth after nine months to 3.7 percent and the company to the upper end of its 2005 target.
Earnings per share will be unchanged after gains from assets sales weren't repeated, Henkel said. Henkel's plan for 2008 is to achieve sales growth of between 3 percent and 4 percent a year excluding acquisitions and to have an operating margin of 12 percent by then. Earnings before interest and tax as a proportion of sales stood at 9.5 percent at the end of the third quarter, Henkel said.
(Bloomberg News)