Henkel warns that delivery woes hit sales in North America

[BERLIN] Henkel expects a fall in organic sales in its laundry and beauty care business in the first quarter due to delivery problems in North America after the German consumer goods company changed transport and logistics systems.

The maker of Persil detergent and Loctite adhesives said its adhesives and professional haircare business were not affected and showed very good development. It confirmed its outlook for sales and earnings for the full year.

Henkel's shares, which have underperformed the German blue-chip index in the last year, were down 4.8 per cent at 0815 GMT.

After launching Persil in the United States in 2015, Henkel has been grappling with a price war with Procter & Gamble and competition in its beauty business. It makes about a quarter of its sales in North America.

Henkel Chief Executive Hans Van Bylen said the causes of the delivery difficulties had been identified and are being solved: "We expect to return to usual service levels in the course of the second quarter." KFC, the fried chicken chain owned by Yum Brands, was forced last month to close hundreds of its British stores because of a shortage of chicken after it switched its delivery contract to DHL, a unit of Deutsche Post.

Henkel, which did not give more details on the supply disruptions, said that it expects negative organic sales growth for its laundry and beauty units in the first quarter.

It said the adhesives group, which generates about half of the company's sales, "continues to show strong development", adding it expects overall organic sales growth for the group to be "slightly positive" in the quarter.

Despite the disruptions, Henkel said that it confirms its outlook for 2018, with organic sales growth in the range of 2 to 4 per cent and adjusted earnings per share to rise between 5 and 8 per cent. It is due to publish first-quarter results on May 9.

REUTERS