Henkel reports stable first-half sales, improved profitability, and raised margin outlook amid strategic progress and consumer market recovery, with full-year growth expectations updated to reflect current economic conditions.
07 Aug 2025 | 5154 Views | By Sarthak Mahajan
Henkel reported stable organic sales performance in the first half of 2025, with signs of acceleration in the second quarter and notable improvements in profitability. Group sales amounted to 10.4 billion euros, reflecting an organic change of -0.1 percent compared to the same period in 2024, while the second quarter ...
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Henkel reported stable organic sales performance in the first half of 2025, with signs of acceleration in the second quarter and notable improvements in profitability. Group sales amounted to 10.4 billion euros, reflecting an organic change of -0.1 percent compared to the same period in 2024, while the second quarter alone achieved organic growth of +0.9 percent. The company recorded an adjusted operating profit (EBIT) of 1.614 billion euros, a 0.2 percent increase year-on-year, and the adjusted EBIT margin improved by 60 basis points to 15.5 percent. Adjusted earnings per preferred share reached 2.81 euros, representing a 5.0 percent increase at constant exchange rates.
The improvement in sales was driven by positive price developments across both business units and a sequential recovery in volumes, particularly in the Consumer Brands segment during the second quarter. Adhesive Technologies achieved 1.2 percent organic sales growth in the first half, supported by balanced price and volume trends, while Consumer Brands experienced a 1.6 percent decline in organic sales over the same period, though this improved to +0.4 percent in the second quarter.
Regionally, performance varied significantly. The IMEA (India, Middle East & Africa) region reported strong organic sales growth of 9.1 percent, accelerating to 13.9 percent in the second quarter. Asia-Pacific also performed well with 3.4 percent organic growth, reaching 3.1 percent in Q2. Latin America saw modest growth of 0.4 percent in the first half, though it declined slightly in the second quarter. In contrast, Europe and North America faced challenges, with organic sales down 1.9 percent and 3.4 percent respectively, primarily due to ongoing macroeconomic and geopolitical pressures affecting both industrial demand and consumer sentiment.
Within Adhesive Technologies, the Mobility & Electronics business area led growth with a 2.8 percent increase in organic sales, driven by double-digit growth in the Electronics segment and strong performance in Industrial applications. The Packaging & Consumer Goods segment showed stable development, with gains in Consumer Goods offsetting a slight decline in Packaging. The Craftsmen, Construction & Professional segment grew by 0.6 percent, supported by solid performance in Construction, while Consumer & Craftsmen and General Manufacturing & Maintenance remained stable. The Automotive business faced headwinds due to weak market conditions.
In the Consumer Brands unit, the Hair business achieved 0.9 percent organic growth in the first half, with momentum building in the second quarter as consumer-focused categories such as Hair Colorants and Hair Styling performed well. The Laundry & Home Care segment declined by 2.6 percent, as lower volumes in Laundry Care outweighed strong growth in Home Care, particularly in Dishwashing. The Other Consumer Businesses, including Body Care, saw a 4.2 percent drop, mainly due to weak performance in North America and Europe.
Despite a slight decrease in adjusted operating profit in both business units compared to the prior year, margins improved. Adhesive Technologies reported an adjusted EBIT margin of 17.2 percent, up from 17.0 percent, supported by a favorable business mix. Consumer Brands saw a more pronounced margin improvement, rising to 15.3 percent from 14.3 percent, driven by portfolio optimization and supply chain efficiencies.
Net working capital as a percentage of sales increased to 6.0 percent in the second quarter from 5.2 percent a year earlier. Free cash flow totaled 485 million euros, down from 772 million euros in the first half of 2024, due to higher working capital requirements and increased investment in property, plant, equipment, and intangible assets. The net financial position stood at -494 million euros as of June 30, 2025, compared to -93 million euros at the end of 2024.
Henkel continued to advance its Purposeful Growth Agenda during the first half of the year. The company emphasized its focus on global megatrends such as sustainability, digitalization, urbanization, and connectivity within its Adhesive Technologies business, helping to strengthen competitiveness and resilience. In Consumer Brands, the top 10 brands now account for approximately 60 percent of sales, and these brands achieved over 3 percent organic growth in the second quarter, driven by balanced price and volume development.
Innovation contributed to growth across both units. In Adhesive Technologies, sustainable innovations in the metal packaging segment enabled high single-digit growth, outpacing the market. One example is a low-temperature, low-foam can cleaner that reduces energy use and cuts water consumption by up to 25 percent, supporting more efficient and environmentally friendly beverage can production. In Consumer Brands, the rollout of the Creme Supreme hair color line—featuring bonding technology designed to strengthen hair structure and prevent breakage—helped drive strong performance in the consumer hair coloration category.
Based on first-half results and current market conditions, Henkel has updated its full-year 2025 outlook. The company now expects organic sales growth of 1.0 to 2.0 percent, revised from a previous range of 1.5 to 3.5 percent. For Adhesive Technologies, the forecast is 2.0 to 3.0 percent (down from 2.0 to 4.0 percent), while Consumer Brands is expected to grow between 0.5 and 1.5 percent (down from 1.0 to 3.0 percent). The adjusted return on sales is now projected at 14.5 to 15.5 percent, up from 14.0 to 15.5 percent, with Adhesive Technologies expected to achieve 16.5 to 17.5 percent and Consumer Brands 14.0 to 15.0 percent. Adjusted earnings per preferred share are still expected to grow in the low to high single-digit range at constant exchange rates.
CEO Carsten Knobel noted that while the year began slowly, momentum improved in the second quarter, particularly in consumer markets. “After a slow start to the 2025 fiscal year, we managed to achieve a significant improvement in sales, especially in our consumer business. At the same time, we have continued to strongly increase profitability in both business units,” he said. “It clearly shows that Henkel’s transformation is already successful. We will continue to drive this change in order to be even better positioned and more competitive in the long term. We are transforming Henkel for a successful future, and with a clear strategy, we are on the right track for further profitable growth.”