Henkel AG & Co. KGaA

EANS-News: Henkel AG & Co. KGaA /

Henkel affected by economic downturn

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companies/finances/shares/stock market/Henkel

Düsseldorf (euro adhoc) - Düsseldorf, May 6, 2009 Q1 results burdened by fall in demand among key industrial customers

Henkel affected by economic downturn

@@start.t2@@. Sales increase of 3.1 percent to 3,258 million euros
      . Organic sales decline of 7.0 percent
      . Adjusted operating profit fell 26.1 percent to 235 million euros
      . Adjusted earnings per preferred share declined 39.2 percent to 0.31 euros

"At the beginning of this new financial year, Henkel too has  felt  the  effects@@end@@

of the persistently adverse economic climate, with our businesses turning  in  a very mixed set of results for the  first  quarter  of 2009,"  commented  Kasper Rorsted, Chairman of the  Henkel   Management  Board.  "Our  two  consumer  goods business sectors, Laundry & Home Care  and  Cosmetics/Toiletries,  continued  to perform very well, while the  Adhesive  Technologies  business   sector  suffered from  the  challenges  encountered  in  major   customer  industries  worldwide." Rorsted continued: "We are dissatisfied with our start to fiscal 2009.  However, we are convinced that, as a result of our early introduction of   countermeasures and based on our solid financial  position,  we  will emerge  from  this  still difficult economic environment stronger than before."

In its first quarter of 2009, Henkel increased sales compared to the prior-year quarter by 3.1 percent to 3,258 million  euros.  The  rise is  attributable  to Henkel's acquisition of  the  National  Starch   businesses  in  April  2008.  In organic terms, or adjusted for foreign  exchange  and  acquisitions/divestments, sales decreased by 7.0 percent within a difficult  overall  market  environment. After adjusting for foreign exchange, the increase  in  sales  amounted  to 3.8 percent. Business development at the company's three business sectors  was  very mixed. While the consumer goods business sectors Laundry &  Home  Care  and,  in particular, Cosmetics/Toiletries, continued to perform very well,  with  organic growth  rates  of  0.4 percent  and  3.5  percent  respectively,  the  Adhesive Technologies business sector suffered from the challenges encountered  in  major customer industries worldwide. This was  reflected  in  an  organic   decline  in sales of 18.2 percent.

Due  primarily  to  the  significant  decrease  in  earnings  at  the Adhesive Technologies business sector, operating profit (EBIT) fell by 31.7 percent  from 320 million euros in the first quarter of  2008 to  218  million  euros.  After adjusting  for  one-time   gains/charges  and  restructuring  charges,    adjusted operating profit ("adjusted EBIT") decreased by 26.1 percent  from  318   million euros in the prior-year quarter to 235 million euros.

The EBIT margin  amounted  to  6.7  percent,  while  the  adjusted   EBIT  margin declined  from  10.1  percent  to  7.2  percent.  Both   results    are    largely attributable  to  the  significant  decrease in    profits    at    the    Adhesive Technologies business sector.

As a result of the sale of Henkel's  stake  in  Ecolab  in  November 2008,  the investment result fell from 19 million euros to 0 million euros.  Net  interest expense increased by 14 million euros from -38 million  euros  to  -52  million euros. This is primarily due to higher net debt arising from  the  financing  of the purchase price for the acquisition of the National  Starch  businesses.  The financial result consequently decreased further, from -19 million euros  to  -52 million euros. The tax rate amounted to 27.1 percent.

With the lower EBIT and the decrease in the financial result, net   earnings  for the quarter fell by 45.7 percent from 223 million euros to  121  million  euros. After minority interests totaling 4 million euros, net earnings for the  quarter amounted to 117 million euros (prior-year quarter: 219 million euros).  Adjusted quarterly net earnings after minority interests were 130 million euros  compared to 218 million euros in the first quarter of the  previous  year.   Earnings  per preferred share eased from 0.51 euros to 0.28 euros.   The  adjusted  figure  was 0.31 euros compared to 0.51 euros in the prior-year quarter.

Business Sector Performance

The Laundry & Home Care business sector  posted  organic  sales   growth  of  0.4 percent, with foreign exchange having a  negative   impact  of  2.1  percent.  In nominal terms, sales fell by 1.7 percent to 1,013  million  euros.  Due  to  the difficult market environment, sales in Western Europe  and  North  America  fell below the figure for the same period  last  year.  In  the  regions  of   Eastern Europe, Africa/Middle East and Latin America, on the  other   hand,  the  company posted organic sales growth with, in  most   cases,  double-digit  growth  rates. Operating profit rose by 7.9 percent to 107 million euros. After  adjusting  for foreign exchange, it rose even by 9.6 percent,  with  contributions  coming  not only from price increases but also from successful measures to reduce   cost  and enhance efficiency. The decrease in material prices that began  toward  the  end of 2008 also continued through  the  first   quarter  of  2009.  In  the  Laundry segment, sales growth was once again driven by  Henkel's  heavy-duty  detergents and fabric softeners. Sales growth  was  again  supported  in  this  quarter  by innovations such as the cold  power  formula  launched  under   Henkel's  premium detergent brands in Western Europe.  With  this   innovation,  excellent  laundry power is assured even at low temperatures, enabling  consumers  to  save  energy and therefore reduce the burden on the environment as  they  do  their  washing. Sales of the Home Care segment matched the level of the previous year.  Henkel's dishwashing detergents and WC  cleaners  performed   particularly  well.  Of  the dishwashing products, the company's two major brands Pril and Somat  once  again succeeded in growing faster than the category average.

Despite the increasingly difficult market conditions and a  very   strong  prior- year quarter, the Cosmetics/Toiletries business sector continued  the  positive trend of recent years, registering organic sales growth  of  3.5  percent.  Once again it was successful in outpacing the growth of its relevant  markets.  Apart from Western Europe, all the regions  contributed  to  the  organic  improvement achieved, with the  regions  of  Eastern  Europe,  Asia  and  Latin   America  in particular continuing to generate strong growth. In nominal  terms,  sales  rose by 1.7 percent to 720 million euros. Operating profit reached 91 million  euros, an increase of 4.1 percent, rising to 4.8 percent after  adjusting  for  foreign exchange.  The  Hair  Cosmetics  segment  succeeded  in  expanding   the    market positions of all its categories. The Hair Care and Colorants  businesses  turned in a particularly positive performance, aided by  the  international  launch  of the new Schauma line Q10, the introduction of the new hair care brand Syoss  and also the launch of the new  colorant  brand  Essential  Colors.  The  Body   Care segment continued its very encouraging performance in the  USA   under  the  Dial brand. This was based in particular on line   extensions  and  the  launch  of  a number of new body wash products. In Europe, the Fa brand  specifically  ensured a successful start to the year: in the deodorants business, the  positive  trend of the previous year was extended through the launch of new  products  for   both women and men. In the Skin Care segment, the focus was on the launch of the  new Diadermine line Dr. Caspari and also the relaunch of the Diadermine  core  range Lift Plus Triple Lifting. In the Oral Care segment,  the  new  Theramed  variant Oxy White generated positive impetus. Against the background of an  increasingly serious slowdown in the global professional hairdressing market,  Henkel's   Hair Salon segment significantly outperformed  its  sector.  At  the center  of  its activities were the continuing rollout  of  the  new brand  Essensity  and  the launch of the styling line Silhouette Gold.

Sales of the Adhesive Technologies business sector increased by 7.7   percent  to 1,469 million euros, or by 7.2 percent after  adjusting   for  foreign  exchange. The rise is due to  the  acquisition  of  the National  Starch  businesses.  In organic terms, sales were 18.2 percent  below  the  figure  for  the  prior-year quarter. In view of the continuing challenges encountered in the world  economy, the business sector was unable to match the sales realized in the  same   quarter last year in any of its regions, with the exception of  Latin America.  Due  to the  strong  decline  in  volumes  and  the   associated  decrease  in    capacity utilization, operating  profit   fell  by  68.6  percent  to  47  million  euros. Included in this figure is  a  charge  of  4  million  euros  arising  from  the integration of the National Starch businesses. In the  Adhesives  for Craftsmen and Consumers segment, the reluctance to spend  among   consumers  and  inventory reductions pursued by the business sector's customers had a negative  effect  on business. This led to a shortfall versus the  prior-year  results.  The  general trend toward postponement of construction projects had an adverse effect on  the performance of the Building  Adhesives  segment.  However,  with   strong  growth still taking place in the Middle East  region,  this   segment  only  suffered  a slight decline. Business in Eastern Europe remained  at  the  prior-year  level. The Packaging, Consumer  Goods and  Construction  Adhesives  segment  benefited significantly from the acquisition of the National Starch  businesses  and  also proved to be more stable in this difficult economic climate.  However, here too the slight decline in demand for consumer goods impacted   business  development. The effects of the  global  downturn  facing   the  customer  industries  of  the business sector were particularly noticeable in the business  results  generated by its Specialty Adhesives  and  Surface  Treatment  segment,  with  significant reductions in volume occurring particularly  in  its  operations   involving  the automotive industry, manufacturers of durable goods and the metal industry.  The Electronics segment  has  been   strengthened  for  the  long  term  through  the acquisition of the National  Starch  businesses.  However,  the  general  market weakness in the semiconductors sector has had a  significantly   negative  effect on business performance.

Regional Performance

In the Europe/Africa/Middle East region,  organic  sales  fell  by   4.6  percent below the figure for the prior-year quarter. While the Laundry & Home  Care  and Cosmetics/Toiletries business sectors were able  to  slightly  increase  sales, Adhesive Technologies posted a decrease in the  double-digit  percentage  range. In Africa/Middle East,  Henkel  once  again  generated  a  double-digit  organic growth rate,  while  developments  in  Western  Europe  including   Germany  were regressive. The previously strong growth  rates   registered  in  Eastern  Europe eased. Overall, the region's sales decreased from 2,119 million euros  to  1,996 million euros. The share of Group sales was 61 percent.  The  organic  sales  of the North America region decreased by 14.1 percent. Due to the difficult market environment prevailing in North America,  Laundry  &  Home   Care  experienced  a slight decline in sales  while  Adhesive   Technologies  suffered  a  substantial drop.  On  the  other  hand,   there    were    positive    developments    at    the Cosmetics/Toiletries business sector. Total sales of the region amounted to  664 million euros, resulting in a share of Group sales of  20  percent.  In  organic terms, sales in the Latin America region increased by 5.1 percent, with all  the business sectors contributing. At 188 million euros, the share  of  total  sales accounted for by this region was 6  percent.  In  the  Asia-Pacific   region,  in organic terms sales decreased compared to the same quarter  last  year  by  20.3 percent. A rise in the sales generated by  Cosmetics/Toiletries  was  offset  by significant decreases  at   Adhesive  Technologies  and  the  discontinuation  of Henkel's laundry and home care operations in China. Total sales  of  the   region amounted to 354 million euros, yielding a share of Group sales of  11  percent. In the growth regions of Eastern Europe, Africa, Middle East, Latin America  and Asia (excluding Japan), sales increased by 3.8 percent to 1,143  million  euros, corresponding to a share of consolidated sales of 35.1 percent.  Organic  growth amounted to 0.3 percent.

Major Participation Following the sale of its stake in Ecolab  Inc.   in  November  2008,  Henkel  no longer has any major participations.

Sales and Profits Forecast 2009 Henkel expects that the difficult   market  conditions  prevailing  in  the  real economy and also in the financial  markets  will  persist  through  2009.    The general economic climate and its further development are difficult  to   predict. Nevertheless, Henkel is confident of  outperforming  its   markets  in  terms  of organic  sales  growth  (i.e.  after   adjusting    for    foreign    exchange    and acquisitions/divestments). A number of measures have already been introduced  on the operational side, from which Henkel expects positive  momentum  to  develop. These activities and also  relief  from  easing  of  raw  material   prices  will support the development of operating profit (EBIT) and   earnings  per  preferred share  (EPS),  as  adjusted  in  each  case for  one-time    gains/charges    and restructuring  charges.  As  soon as  the  markets  allow    properly    reasoned assumptions, Henkel will communicate quantified  expectations  for  full  fiscal 2009.

For the second quarter  of  2009  Henkel  expects  its  consumer   businesses  to continue their strong development of the first quarter of  the  current  fiscal year. For the Adhesive Technologies business sector Henkel anticipates a  slight improvement compared with the first quarter of 2009.

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.

Contact:

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

Chief Communications Officer: Ernst Primosch, Corporate Vice President

Photo material available for downloading at http://henkel.com/press. For more detailed facts and figures relating to the first quarter of 2009, 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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