Henkel halves sales growth target due to sluggish market

- Last updated on GMT

Related tags: Europe, Eastern europe, Henkel

German maker of Schwarzkopf hair care products Henkel recently cut
its sales growth target by nearly half to 2 per cent, blaming a
sluggish market, both at home and in other European countries.

Most macroeconomic indicators indicate Europe is experiencing a steady recovery, and that Germany is already experiencing some relief.

Henkel​ has, however, already been hit by recent slowed demand for consumer products. While a recent CosmeticsDesign.comarticle​ noted cosmetics that were a growth driver in 2003, according to a report published by Mintel​, sales had since dipped.

Last year, Germany was Western Europe's largest health and beauty market in 2003, worth almost €40 billion, a third larger than nearest competitor France, and double those of the UK, Italy and Spain.

The figures for health and beauty sales in those other markets last year were €31 billion in France, €19 billion in the UK, €17 billion in Italy and €16 billion in Spain.

As well as falling cosmetics sales, Henkel stated it was also weathering the effects of "tougher competition as well as pricing activities of the large competitors to which Henkel responds".

According to the Financial Times, analysts viewed this as a reference to US FMCG group Procter & Gamble.

Henkel is understood to be disappointed with sales of washing products, cosmetics and adhesive products, with sales of its higher technology products less affected.

And Henkel is not the only German company affected; drugstore operator Schlecker's difficulties date back to last year, when it was already coming under pressure in the local market, according to the Mintel report.

Schlecker reportedly "has plans to expand in its existing overseas markets, plus it is looking to move into a handful of Eastern Europe countries in 2004,"​ explained Mintel analyst Jenny Catlin.

CosmeticsDesign.com​ recently reported​ that Japan's second largest manufacturer of household goods Lion​ is cutting its stake in a hair care product joint venture with a Henkel Japanese unit, reportedly due to weak sales.

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