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Beware of Submerging Markets says Henkel

August 8, 2013

Growth slows in emerging economies.

Henkel has joined other multinational household and personal products companies in taking a more cautious view of growth in emerging markets as it reported second quarter results in line with expectations.

The maker of Persil, Prill, Purex and other popular brands today revised its growth forecast for emerging market economies downwards slightly and now expected consumer spending in those countries to rise by 4% in 2013, compared with a previous forecast for 5%.

Still, Henkel maintained its group targets for 2013. It expects adjusted earnings per share to rise 10% this year and sales to rise between 3-5%. Last month, Unilever last month spoke of slowing growth in emerging markets, and Beiersdorf on Wednesday flagged concerns among consumer goods companies.

Henkel has around 4 billion euros ($5.3 billion) available for acquisitions and recently said it was looking at around 80 different targets. Analysts expect Henkel will announce a deal this year, possibly in the US. The group did no provide any update on acquisitions.

Henkel's last major purchase was that of National Starch in 2008 for 3.7 billion euros to expand its adhesives division. The group reported second-quarter sales of 4.29 billion euros, up 4% adjusted for currency effects and driven by emerging markets, and an 8% gain in operating profit to 660 million euros.


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