Buy Signal on Henkel
Henkel is a €34.5 bn market cap and one of the world's leading chemical groups. Revenues are split between :
1/ glues and adhesive products (47% of sales): industrial and packaging glues (Loctite, Technomelt Supra Cool and Ablestik Self-filleting brands), consumer adhesives (Pritt and Pattex brands), adhesive tapes (Duck) and glues for wallpapers (Metylan);
2/ detergents and maintenance products (33% of sales) including detergents (Persil, Somat and Purex brands) and
3/ care products (19% of sales) including hair care products (Schwarzkopf and Syoss brands), personal hygiene products (Dial Anti-Ox Body Wash), oral hygiene, etc. ;
Henkel posted robust Q2-2020 results, including a €9.5bn revenue (-5% organic) and a 12.6% EBIT margin ( versus 16.3%). Laundry & Home care business grew organicall by +4.9% and was the strong spot, while adhesive was the most impacted (-12.2%). Progress are expected in H2-2020 in adhesive, with a full recovery in 2021.
Short term catalyst: Cyclical recovery in the adhesive business.
This signal is consistent with the strong momentum in the Chemical and Household sectors.