Henkel reports profit rise and plans to cut 3,000 jobs

 Henkel KGaA, an international household products company headquartered in Düsseldorf, Germany, posted an 11 percent increase in fourth-quarter profit after selling more adhesives and said it will curtail as many as 3,000 jobs to further cut costs.

The company has four business sectors operating in three strategic areas: Home Care (with household cleaning products such as laundry detergent and dishwashing liquid), Personal Care (with beauty and oral care products such as shampoo, toothpaste, hair colorants and shower gel), and Adhesives, Sealants & Surface Treatment for consumer and industrial purposes.

With presence in 125 countries on five continents, Henkel engages in the majority of their business within Europe and North America .

Net income of the company rose to 244 million euros ($366 million), or 57 cents per preferred share, from 220 million euros, or 51 cents, a year earlier.

Henkel didn't say when it starts the job cuts, which represent about 7 percent of its 53,000 workforce. The company, which increased its annual sales and operating profit forecast three times last year, has reduced costs after merging its industrial and consumer adhesives units in 2007.

"With this step we are responding early and responsibly to the ever faster changes in our markets,'' Chief Executive Officer Ulrich Lehner said in the statement.

Henkel also said today it plans to sell all or part of its 29.4 percent stake in U.S. cleaning-chemicals maker Ecolab Inc. as falling home sales curb growth in the world's biggest economy. The German company, which hasn't decided on the timing of a sale, values the holding at about $3.72 billion.

Henkel intends to spend 500 million euros this year on the job cutting program as well as on other cost-reduction measures aimed at generating annual savings of 150 million euros from 2011.

The preferred shares rose as much as 1.84 euros to 32.40 euros in Frankfurt , their sharpest growth since Jan. 24 and the biggest advance in Germany 's benchmark DAX index. They were up 68 cents, or 2.2 percent, to 31.24 euros at 9:59 a.m. local time.

Before today, the preferred shares had fallen about 20 percent in 2008, valuing the company at about 12.8 billion euros.

Operating profit in Henkel's adhesives unit rose 23 percent to 146 million euros in the fourth quarter as revenue rose 5.7 percent, adjusted for currency swings, to 1.4 billion euros.

Operating profit as a percentage of sales for the whole company was unchanged at 10.1 percent.

Henkel expects growth of 3 percent to 4 percent in revenue and a stronger percentage increase in earnings before interest and taxes this year after adjusting for currency swings.

The German company on Feb. 15 secured European antitrust approval to buy most of Imperial Chemical Industries Plc's National Starch & Chemical Co. for 2.7 billion pounds ($5.4 billion). The detergent maker agreed in August last year to acquire the U.S. - based operations to boost sales of industrial adhesives.

Henkel's fourth-quarter sales fell less than 1 percent to 3.19 billion euros, missing analysts' 3.26 billion-euro median estimate. Revenue dropped 0.5 percent to 731 million euros in the beauty unit and declined 2.8 percent to 1 billion euros in the home-care unit.

Operating profit at the beauty unit declined 3 percent to 97 million euros, while the home-care unit increased earnings on that basis by 2.4 percent to 105 million euros.

Full-year revenue advanced 2.6 percent to 13.1 billion euros. Sales excluding acquisitions, disposals and exchange rate movements rose 5.8 percent, meeting the company's forecast of a 5 percent to 6 percent increase on that basis.

Ebit for the year also advanced 5.8 percent to 1.34 billion euros compared with Henkel's forecast that profit will grow faster than sales, excluding currency effects.

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Author`s name: Editorial Team