Henkel increases its 2014 profitability forecast

Henkel, the maker of Persil detergent and Loctite glue, increased its 2014 profitability forecast, helped by better-than-expected growth in Russia.

The stock rose the most in six months on the news.

Adjusted earnings before interest and taxes will approach 16 per cent of sales, compared to an earlier goal of about 15.5 per cent, the company said.

Henkel gained as much as 5 per cent, the steepest intraday increase since May 7th.

Henkel shrugged off its August warning that turmoil in Russia and Ukraine posed a risk to its performance, threatening to keep earnings gains at the bottom of a 7 per cent to 9 per cent target range. Instead, Russia made “an above-average contribution to growth,” helping sales increase 2.3 per cent to €4.24 billion , the company said.

"We are seeing the Russian crisis take place outside of Russia,"chief executive Kasper Rorsted said. "We have seen Germany slow down, but we have not seen this for Henkel," he said as the company posted the strongest gains in its home market since 2012.

Henkel is seeking to increase revenue to €20 billion in 2016 from €16.5 billion last year, with half of sales coming from emerging markets. Mr Rorsted still expects organic sales growth, which excludes currency effects, acquisitions and disposals, in a range of 3 per cent to 5 per cent for 2014, even as gains at the beauty-care division slow below that range, echoing competitor Unilever’s experience in that industry.

Adjusted Ebit increased 3.1 per cent to €693 million in the third quarter, beating the average analyst estimate of €677 million. Henkel jumped to as much as €83.54 , the highest intraday price since September 19th, and was trading up 4.6 per cent at €83.27 euros in Frankfurt. That narrowed the decline this year to 1.2 per cent, valuing Henkel at €34.3 billion.

Bloomberg