Henkel bets on soap after a slippery quarter

German Henkel saw its sales decline slightly because of the coronavirus crisis, as hair salons and automobile manufacturers were forced to close. The soap and washing powder category did perform well, so much so that the Persil manufacturer increased its soap supply by 30 %.

Laundry machines doing overtime

In the past quarter, Henkel failed to live up to expectations: sales fell by 0.8 % to 4.9 billion euros, while analysts expected sales of 4.96 billion euros. Excluding currency effects and acquisitions, sales fell by 0.9 % due to the coronavirus pandemic, the German company claims. In Western Europe, sales even fell by 4.6 %.

Sales of glues and adhesives suffered in particular from the sharp drop in demand from the automotive industry (- 4.3 %), as did the Beauty Care branch due to the compulsory closure of hairdressing salons (- 2.6 %). Sales in the Consumer Products division remained stable, while the laundry and household products segment had a very strong growth (+ 5.3 %) that mainly came courtesy of the double-digit growth of the Persil washing powder brand.

More soap, less cosmetics

Henkel is therefore launching a “cleanliness” offensive: soap supplies have increased by 30 %, and the FMCG producer is also launching new products in several markets, such as Persil Hygiene in Mexico, an antibacterial dishwashing detergent in Egypt and a disinfectant gel under the name Pril, Reuters reports.

Nonetheless, the company still expects a difficult second quarter as the automotive industry and hair salons are only slowly recovering. Henkel’s beauty division was already experiencing difficulties before the crisis, and there were plans to divest some consumer brands. These plans will continue, but may be delayed due to the complicated market situation. Henkel does not currently dare to comment on the rest of the year.