Lower Detergent Sales Only Glitch in Henkel’s 1Q

Duesseldorf, Germany-based Henkel posted a 4.5% quarterly profit rise on Tuesday, a shade below expectations due to decreased sales in the core home care division. Henkel, whose overall sales in the first quarter rose 2.4%, and 4.8% after currency effects, kept its forecast for an adjusted revenue increase of 3-4% for the year as a whole.

Earnings before interest and tax (EBIT) at the new owner of U.S soap maker Dial totaled 175 million euros ($211 million) in the first three months of 2004, up from 168 million euros the year before. While all divisions contributed to the rise in operating profit, Henkel’s adhesives and technologies units performed the strongest especially in the U.S.

But Henkel’s key laundry and home care business was the only part of the company to post a sales drop as it pointed to product re-launches. Revenues during the quarter fell 1.3%, although EBIT rose a modest 0.2%.

Henkel faces tough competition and big marketing bucks in laundry against giants such as Procter & Gamble and Unilever. Henkel, which expects its $2.9 billion buy of Scottsdale, AZ-based Dial to give group profits an immediate boost, said the forecasts did not include the recent acquisition. With revenues of about $1.3 billion last year, Dial roughly doubles Henkel’s North American revenues, bringing with it brands such as Purex washing detergents, Renuzit air fresheners and Armour Vienna sausages. There is still no word from Henkel on how it ultimately plans to finance its biggest acquisition ever.

In other news, Henkel bought the Indola professional hair care unit of Alberto-Culver Inc. The price for the deal was not disclosed. Indola has annual sales of approximately $55 million.