By  on August 7, 2008

BERLIN — Despite plummeting second-quarter profits, Düsseldorf-based Henkel said it has managed to deal with rising raw material costs and reported a sales increase, sending its shares up 4.5 percent to close at 27.44 euros, or $42.29 at current exchange, on the Frankfurt Stock Exchange Wednesday.

Quarterly results were impacted by restructuring charges that totaled 256 million euros for the quarter, or $400.2 million at average exchange, which sent net earnings down 83.8 percent to 38 million euros, or $59.4 million. Operating profits decreased by 66.7 percent to 113 million euros, or $176.7 million. However, after adjusting for restructuring charges and one-time gains and charges, earnings before interest and taxes rose by 7.8 percent to 372 million euros, or $581.6 million.

Henkel’s beauty division, which comprises skin, body and hair care, including the Schwarzkopf and Dial brands, saw strong growth in Eastern Europe, Latin America and North America.

Cosmetics sales for the quarter rose by 1.2 percent to 779 million euros, or $1.22 billion, with sales growth of 5.8 percent after adjusting for foreign exchange. Operating profits rose 2 percent to 99 million euros, or $154.8 million, an 8.3 percent gain on a currency adjusted basis.

“We achieved highly encouraging second-quarter organic sales growth, despite a difficult economic environment still characterized by significantly increasing raw material costs and a weak U.S. dollar,” said Henkel chief executive officer Kasper Rorsted, adding that an efficiency enhancement program, which aims to maintain competitiveness and involves cutting 3,000 jobs, will continue.

The group aims to generate annual savings of 150 million euros, or $231.2 million at current exchange rates, starting in 2011, and, for this year, savings of 30 million euros, or $46.2 million.

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