Henkel AG (HEN3) Chief Executive Officer Kasper Rorsted said Europe needs to maintain a single currency as weakening economies and ballooning debt prompt speculation that some countries may exit the euro.
“We are convinced that the euro in its function as a common currency is better for our economy in Germany and better for our company,” Rorsted said at the annual shareholders meeting of the Loctite glue-maker today in Dusseldorf, Germany. “Countries in Europe differ in terms of their economic strength and their national debt. Yet they are joined together by a common currency. A rebalancing of the situation through currency appreciation or depreciation is therefore no longer possible.”
More than two years since Greece set in train the euro area’s worst financial crisis, bets made at Intrade.com suggest a 39 percent chance that the single currency will splinter by the end of 2013. Concern about Spain’s position have ratcheted the nation’s borrowing costs to the highest levels this year.
Rorsted said he expects economic conditions in Europe “to remain tense and difficult over the next few years.”
To combat that, Henkel is seeking to boost the proportion of sales from emerging markets to 45 percent of revenue this year from 42 percent in 2011. Emerging-market economies probably grew at the fastest pace in nine months in the first quarter, led by Brazil and India, as manufacturing rebounded from a slump and services expanded, according to a HSBC Holdings Plc (HSBA) review of a purchasing-managers survey this month.
Rorsted said the company made a “good start” to 2012. Henkel today reiterated that earnings before interest and taxes will reach 14 percent of sales this year, adjusted for one-time items and reorganization costs.
Henkel is forecasting sales growth from continuing operations of 3 percent to 5 percent in 2012, and an increase in adjusted earnings per preferred share of at least 10 percent. The company has expanded through acquisitions and will continue to, though any such move “must make sense” strategically, Chief Financial Officer Lothar Steinebach said in March.
Steinebach is scheduled to retire in mid-2012 and be replaced on July 1 by Carsten Knobel, who currently runs Henkel’s cosmetics and toiletries business.
To contact the reporter on this story: Julie Cruz in Dusseldorf via firstname.lastname@example.org
To contact the editor responsible for this story: Sara Marley at email@example.com