HENOF - Henkel: Weaknesses In Consumer Assets Exposed By High Inflation

• We are downgrading our rating on Henkel from Buy to Hold, having lost confidence in both its businesses and its management.
• The midpoint of Henkel's 2022 guidance implies an Adjusted EPS that is 25% lower year-on-year and 37% lower than in 2019.
• High input cost inflation following Russia's invasion of Ukraine has exposed continuing weaknesses in Henkel's consumer assets.
• Henkel is far more impacted than its competitors. The turnaround since 2020 has not worked, but even more restructuring is coming.
• At €60.50, Henkel's Preferred stock is trading at a 17.7x P/E and a 3.1% Dividend Yield, not cheap enough for the risks involved. Avoid.

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