Jefferies cuts Henkel, forecasts weak Q3 sales amid pricing pressure
** Jefferies downgrades Henkel HNKG_p.DE to "hold" from "buy", expecting pricing pressure to hit the German consumer goods maker's sales in Q3
** The broker expectsorganic sales growth for Q3 at 1.9%, below VA consensus of3.6%, and 2.7% for 2024, against the consensus estimate of 3.4%
** Jefferies notessequential pricing pressures in both Adhesive Technologies and Consumer Brands segments, with signs of only modest volume momentum
** Jefferies saysa consistent organic sales growth of around 3% may not happen in H2 2024, which may lead to cuts to Henkel's margin ambition should sales evolution falter
** Consumer good makers have faced weak sales growth as consumers opted for brands that slowed hike prices in an inflationary environment
** Though Jefferies expects Henkel's operating margin of 14.9% for FY 2025, roughly in line with consensus, it says the target of about 16% by 2027 could threaten its competitiveness, due to higher pricing and not enough advertising and promotion
Reporting by Bernadette Hogg
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