Henkel AG & Co. KGaA

EANS-News: Henkel recovery continues through third quarter

Consumer businesses continue their successful course – Adhesives business further improved versus previous quarters

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quarterly report/9-month report/Henkel

Subtitle: Consumer businesses continue their successful course – Adhesives business further improved versus previous quarters

Düsseldorf (euro adhoc) - Düsseldorf, November 11, 2009 Consumer businesses continue their successful course - Adhesives business further improved versus previous quarters

Henkel recovery continues through third quarter

• Sales down 7.3 percent to 3,485 million euros
      Â• Decline in organic sales reduced to 2.5 percent
    Â• Operating profit up 191 million euros to 290 million euros
    Â• Adjusted operating profit down 1.5 percent to 385 million euros

"In the third quarter, we were again able to continue our  positive   performance of recent quarters", says Kasper Rorsted,  Chairman  of   the  Henkel  Management Board.  "We  achieved  excellent  results  at Laundry  &  Home  Care,  and  our Cosmetics/Toiletries business sector was also able  to  once  again  exceed  the very good performance of  the  previous  quarters.  There  was  also  a   further improvement in the results of the Adhesive Technologies business sector  in  the course of the year, albeit on a lower level than in the previous year."  Rorsted continued: "The encouraging results registered  in  this  last  quarter  reflect both the stabilization in our markets and our programs on  structural  and   cost alignment."

In the third quarter of 2009, Henkel generated sales of 3,485 million euros.  In a still difficult market environment, this represents a decrease of 7.3  percent compared to the figure for the prior-year quarter. In organic terms, i.e.  after adjusting  for  foreign   exchange  and  acquisitions/divestments,  sales  showed another improvement compared to the first two quarters of this year,  coming in just 2.5 percent below  the  level  of  the  third  quarter  of   2008.  However, performance of the company´s three business sectors continued  to  show  a  very mixed picture. Laundry & Home Care again performed well, posting an increase  in organic sales of 2.4 percent. Cosmetics/Toiletries saw  organic  sales  rise  by 3.7 percent,   again  outstripping  the  already  very  good  figures  of  recent quarters. Due to the volume decline encountered in  major  customer   industries, Adhesive Technologies registered a decrease in organic   sales  of  7.6  percent. Compared to the second quarter, however, the drop in organic sales has halved.

Due primarily to the burden of restructuring  charges  on  the   results  of  the prior-year quarter, operating profit (EBIT) increased by 51.8 percent, from  191 million euros to 290 million euros.  After  adjusting  for  one-time  gains  and charges and restructuring charges totaling 95 million euros, adjusted  operating profit ("adjusted EBIT") decreased slightly by 1.5  percent,  from   391  million euros to 385 million euros.

Return on sales (EBIT margin) was 8.3 percent, while adjusted  return on  sales ("adjusted EBIT margin") increased from 10.4 percent to 11.0 percent.

The investment result fell from 24 million euros to 0 million euros due  to  the sale of the company´s stake in Ecolab in November  2008. Net  interest  expense improved by 32 million euros, from -72   million  euros  to  -40  million  euros, largely attributable to lower interest rates  compared  to  the  previous  year. Consequently, the financial result  improved  from  -48  million   euros  to  -40 million euros. The tax rate amounted to 28.0 percent.

Due to the increased EBIT, net earnings for the quarter rose  by   68.2  percent, from 107 million euros to 180 million euros. After deducting minority  interests of 8 million euros, quarterly net earnings totaled 172  million  euros  compared to 101 million euros in the third  quarter  of  2008.    Adjusted  quarterly  net earnings after minority interests amounted  to  240  million  euros  versus   251 million euros in the prior-year quarter. Earnings per preferred share  increased from 0.23 euros to 0.39 euros. The adjusted figure was 0.55  euros  compared  to 0.59 euros in the prior-year quarter.

Thanks to a strong cash flow performance, net debt was further reduced  compared to the end of the second quarter of 2009  by  some 700  million  euros  to  3.2 billion euros.  Good progress was also   made  with  regard  to  working  capital management: compared to the prior-year period, the ratio of net working  capital to sales improved from 12.8 percent to 10.3 percent.

Business Sector Performance

Laundry & Home Care increased sales  in  organic  terms  by  2.4   percent,  with foreign exchange having a negative impact of  5.3   percent.  In  nominal  terms, sales decreased by 2.9 percent to 1,035 million euros. The generally  gratifying increase in organic sales was attributable to  the  growth  regions  of  Eastern Europe, Africa/Middle East and  Latin  America  which,  in  some  cases,   posted double-digit percentage improvements. In Western Europe and   North  America,  on the other hand, the difficult market environment impeded  sales  performance  to the extent that neither region was able to attain the sales level of the  prior-

@@start.t2@@year  quarter.  Nevertheless,  operating  profit  rose  significantly,  by  17.0
percent to 137 million euros. After adjusting for  foreign  exchange,  the  rise
was an even more encouraging 23.7 percent.  Return  on  sales  improved  by  2.2
percentage    points    to    13.2    percent.    The    Laundry    segment    made      a@@end@@

disproportionately high contribution to the rise  in  sales,  with   the  biggest boost to growth again coming from Eastern Europe  and   Africa/Middle  East.  The good  sales  performance  posted  was  also due  to  a  number  of    successful innovations such as Persil   ActicPower,  the  most  advanced  laundry  detergent available under the premium Persil brand. Persil ActicPower requires  just  half the previous quantity per wash  and  develops  its  laundry  power  at   just  15 degrees Celsius. In the USA, Henkel´s innovation Purex 3-in-1 also continued  to perform very well. The Home Care segment likewise turned  in  a  positive  sales performance, with the growth regions of Eastern Europe  and  Africa/Middle  East again  leading   the  way.  Here,  Henkel´s  dishwashing  products  continued  to generate particular success.

With organic sales growth of 3.7 percent,  Cosmetics/Toiletries   maintained  its consistently strong  development  in  the  third   quarter.  Once  again  it  was successful in outpacing the growth of its relevant markets as they continued  to bear the impact of the economic downturn. The contributions made by  the  growth regions of Eastern Europe, Asia-Pacific  and  Latin  America  were  particularly noticeable, with Western Europe also posting an  organic  sales   increase.  This encouraging sales performance was also reflected in   an  increase  in  operating profit of  3.3  percent  to  99  million euros.  After  adjusting  for  foreign exchange, growth  was  even   6.8  percent,  with  marketing  spend  also  having

@@start.t3@@increased. Return on sales rose by 0.5 percentage points to  13.0  percent.  The Hair Cosmetics segment produced another good  set  of  results.  The  Hair  Care business developed very well as a result of the  further  roll-out  of  the  new Syoss brand and the introduction of the new variants Schwarzkopf Gliss Kur  Hair Active  and  Schauma  Hair  Activator.  Product  launches  including  those    of Essential Color and Poly Palette  10  Minutes  Coloration  greatly  boosted  the@@end@@

results posted by the Colorants  category.  The  Styling  segment   continued  to garner success, this time with innovations in the Got2b series and the new  Drei Wetter Taft line 10 Carat Gloss. In  the   Body  Care  segment,  the  Dial  brand consolidated its ongoing success in the USA, with the  body  wash  product  Dial Anti-Oxidant having developed into one of the most successful launches  in  this market segment. In Europe too,  the  shower  gels/body  wash   products  marketed under the Fa brand continued to perform very well, achieving one of the  fastest growth rates in this category. In the Skin Care business, the focus was  on  the launch of new Diadermine   3D  Wrinkle  Expert,  specially  formulated  for  deep wrinkles. In the Oral Care segment, the  launch  of  the  new  Theramed  variant Arctic White created further positive  momentum.  Despite   increasingly  adverse market conditions,  Henkel´s  Hair  Salon   business  was  able  to  successfully consolidate its position and win important new  customers.  The  focus  in  this segment was on the relaunch of Bonacure Time Restore  and  the  introduction  of new products in the form of the sublines Igora Color 10 and Seah Cashmere Cream Shampoo.

The third quarter saw the Adhesive Technologies  business  sector   make  further progress along the road to recovery embarked upon in the  second  quarter,  with the quality of its earnings significantly improving.  Organic  sales  were  7.6 percent below the  figure  for the  prior-year  quarter.  After  adjusting  for foreign exchange,   the  decrease  was  9.9  percent.  In  nominal  terms,  sales declined by 12.4 percent to 1,630 million euros. However,  in  all   regions  the rates of decline have been reduced compared to those of recent  quarters.    The regions of Latin America  and  Africa/Middle East  have  again  begun  to  show moderate growth  in  sales   adjusted  for  foreign  exchange.  Operating  profit decreased by 47.0 percent. Included in this figure are one-time  charges  of  24 million euros of valuation losses on assets held  for  sale,  and   restructuring charges amounting to 37 million euros. Consequently, adjusted  operating  profit ("adjusted EBIT") only decreased by 20.6 percent to 150 million euros.  Compared to the previous quarter it actually increased  by  32.0  percent.  Reflected  in this improvement are the accelerated  process  of  synergy  realization   arising from the integration  of  the  National  Starch  businesses, and  the  benefits accruing from the "Global Excellence" program. Return on sales decreased by  3.6 percentage points to 5.5 percent, although adjusted  it  only  declined  by  1.0 percentage  points  to 9.2  percent.  The  performance  of  the  Adhesives  for Craftsmen and Consumers and Building Adhesives  segments  improved  compared   to the second quarter of 2009. In Asia-Pacific, Eastern  Europe  and Africa/Middle East, certain significant increases were  achieved  in the  Building  Adhesives segment compared to the prior-year quarter. Sluggish  consumer  demand  in  the developed countries impacted on business performance of the Packaging,  Consumer Goods and Construction Adhesives segment. Here, however,  substantial   increases in sales compared to the  prior-year  quarter  were   registered  in  the  growth regions of Eastern Europe, Latin America and Africa/Middle East. There was  also a slight recovery in various industries served by the  Specialty  Adhesives  and Surface Treatment segment, although sales remained  significantly  below  prior- year levels, particularly with respect to the automotive and  metal   industries. The Electronics segment has experienced a revival due to the  recovery  of  the semiconductors industry. This  business   therefore  succeeded  in  significantly increasing sales versus the second  quarter,  thus  substantially  reducing  the rate of decline compared to the prior-year quarter.

Regional Performance

In the Europe/Africa/Middle East region, sales further improved compared to  the second quarter of 2009, although in organic  terms   they  were  slightly  -  0.9 percent - below the level of the third quarter of 2008.  While  Laundry  &  Home Care and Cosmetics/Toiletries were able to  achieve  a  gratifying  increase   in their respective sales figures,  Adhesive  Technologies  posted  a single-digit decrease. In Africa/Middle East, Henkel achieved organic sales  growth  in  the single-digit percentage range, while performance  in  Western  Europe  including Germany declined. The growth  rates  in  Eastern  Europe  further  recovered  in comparison to  the  first    two    quarters    of    this    year.    Overall,    the Europe/Africa/Middle East region´s sales decreased from 2,319 million euros  to 2,154 million euros, giving it a share of 62 percent  of   total  sales.  Organic sales in the North America region declined by 7.8  percent.  In  a  challenging market environment,  sales  of   Adhesive  Technologies  decreased  considerably; performance    of     the    consumer    businesses    Laundry    &    Home    Care    and Cosmetics/Toiletries was also slightly down. Overall, sales in this region  came in at 628 million euros, representing an 18 percent share of  total  sales.  The Latin America region saw organic sales increase by 2.7 percent,  driven  by  the consumer businesses and particularly Cosmetics/Toiletries which posted a double- digit percentage rate of growth. At 209 million euros, the share of total   sales accounted for by this region remained at 6 percent. In the Asia-Pacific  region, organic sales fell by 3.7 percent compared to   the  third  quarter  of  2008.  A gratifying increase in performance at Cosmetics/Toiletries  was  offset  by  the decrease at Laundry & Home  Care  arising  from  the  closure  of  its  business operation in China at the end of 2008. The  organic  sales  development  of   the Adhesive Technologies business likewise showed a decline, although there was  an improvement compared to the second quarter  of 2009.  Overall,  sales  in  this region came in at 438 million euros, slightly above the level of the  prior-year quarter. The share of total sales accounted for by this region was  12  percent. In the growth regions of Eastern Europe, Africa/Middle East, Latin  America and Asia (excluding Japan), organic  sales  increased  by  4.1   percent,  marking  a further improvement compared to the second quarter of 2009.  In  nominal  terms, sales fell by 5.2 percent to 1,372 million euros, a figure that represents  39.4 percent of total sales compared to 38.5 percent in the prior-year period.

Sales and Profits Forecast 2009

Despite the recently apparent stabilization of the markets at their low level of activity, it remains difficult to assess the overall economic situation and how it is likely to develop going forward.

Nevertheless, Henkel is confident of again outperforming its relevant 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 further 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 and charges and restructuring charges.

Henkel expects its consumer businesses to continue to perform well in the fourth quarter as they have in the first nine months of this year, albeit with a degree of deceleration.  Henkel anticipates that the performance of its Adhesive Technologies business sector will be an improvement on that of the first nine months.

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: +49-211-798-4040  Fax: +49-211-798-4040

You will find the full report for the third quarter of 2009 and also photo material at http://www.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
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