UPDATE 2-Henkel lifts margin target on emerging market gains, shares hit high

By Tina Bellon
Reuters

* Henkel confirms 2016 sales outlook, raises EBIT margin

* Q2 adj EBIT margin grew by 120 basis points

* Q2 organic sales up 3.2 percent to 4.65 bln euros

* Cost cuts, brand focus pays off

* Shares at record high, lead blue-chip DAX index (Recasts throughout, adds detail, background)

FRANKFURT, Aug 11 (Reuters) - German consumer group Henkel raised its profit margin forecast for the year on strong demand from emerging markets, driving its shares to a record high.

Henkel, known for laundry detergent Persil, beauty line Schwarzkopf and adhesives brand Loctite, reported consensus-beating second-quarter results on Thursday, driven by forecast-beating margin improvements.

Strong emerging markets demand, particularly in Latin America and Eastern Europe, led Henkel to lift its full-year EBIT (earnings before interest and taxation) margin target, saying it now expects an increase of more than 16.5 percent, from a previous forecast of "approximately" that figure.

Henkel said its adjusted margin for earnings before interest and taxes (EBIT) rose by 120 basis points to 17.6 percent in the second quarter, compared with an average expected rise of 51 basis points, a Reuters poll showed.

Henkel benefited from lower input costs and marketing expenses as well as an improved global distribution chain in the quarter, aiding gains from previous restructuring programs.

NEW BROOM

Under its former Chief Executive Casper Rorsted, who ran the company from 2008 until January, the German group focused on international markets, strengthened its core brands and cut costs, laying off nearly 3,000 workers since 2007.

But analysts were impressed with Rorsted's successor, Hans Van Bylen, a 55-year old Belgian who took over in May.

"In his first quarter as CEO Hans Van Bylen seems to be doing a commendable job," said Mirco Badocco, an analyst with RBC Europe.

The consumer group said quarterly adjusted EBIT rose by 6.6 percent to 819 million euros, beating a forecast in a Reuters analyst poll of 786 million euros.

Henkel shares were top of Germany's blue-chip DAX index following the results, rising by 4.9 percent to a record high of 118.6 euros.

Under Van Bylen, Henkel also saw the $3.6 billion takeover of North American laundry detergent maker Sun Products in June, setting it up to become the region's second-biggest player in that market, behind Procter & Gamble.

Sun Products, known for its U.S. Snuggle brand, is expected to add 1.4 billion euros to the group's coffers, Henkel's Chief Financial Officer said on Thursday.

Second-quarter organic sales across all three company segments - home care, beauty and adhesives - rose by 3.2 percent to 4.65 billion euros with Henkel confirming its organic sales guidance of 2 to 4 percent growth.

But slowing growth in China was a drag in Asia, where organic sales increased by 0.4 percent.

"We are facing a market environment which is becoming increasingly challenging, with moderate global economic growth, slowing growth dynamics, high uncertainties in the markets and unfavorable foreign exchange developments," Van Bylen said in a statement. (Editing by Alexander Smith)

08/11/2016 7:43