Henkel, manufacturer of Persil and Pritt, sold significantly less in the last quarter. Nevertheless, revenue was higher than expected, thanks to prices that rose by more than 10%.
Easy to replace
In the first quarter, Henkel achieved 6.6 % more revenue, or 5.6 billion euros in total. However, volumes fell by 5.6 %. The decline was even greater than analysts had expected. The manufacturer of Persil and Pritt increased the prices of its consumer goods by an average of 12.7%, causing many consumers to switch to cheaper private labels. Interestingly, brand manufacturers such as Mondelez and Coca-Cola suffered less from customer abandonment.
As Henkel’s products proved more easily replaceable, price negotiations with several retailers also failed. At the German supermarket group Edeka, for example, part of the range is simply not available due to an on-going boycott. Nevertheless, CEO Carsten Knobel is satisfied: “We have started the year well, and this in a persistently difficult economic market environment.”
Fortunately, the Henkel executive now sees the pressure on costs easing. However, he remains cautious about the rest of the year. Knobel continues to expect organic revenue growth of 1 to 3 % and an adjusted return on sales of between 10 and 12 %.