P&L Check

Henkel's Fly in the Ointment

  • Why it matters

    Why it matters

    Family-owned Henkel has been a sure bet for investors for a long time but problems with its expansion into growth markets is threatening its high dividends.

  • Facts

    Facts

    • Henkel, a rival to 3M and P&G, produces cosmetics, detergents and adhesives, including the PErsil and Pritt Stick brands.
    • In 2016, revenue rose 3.5 percent to €18.7 billion ($19.9 billion) and operating profit increased by 4.9 percent to €2.8 billion.
    • At its AGM on Thursday, shareholders will vote on a 10.2 percent rise in the dividend on preferred shares to €16.62.
  • Audio

    Audio

  • Pdf
Persil Laundry Detergent Production At Henkel AG
Persil is among Henkel's best-known brands. Source: Bloomberg

From Persil laundry detergent to Pritt Stick glue and Schwarzkopf shampoos, products sold by German chemicals giant Henkel are instantly recognizable around the world.

Less well known, however, is its value to investors. The firm has gained great respect among shareholders for its immunity to economic cycles and global reach, not to mention its billions of euros profit. So investors will understandably be expecting more good news at the firm’s annual shareholder meeting on Thursday. They’ll get it, but it may come with a sting in the tail.

Henkel, based in Düsseldorf, sees itself as a mixed conglomerate based on chemicals. It has two segments that focus on retail customers: detergents and cosmetics under the Schwarzkopf brand. Just more than half of revenue is generated by its adhesives division, the global market leader.

The company is a consistent performer. Only nine of the 30 firms listed in the German DAX share index, the country’s leading index, have managed to increase their dividend continuously over the past eight years, and Henkel is one of them.

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