Henkel AG & Co. KGaA

EANS-News: Henkel AG & Co. KGaA
Henkel shows positive trend in Q2

Consumer businesses report continued success ┬ľ slight recovery of Adhesives business

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companies/finances/industry/shares/Henkel

D├╝sseldorf (euro adhoc) - . Sales fall 5.0 percent to 3,485 million
euros      . Organic sales decline 5.3 percent      . Operating profit
increases from 113 million euros to 279 million euros      . Adjusted
operating profit decreases 17.2 percent to 308 million euros

"Again in the second quarter of 2009, Henkel felt the effects of the continuing world economic recession. Nevertheless, all  our  business sectors  were  again able to outstrip their relevant markets," said Kasper Rorsted, Chairman  of  the Henkel Management Board. "Our Laundry  &  Home  Care  business  sector  actually surpassed the good results of  the  first  quarter,  while  Cosmetics/Toiletries again showed a very positive performance. Compared  to  the  first   quarter,  we also registered an improvement at  Adhesive   Technologies."  Rorsted  continued: "These developments are attributable to the countermeasures we were able to  put in place early on. Hence we remain firmly convinced 2009  will  not  be  a   lost year.  Rather,  it  will  be  a  major  step  toward  achieving our    long-term objectives."

In a persistently difficult market environment, Henkel achieved sales of  3,485 million euros in the second quarter of 2009, 5.0 percent less than in the prior- year period. Organic sales, i.e. sales after adjusting for foreign exchange  and acquisitions/ divestments, were 5.3  percent  below  the  level  of  the  second quarter of 2008, but improved slightly compared to the  first  quarter  of  this year. Against this background, developments  at  the  company's  three   business sectors continued to show a very mixed picture. The   consumer  goods  businesses Laundry & Home Care and Cosmetics/Toiletries were able to successfully  continue their positive trend with organic growth rates of 6.3 percent  and  3.5   percent respectively. The Adhesive Technologies business  sector   improved  compared  to the first quarter, but due to the volume decreases in major customer  industries worldwide, was unable to avoid posting  a  decline  in  organic  sales  of  15.4 percent.

Due primarily to the restructuring charges burden on the results of   the  prior- year quarter, operating  profit  (EBIT)  increased  by   145  percent,  from  113 million euros to 279 million euros. After adjusting for  one-time  gains/charges and  restructuring  charges,   adjusted  operating    profit    ("adjusted    EBIT") decreased by 17.2 percent, from 372 million euros to 308 million euros. This  is largely attributable to the decrease in earnings at Adhesive Technologies.

The EBIT margin was 8.0 percent, while the adjusted EBIT margin   decreased  from 10.1 percent to 8.7 percent.

The company's investment result fell from 24 million euros to -4 million  euros. This decline is essentially due to the sale of Henkel's participation in  Ecolab in November 2008. Net interest expense improved by 28  million  euros  from  -84 million euros to -56 million euros, mainly as a result of lower  interest  rates compared to the previous year. The financial result remained stable   overall  at -60 million euros. The tax rate was 31.5 percent.

Due to increased EBIT, net earnings for the quarter rose by  257   percent,  from 42 million euros to 150 million  euros.  After   minority  interests  totaling  7 million euros, net earnings for the quarter  were  143  million  euros  (second quarter of 2008: 38   million  euros).  Adjusted  quarterly  net  earnings  after minority interests were 162 million euros compared to 227 million euros  in   the first quarter of the previous year. Earnings per preferred share increased  from 0.09 euros to 0.33 euros. The adjusted figure was 0.37 euros  compared  to  0.52 euros in the prior-year quarter.

Business Sector Performance

The Laundry & Home  Care  business  sector's  organic  sales   increased  by  6.3 percent, the highest rise since the first  quarter of  2007.  Foreign  exchange exerted a negative impact of 1.9 percent.  Nominally,  sales  increased  by  4.4 percent  to  1,058   million  euros.  The  growth  regions  of  Eastern    Europe, Africa/Middle East and Latin America continued to deliver  strong   sales  growth with, in some cases, double-digit rates of increase. Following a sluggish  start to the year, a gratifying rise in organic sales was also registered  in  Western Europe and North America. Operating profit rose by 28.8 percent to  119  million euros. After adjusting for foreign exchange,  earnings  rose  by  an  even  more respectable 34.1 percent. This highly encouraging development  was   attributable not only to a further relaxation in raw material prices but  also  sales  price increases and measures successfully   introduced  to  reduce  costs  and  enhance efficiency. Sales reported by the Laundry segment showed a substantial rise.  In particular, the biggest brands Persil and Purex posted disproportionate  organic improvement. The launch of Purex Complete 3-in-1  in  the  USA  proved  a  great success. These innovative laundry sheets combine the performance of a  detergent along  with   heat-activated  softener  and  anti-static  ingredients  that    are released in the drier to prevent electrostatic accumulation in  the   wash  load. Sales of the Home Care segment likewise continued to   follow  an  upward  trend, with  the  fastest  rates  of  increase   occurring    in    Eastern    Europe    and Africa/Middle East. The   company's  largest  dishwashing  detergent  brand  Pril achieved double-digit increases in  organic  sales  in  both  regions.  And   the launch of Somat 9 in the machine dishwashing category also produced  encouraging results.

Despite 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.   Consequently,  this  business  sector    significantly outperformed its relevant markets, which exhibited negative development  overall in a very  difficult  economic  environment.  Particularly  in  the   regions  of Eastern Europe, Asia and Latin America, growth  remained strong.  The  increase achieved in Western Europe was also noteworthy. In nominal terms, sales rose  by 1.5 percent to 790 million euros. Operating profit reached  100  million  euros, an increase of 2.8 percent, rising to 4.2 percent after  adjusting  for foreign exchange. The Hair Cosmetics segment continued to  perform   very  well,  further expanding the market  positions  of  all  its   categories.  The  Hair  Care  and Colorants businesses turned in a particularly  positive  performance,  aided  by the continuing roll-out of  the  new  brand  Syoss,  the  new  Gliss  line  Asia Straight and the new Schauma Shampoo Hairactive for Men. The positive trend  in the Colorants category continued  with  the  support  of   the  Essential  Colors innovation and the market launch of Palette 10 Minutes Coloration. In  the  Body Care segment, the Dial brand in the USA continued to do very well, supported  in particular by the launch of a number  of  new  body  wash  products.  Also  very successful in this segment was the Fa brand which generated significant  revenue and market share increases in Europe following the introduction  of   the  shower products Cream & Oil and Fresh & Oil. In the Skin Care segment,  the  focus  was on the launch of the new  Diadermine   series  Dr.  Caspari.  In  the  Oral  Care segment, the launch of the new Theramed variant Arctic White generated  positive momentum. Against the background of an increasingly negative development in   the global  professional  hairdressing    market,    Henkel's    Hair     Salon    segment significantly outperformed its market. Here, the focus was on  the  relaunch  of Bonacure, the introduction of two new sublines from Igora and the ongoing  roll- out of the Essensity brand.

With the  markets  stabilizing  and  sales  below  the  prior-year   quarter  the Adhesive Technologies business sector was  able  to   substantially  improve  the quality of its results compared to the first quarter of 2009.  Compared  to  the second quarter 2008 - the period in which the  newly  acquired  National  Starch businesses were consolidated for the first time - sales fell by 12.9 percent  to 1,582 million euros. After adjusting for  foreign  exchange,  the   decrease  was 13.9 percent. In view of the continuing difficulties 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. Organic sales remained 15.4 percent below the level of the  prior-year  quarter. Compared to the first quarter of 2009, however, this constitutes an   improvement of 2.8 percentage points. Due to the  decline  in   volumes  and  the  associated decrease in capacity utilization, operating profit fell by 50.8  percent  to  95 million euros. Included in  this  amount  is  4  million  euros  in  consultancy charges resulting from the integration of the National  Starch   businesses.  The early introduction of measures to adapt capacity and reduce costs,  as  well  as the launch of a number of innovative products, served to  significantly  improve earnings compared to the first quarter. The performance  of  the  Adhesives  for Craftsmen and Consumers segment was impacted by the continuing recession in  the building industry and particularly the slump in demand encountered   in  the  UK, Spain and the USA. The generally  lower  level  of   construction  activity  also adversely influenced developments in the Building  Adhesives  segment,  although business in the Middle East region continued to  improve.  The  decline  in  the Packaging, Consumer Goods and  Construction  Adhesives  segment  was  relatively minor. However, here too the slight fall in demand for consumer   goods  affected business performance. The global reduction in manufacturing output  among  major industrial  customers  again   significantly  impacted  the  development  of  the Specialty Adhesives and Surface  Treatment  segment.  However,  particularly   in this difficult environment, Henkel has benefited from its acknowledged  position as a supplier  of  innovative  problem   solutions.  As  a  case  in  point,  the company's metal pretreatment product TecTalis received the  PACE  Award  as  the ecologically  and economically  most  significant  innovation  of  2008    among automotive suppliers. The Electronics  segment  continued  to  suffer from  the general market weakness affecting the semiconductors industry.

Regional Performance

In the Europe/Africa/Middle East region, organic sales were  3.7   percent  below the level for the second quarter of 2008. While the   Laundry  &  Home  Care  and Cosmetics/Toiletries business  sectors   succeeded  in  generating  a  gratifying increase in sales, Adhesive Technologies posted a decline  in  the  double-digit percentage range. In Africa/Middle East,  Henkel  once  again  achieved  double- digit organic growth, while performance in Western Europe including Germany  was regressive. The growth rate in Eastern Europe  recovered slightly  compared  to the first quarter.  Overall,  sales  in  the   Europe/Africa/Middle  East  region decreased from 2,283 million euros to 2,113 million euros, giving it a share  of 61 percent of  Group   revenues.  Organic  sales  in  the  North  America  region decreased by 10.2 percent. The difficult  market  environment  led  to   Adhesive Technologies  posting  a  substantial  decline    in    sales. Developments    at Cosmetics/Toiletries were slightly regressive. However, sales of the  Laundry  & Home Care business sector showed an encouraging increase.  Total  sales  of  the region amounted to 677 million euros, resulting in a share of Group revenues  of 19 percent. Organic sales in the Latin America region increased by 3.9  percent, with all business sectors contributing. At  210  million  euros,  the share  of total sales accounted for by this region was  6  percent.   In  the  Asia-Pacific region, organic sales decreased compared to the same quarter last year  by  10.0 percent. A gratifying increase in sales  at  the  Cosmetics/Toiletries  business sector was offset by a significant decline at Adhesive  Technologies.  With  the closure of our Laundry & Home Care operations in China at the beginning  of  the year, sales of this business sector also declined. Total  sales  of   the  region amounted to 430 million euros, resulting in a share  of   Group  revenues  of  12 percent. Sales in the growth regions  of   Eastern  Europe,  Africa/Middle  East, Latin America and Asia (excluding Japan) increased organically by  2.3  percent. In  nominal terms,  sales  fell  by  1.5  percent  to  1,317    million    euros, corresponding to a share of consolidated sales of 37.8 percent.

Sales and Profits Forecast 2009 Henkel expects that the difficult market conditions  currently  prevailing  both in the real economy and also in  the  financial  markets  will  persist  through 2009. The general economic climate and its  further  development  remain   rather difficult to predict. Nevertheless, Henkel is  confident  of   outperforming  its relevant markets in terms of organic sales  growth (i.e.  after  adjusting  for foreign exchange and acquisitions/divestments). Henkel has introduced  a  number of further measures on the operational side,  from  which  the  company expects positive momentum to develop. These activities and also relief from  easing  raw material prices will support the development of  operating  profit  (EBIT)  and earnings  per  preferred  share   (EPS)  -adjusted  in  each  case  for  one-time gains/charges and restructuring charges.

For the third  quarter  of  2009  Henkel  expects  its  consumer   businesses  to continue to perform well - albeit with a degree of deceleration.  The  company's expectation for the Adhesive   Technologies  business  sector  is  that  it  will develop similarly to or slightly better than in the second quarter of 2009.

The outlook for the  fourth  quarter  of  2009  is  unclear  due  to continuing uncertainties regarding  the  likely  development  of  the economic  parameters governing  the  markets  of  relevance  for   Henkel.  This  also    reduces    the reliability of any forecast made with respect to the year as a  whole.  As  soon as the markets allow properly  reasoned  assumptions,  Henkel  will  communicate quantified expectations for full fiscal 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 Kl├╝ppelholz
Phone: +49-211-797-2606        Phone: +49-211-797-1875
Fax: +49-211-798-4040          Fax: +49-211-798-4040

Full report for the second quarter 2009 and photo material are available at http://henkel.com/press.

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
B├Ârsen:  Frankfurt / regulated dealing/prime standard
              Hamburg / free trade
              Stuttgart / free trade
              D├╝sseldorf / free trade
              Hannover / free trade
              M├╝nchen / free trade
              Berlin / regulated dealing



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