Henkel Earnings: Another Challenging Year on the Horizon but Longer-Term Prospects Are Unchanged

Narrow-moat Henkel reported full-year 2022 results that largely tracked our expectations, with an adjusted operating profit of EUR 2.4 billion roughly in line with our EUR 2.3 billion forecast. Despite largely unsurprising results, a somber 2023 guidance sent shares down 3% on the day. Management expects continued macroeconomic headwinds to result in a slowdown in both industrial production and consumer spending, translating into muted organic sales growth for the company and an adjusted operating margin in the range of 10% to 12%—significantly below pre-inflation and prepandemic average levels (of 13.4% and 17%, respectively).