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Henkel AG & Co. KGaA

Henkel reports good organic growth

National Starch acquisition and efficiency enhancement program characterize Q2

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Düsseldorf (euro adhoc) - Düsseldorf, August 6, 2008 National Starch acquisition and efficiency enhancement program characterize Q2

Henkel reports good organic growth

@@start.t2@@. Strong sales growth of 11.4 percent
      . Organic sales growth: plus 6.1 percent
      . Adjusted operating profit (EBIT): plus 7.8 percent
      . Sales in growth regions: plus 19.5 percent

"We achieved highly encouraging second quarter organic sales growth,  despite  a@@end@@

difficult economic environment still characterized by  significantly increasing raw material costs and a weak US dollar," said Henkel CEO Kasper  Rorsted.  "Our organic growth was supported by all our business sectors. The improvements  were primarily from our growth regions,  while  development  in  Western  Europe  was restrained. We were able to further  increase  adjusted  operating  profit.  The integration of the National Starch businesses, which brought  us  a   significant boost in sales, and the implementation of  our   efficiency  enhancement  program aligned to achieving a sustainable improvement in our competitiveness,  continue on  track  with  good   progress  being    achieved.    Despite    the    challenging environment, we are confident regarding the development in  the   further  course of the year."

In its second quarter of 2008, Henkel increased sales by 11.4 percent to  3,668 million euros. This strong rise is due to good  organic   sales  growth  and  the first-time consolidation of  the  newly   acquired  National  Starch  businesses. After adjusting for foreign exchange, sales rose by a substantial 17.7  percent.

@@start.t3@@Organic    sales,      or      those      adjusted      for      foreign      exchange      and
acquisitions/divestments, increased by 6.1 percent, with  all  business  sectors
contributing.@@end@@

Operating profit (EBIT) was heavily impacted by restructuring charges amounting to 256 million euros for the quarter under review. This   corresponds  to  around one third of the restructuring charges previously announced for the  year  as  a whole, with the total expected to  be  about  770  to  780  million  euros.  The charges relate primarily to a global program for efficiency enhancement and   the integration of the National Starch businesses. As a consequence, EBIT  decreased to 113 million euros. Conversely, operating profit, adjusted  for  restructuring charges and one-time gains and charges ("adjusted EBIT"), rose  by  7.8  percent to 372 million euros.

EBIT margin amounted to 3.1 percent, while adjusted EBIT margin   decreased  from 10.5 percent to 10.1 percent. This decline  is   primarily  attributable  to  the heavy impact of raw material price increases on the Laundry & Home Care and  the Adhesive Technologies business sectors. Investment result,  mainly  attributable to Henkel's participation in Ecolab, remained  constant  at  24  million euros, despite the weaker US dollar. Net  interest  expense   increased  by  47  million euros, from -37 million to -84 million euros, due primarily to  the  higher  net debt arising from  payment of  the  purchase  price  for  the  National  Starch businesses but   also  to  higher  interest  rates.  There  was  a  corresponding increase in the negative financial result from -13 million euros to -60  million euros. The tax rate fell from 26.7 percent to 20.8 percent.

Due to lower EBIT and  the  increase  in  the  negative  financial   result,  net earnings  for  the  quarter  decreased  to  42  million euros.  After  minority interests totaling 4 million  euros,  net   earnings  for  the  quarter  were  38 million euros. At 227 million   euros,  adjusted  quarterly  net  earnings  after minority interests were 4.6 percent below the  prior-year  level.  Earnings  per preferred share decreased to 0.09 euros. The adjusted  figure   declined  by  5.5 percent to 0.52 euros.

Business Sector Performance

Organic sales for the Laundry & Home Care business sector increased   by  a  good 3.9 percent. At 1,012 million euros, sales overall were 1.1  percent  below  the previous year. Foreign exchange had a negative impact of 4.7 percent.  Operating profit decreased from 111 million euros  to  96  million  euros,  reflecting  in particular   the  ongoing  increase  in  raw  material  prices  that  lead  to  a substantial rise in input costs. Despite  the  price  increases   implemented  by Henkel and measures taken to reduce costs and improve efficiency,  the  company was not yet able to completely offset these additional expenses. Organic  growth in the Laundry segment was primarily due to results  in  Eastern  Europe.  Here, both the company's heavy-duty detergents  and  its  fabric  softeners  posted a positive sales performance. The good sales growth in North America was  due  to the high level of market acceptance of the change-over   to  ultra  concentrates, and to the successful launch of Purex Natural  Elements.  This  innovation  with mainly natural ingredients is in  line  with  consumers'  growing  environmental awareness. Organic sales of  the  Home  Care  segment  underwent  a  substantial increase with the greatest impetus again coming from Eastern  Europe. The  main contributors to this sales improvement were Henkel's dishwashing detergents  and WC cleaning and hygiene products. There was also an increase  in  air  freshener sales  in  North  America,   once  again  contributing  to  an  overall  positive performance.

With strong organic  sales  growth  of  5.9  percent,  the   Cosmetics/Toiletries business sector was able to maintain the highly positive trend of the  last  few quarters, with all regions contributing. In addition to  an  extremely  positive development in North  America,  the  businesses  in  Eastern  Europe  and  Latin America also generated particularly strong growth. Compared  to  the prior-year quarter, nominal sales rose by 1.2 percent to 779  million euros,  with  growth after adjusting for foreign exchange  rising  to 5.8  percent.  Despite  rising material costs, operating profit increased by 8.3 percent  after  adjusting  for foreign exchange, outstripping the rise in sales. Hence, the  EBIT  margin  also improved to 12.8 percent. The Hair Cosmetics segment continued  to   post  strong growth,  further  extending  its  market  positions  in all  its  categories  - Colorants, Care and Styling. Major contributions to this improvement  came  from the international relaunch of the Schauma brand, the debut  of  the  Taft  Power Gels Waterproof series and the rollout of  Diadem  Care  Gloss.  The  Body Care segment also continued to perform well. Developments in the deodorants  business were particularly encouraging with the launch of the  Fa  Rice  Dry  innovation, the first Fa deodorant with natural rice extract.  The  Skin  Care  segment  was able to further  expand its  market  position  thanks  to  the  high  level  of performance turned in by its most  important  international  brand,  Diadermine, with the focus this time on the launch of an  innovative  line  of   anti-oxidant treatments. The Oral Care segment was also able to  make further  market  share gains thanks in particular to the launch of Theramed Titan Fresh and Pro  Natur. The Hair  Salon  segment   continued  to  post  very  good  organic  growth.  The innovative strength of this business was again apparent with the launch  of  the new OSiS Design Mix line and of Igora  Royal  Absolutes,  the  first anti-aging coloration series.

Organic growth in the  Adhesive  Technologies  business  sector   amounted  to  a highly encouraging 7.9 percent. Nominal sales rose   by  26.1  percent  to  1,816 million euros, and by 34,6 percent after adjusting  for  foreign  exchange,  due primarily  to  the   acquisition  of  the  Adhesives  and  Electronic    Materials businesses of National Starch. Operating profit increased  by  21.1   percent  to 195 million euros, and by 29.3 percent after adjusting for foreign exchange.  In the  Craftsmen  and  Consumer  segment,   business  was  affected  by  the  tough conditions prevailing in North  America  and  Western  Europe.  Major  craftsmen markets in Western Europe showed a decline, and the severe real estate  downturn in the  USA  continued  unabated.  By  contrast,  the  Eastern   European  region continued to  develop  successfully.  There  was   again  strong  growth  in  the Building Adhesives segment, supported in particular  by  very  good  results  in Eastern Europe and the North Africa/Middle East  region.  The  Industry  segment benefited significantly from the acquisition of the National  Starch   businesses while also performing well in organic terms. There was  a further  increase  in sales in Western Europe despite a difficult business environment.  The  products for industrial maintenance, repair and overhaul under the  Loctite  brand  again generated positive results. Activities  in  the  automotive  and  durable   goods segments were stepped up with the launch of TecTalis, an innovative  metal  pre- treatment product. The performance  of  the   National  Starch  businesses  eased slightly in the face of a slowdown in the semiconductor and electronic  products markets.

Regional Performance

Organic  sales  in  the  Europe/Africa/Middle  East  region   increased    by    an encouraging  6.2  percent,  with  all  business   sectors    contributing.    After adjusting for foreign exchange, sales rose by 10.4  percent.  At  2,283  million euros, total sales were 8.2 percent  above  the  level  of  the  previous  year. Significant double-digit organic growth rates were achieved  in  Eastern  Europe and Africa/Middle East, while development in Western  Europe   including  Germany underwent a slight decline. Overall, the share of sales  accounted  for  by  the region amounted to 62 percent.   Organic  sales  for  the  North  America  region increased  by    a     good    3.8    percent.    Here,    the    performance    of    the Cosmetics/Toiletries business sector was encouraging as was that  of Laundry  & Home Care following a relatively slow start to the year. The weakness of the  US dollar led to a negative foreign exchange   impact  amounting  to  16.3  percent. Sales adjusted for foreign exchange rose by  23.0  percent,  with  the  acquired National Starch businesses making a significant contribution. With sales of  690 million euros, this region contributed 19 percent  to  total  sales. The  Latin America region reported an increase in organic sales of 13.3 percent,  with  all business sectors contributing.  After   adjusting  for  foreign  exchange,  sales growth amounted to 21.0 percent. With sales of 202 million euros,  the  region's share of the total remained at 5 percent. The  businesses  in  the  Asia-Pacific region likewise performed well. Sales increased by 44.9 percent to   432  million euros, due primarily to the businesses acquired from   National  Starch.  Organic growth, also supported by all business sectors, was 6.6 percent.  The  share  of total sales accounted for by the region  grew  by  3  percentage  points  to  12 percent.

In the growth regions of Eastern Europe, Africa, Middle East, Latin America  and Asia (excluding Japan), sales increased by 19.5 percent to 1,336 million  euros, corresponding to a share of consolidated sales of 36  percent.  After  adjusting for foreign exchange, sales rose by 27.0 percent while organic  growth  amounted to 15.7 percent, with all business sectors contributing.

Major Participation

Henkel has a 29.4 percent stake in Ecolab Inc., St.  Paul,   Minnesota,  USA.  In the second quarter of 2008, Ecolab Inc. generated  sales  of  1,570  million  US dollars. This corresponds to a rise  of  15.2  percent.  Net  earnings  for  the second quarter increased versus the prior year quarter by 26.0 percent to  139.0 million US dollars. The market value of this participation as of June 30,  2008, amounted to around 2.0 billion euros.

Updated Sales and Profit Forecast 2008

Given the business developments of the  first  half  of  2008  and   taking  into account the National Starch businesses  acquired  as  of April  3,  Henkel  has specified its sales and profit forecast for full fiscal 2008 as follows:

Henkel expects to achieve organic sales  growth  (after  adjusting   for  foreign exchange and acquisitions/divestments) of 3 to 5 percent.

Henkel expects to increase operating profit adjusted for   restructuring  charges and one-time gains and charges ("adjusted EBIT") at the lower end  of  the  mid- teens percentage range (2007 base: 1,370 million euros).

Henkel  expects  to  increase  earnings  per  preferred    share     adjusted    for restructuring charges and one-time gains and charges   ("adjusted  EPS")  at  the lower end of the mid single-digit percentage range (2007 base: 2.19 euros).

Included  in  this  forecast  are  initial  savings  arising  from   the  "Global Excellence" efficiency enhancement program and the integration of  the  National Starch businesses. We also anticipate that the currently  weak  US  dollar  will recover in the course of the second half of the year.

Not included in this forecast are any influences arising from the sale  in  part or in whole of our stake in  Ecolab,  the  purchase   price  allocation  for  the acquired National Starch businesses that still has to be carried  out,  and  the fiscal effects relating to a possible Ecolab transaction,  the  acquisition  and the restructuring charges. This information contains forward-looking statements  which are  based  on  the current estimates and assumptions made by the corporate management of Henkel  AG & Co. KGaA. Forward-looking statements are characterized by  the  use  of  words such as expect, intend, plan, predict, assume,  believe,  estimate,  anticipate, etc. Such statements are not to be understood as in any  way  guaranteeing that those expectations will turn out to be  accurate.  Future   performance  and  the results actually achieved by Henkel AG & Co. KGaA and its  affiliated  companies depend on  a  number  of  risks   and  uncertainties  and  may  therefore  differ materially from the   forward-looking  statements.  Many  of  these  factors  are outside Henkel's control and cannot be accurately estimated in advance, such as the future economic environment  and  the  actions  of   competitors  and  others involved in the marketplace. Henkel neither plans nor undertakes to  update  any forward-looking statements.

Press Contacts:
Lars Witteck        Wulf Klüppelholz

Phone: +49-211-797-2606        Phone: +49-211-797-1875
Fax: +49-211-798-9208  Fax: +49-211-798-9208

Henkel AG & Co. KGaA

Head of Corporate Communications: Ernst Primosch, Corporate Vice President

Photo material available for download at http://henkel.com/press. For further details on the figures for the second quarter, please go to: http://www.henkel.com/ir

press@henkel.com

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ots Originaltext: Henkel AG & Co. KGaA
Im Internet recherchierbar: http://www.presseportal.ch

Further inquiry note:
Irene Honisch
Assistent Corporate Communications
Tel.: +49 (0)211 797-5668
E-Mail: irene.honisch@henkel.com

Branche: Consumer Goods
ISIN:      DE0006048432
WKN:        604843
Index:    DAX, CDAX, HDAX, Prime All Share
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