Henkel AG & Co. KGaA

EANS-News: Henkel AG & Co. KGaA /

Henkel reports substantial increase in sales and earnings in the second quarter

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Annual Reports/annual result/Company Information/Earnings/Financial Figures/Balance Sheet/Further Education/New Products/quarterly report

Subtitle: Henkel reports substantial increase in sales and earnings in the second quarter

Düsseldorf (euro adhoc) - Düsseldorf, August 4, 2010

Sales and profits forecast for 2010 further upgraded

Henkel reports substantial increase in sales and earnings in the second quarter

@@start.t2@@• Sales increase by 11.6 percent to 3,890 million euros
      • Organic sales growth of 6.8 percent
      • Share of sales of growth regions: plus 3 percentage points to 41 percent
      • Adjusted operating profit: plus 54.5 percent to 476 million euros
      • Adjusted EBIT margin: plus 3.5 percentage points to 12.2 percent
      • Adjusted earnings per preferred share (EPS): plus 97.1 percent to 0.73
         euros@@end@@

"Following a very good start to fiscal 2010, we have  now  seen  our operations continue their successful development in the second quarter, with  our  Adhesive Technologies and Cosmetics/Toiletries business  sectors  making  a  particularly strong contribution. In addition,  the  share  of  sales  generated  within  the growth regions reached 41 percent," said Kasper Rorsted, Chairman of the   Henkel Management Board, adding: "Our excellent performance in the second  quarter  was once again due to our strong brands and   successful  innovations.  However,  our continuing focus  on   implementing  more  efficient  structures,  stricter  cost management, and the progress made in the pursuit  of  our  strategic priorities have also contributed substantially to the very  good   results  achieved.  As  a consequence we are now looking  forward  to an  improvement  of  more  than  25 percent in earnings versus 2009." In the second quarter of 2010, Henkel generated sales of  3,890   million  euros. In a stabilizing market environment,  this  was  an   increase  of  11.6  percent compared to the figure for the prior-year quarter. After adjusting  for  foreign exchange, sales improved by 6.0 percent. Organically, i.e. after  adjusting  for foreign exchange and acquisitions/divestments, a  further  significant  increase in sales of 6.8 percent was achieved compared to the  prior-year   quarter.  This follows on from strong sales growth in the first quarter of 2010. This  positive development was driven by the   Adhesive  Technologies  and  Cosmetics/Toiletries business sectors. With a 13.6  percent  increase,  Adhesive  Technologies  again achieved a double-digit organic  growth  rate.  Cosmetics/Toiletries once  more substantially outperformed market growth with  an  organic improvement  of  5.0 percent. The Laundry &  Home  Care  business   sector  achieved  positive  volume growth although, due to intensified promotional and price competition,  recorded a decline in organic sales of minus 1.5 percent.

Due primarily to the substantial improvement posted  by  Adhesive   Technologies, operating profit (EBIT) increased by 51.2 percent, from 279  million  euros  to 421 million euros. After allowing for one-time charges (9 million  euros),  one- time gains    (1 million euros) and restructuring  charges  (47  million  euros), adjusted operating profit improved by 54.5 percent, from 308  million  euros   to 476 million euros.

Return on sales (EBIT margin) increased significantly, from 8.0 percent to  10.8 percent, and adjusted return on  sales  even  rose   from  8.7  percent  to  12.2 percent.

The company´s financial result improved from -60 million euros  to   -35  million euros. This is attributable to the lower net  debt   figure,  accompanied  by  an improvement in results from currency hedging  transactions.  The  tax  rate  was 27.5 percent.

Due to the increased EBIT, net income for the  quarter  rose  by   86.7  percent, from 150 million euros to 280 million  euros.  After   deducting  non-controlling interests totaling 7 million euros, net income for the quarter came  in  at  273 million euros (prior-year quarter: 143 million euros).  Adjusted  quarterly  net income after non-controlling interests amounted to 315  million  euros  compared to 162 million euros in the prior-year quarter.  Earnings  per   preferred  share (EPS) increased substantially, from 0.33 euros to 0.63 euros. Adjusted  earnings per preferred share almost doubled, reaching  0.73  euros  versus  0.37  in  the prior-year quarter.

Good progress was also made in the management of net working   capital:  compared to the prior-year period, the ratio of net working capital to sales improved  by 3.0 percentage points to 8.7 percent.

Business sector performance

In the second  quarter  of  2010,  the  Laundry  &  Home  Care   business  sector increased sales by 2.7 percent to 1,086  million   euros.  The  foreign  exchange impact amounted to a positive 4.6   percent.  However,  intense  promotional  and price competition led to a fall in prices  of  4.7  percent.  Hence,  despite  a substantial increase in volume of 3.2 percent, organic  sales   declined  by  1.5 percent compared to the prior-year quarter. The highest rate of  organic  growth was achieved in the region  of   Africa/Middle  East.  In  North  America,  sales decreased due to   strong  competitive  pressures.  However,  in  all  the  other regions, sales were largely held at the level  of  the  previous   year,  despite declining markets in most cases, enabling Henkel to either defend or expand  its market shares. Operating profit rose markedly, up 15.4 percent  to  137  million euros, the  increase  in material  prices  being  successfully  offset  through further cost savings in procurement and production. At 12.6 percent,  return  on sales improved by 1.4 percentage points versus  the  prior-year.   Sales  of  the Laundry Care  business  benefited  from  a  number  of successful  innovations. Eastern Europe, for example, saw the launch of Persil Gold with  "Fresh  Pearls" from  Silan,  which  combines   outstanding  cleaning  power  with  a  freshening fragrance. The innovative stain removal product Transpirex was  introduced  into the Spanish market  under  the  Neutrex  brand.  The  Home  Care   business  also launched a number of high-performance innovations onto the market in the  period under review. In Eastern Europe, a new hand-dishwashing product  was  introduced under the Pur brand, which - with its especially viscous  and  extra-strong  Pur Max gel formula - is able to remove even  the  most  stubborn  dirt  with  small dosages. The new WC product Bref Power Active was launched onto the   markets  of Western and Eastern Europe offering four active components: a cleaning foam,  an anti-limescale formulation, a special dirt protection formula which prevents re- contamination, and an extra-fresh fragrance.

Despite  high  prior-year  figures,  the  Cosmetics/Toiletries   business  sector posted strong organic sales growth of 5.0 percent to 865 million  euros  in  the second quarter of 2010, significantly outperforming  the  relevant  markets  and continuing the highly successful trend  of  recent  quarters.  This  growth  was primarily due to an ongoing innovation  offensive.  Record  market  shares   were again registered in Europe.  The  growth  regions  of  Asia   (excluding  Japan), Africa/Middle East, Latin America and Eastern Europe made a particularly  strong contribution to this continuing good performance  with,  again,  a  double-digit improvement.  While a  slight  decline  was  observed  in  North    America,    a substantial increase in sales was once more achieved in Western   Europe.  Worthy of particular mention is the robust improvement in sales  achieved  in  Germany. With advertising investment significantly higher, operating profit  (EBIT)  rose in the quarter under review by 12.4 percent to  112  million  euros.  Return  on sales improved by 0.3 percentage points to  13.0  percent,  a  new   high  for  a second quarter. The Hair Cosmetics  segment  continued   to  perform  very  well, expanding its market shares and posting record results in  all  categories.  The Hair Care category benefited from the launch of the Schauma line Intensiv  Anti- Schuppen (Intensive Anti-Dandruff), and the introduction of the  Syoss   Moisture series. In the Colorants business, the focus was on the further successful roll- out of the Syoss Color line and the   introduction  of  Palette  Intensive  Color Creme Gelée Royale and   Diadem  Gelée  Royale.  In  the  Styling  category,  new product   launches  from  Got2b  and  Taft  Power  &  Touch  contributed  to   the gratifying performance achieved. In addition to a successful launch  of  new  Fa 3D Protect and the relaunch of Dial4Men, the Body Care  segment  also  benefited from further significant  growth   momentum  generated  by  the  introduction  in Western and Eastern Europe of the innovative, high-performance  men´s  deodorant brand Right Guard. In the Skin Care segment, the focus was on  the   relaunch  of the Diadermine line Reactivance for mature skin. In the Oral Care  segment,  the focus was on the relaunch of the  successful series  Theramed  2in1.  The  Hair Salon segment again generated good sales growth in the second  quarter  compared to prior-year. As a result, the business was able to gain further market  shares in a persistently difficult operating environment. The successful relaunches  of the styling brand OSiS and the cross-segment  brand   Essensity  were  among  the main activities pursued.

The Adhesive Technologies  business  sector  saw  the   extraordinarily  positive developments of the first quarter continue through the second quarter.  With  an increase of 19.5 percent to 1,890 million euros, sales were significantly  above the level of the prior-year quarter. Organically, sales rose  by  13.6  percent, this growth being generated in particular by volume increases that were able  to more than offset the slight reduction in price levels. All   Henkel´s  businesses and regions contributed to this positive   development.  The  growth  regions  of Asia (excluding Japan), Africa/Middle East, Latin  America  and  Eastern  Europe continued to exhibit  above-average  improvements  in  sales.  Yet  the  mature markets of Western Europe and North  America  also  posted  highly   satisfactory double-digit growth. Despite  material  price  increases operating  profit  and return on sales developed well, reflecting both an increase in sales volume  and an improved cost structure. Operating profit more than doubled compared  to  the prior-year quarter, coming in at 222 million euros. Adjusted  EBIT  amounted  to 255 million euros. Return on sales also improved to 11.8 percent, a   substantial 5.8 percentage points higher than prior-year. Adjusted return on sales  actually increased by 6.3 percentage points to a new high of 13.5  percent.  The  segment Adhesives for Craftsmen, Consumers and Building continued  to  develop  well  in all regions. Both the business with craftsmen and consumers and also  activities involving  the  construction  industry  contributed  to  the  growth achieved. Compared to the market-related, rather weak prior-year quarterly figures  posted by the Transport and Metal business,  this quarter  the  segment  achieved  the strongest rate of sales  growth registered  within  the  Adhesive  Technologies business sector. All regions contributed  to  this  improvement,  some  of  them posting significant double-digit sales growth. In the General Industry   business too, sales were substantially above the level  of  the   prior-year  quarter.  In particular, the regions of Asia-Pacific, North America and Latin America  posted above-average  results;   however,  the  Europe/Africa/Middle  East  region  also turned in double-digit growth rates. Likewise the Packaging, Consumer Goods   and Construction Adhesives business saw growth compared to the   prior-year  quarter, with  activities  involving  laminating   adhesives  under    the    Liofol    brand performing especially well. The  Electronics  segment  also  continued  to  show considerable improvement,  with  the  business  generating  further  substantial increases compared to the  prior-year  quarter,  primarily  in   Western  Europe, North America and Latin America. This year, at the world´s most important  trade show for the PCB and electronic   components  industry  in  Las  Vegas,  Henkel´s innovative strength within this sector was recognized with two  awards  for  new product developments under the Loctite and Hysol brands.

Regional performance

In the Europe/Africa/Middle East  region,  sales  improved   organically  by  6.3 percent compared to the second quarter of  2009, coming  in  at  2,307  million euros, with all three business sectors contributing.  Africa/Middle  East  once again saw double-digit organic growth,  while  developments  in  Eastern  Europe continued in the upper single-digit  range.  Western  Europe  including   Germany posted an organic growth rate in the mid single-digits, as it did in  the  first quarter of 2010. At 714 million euros, sales of the North  America  region  grew organically by 1.9 percent compared to the  prior-year  quarter.  Sales  of  the Adhesive Technologies business sector developed particularly well,  while  sales in the Laundry & Home Care and Cosmetics/Toiletries business  sectors   declined. The successful development of the Latin America region continued unabated.  Here organic sales increased by 12.3 percent to 259 million euros, with all  business sectors contributing. Sales continued to recover  in  the  Asia-Pacific  region, with organic growth of 16.0 percent compared to prior-year  generating  a  total of 560  million  euros.  Encouraging  sales  increases  were   achieved  by  both

@@start.t3@@Adhesive  Technologies  and  Cosmetics/Toiletries.  In  the  growth  regions  of Eastern Europe, Africa/Middle East, Latin America and  Asia  (excluding  Japan), sales rose by 21.4 percent to 1,598 million euros. Compared  to  the  prior-year quarter, organic growth amounted to 11.6 percent,  keeping  it  in  the  double- digit range. All the business sectors contributed to  this  improvement,  albeit with  the  biggest  contributions  coming    from    Adhesive    Technologies    and Cosmetics/Toiletries. The share of sales of the growth  regions  increased  from 38 to 41 percent.

Sales and profits forecast 2010

Looking at the economic forecasts for the current year, Henkel anticipates  that the world economy will grow by around 3.5 percent.@@end@@

Henkel is confident of again outperforming its  relevant  markets  in terms  of organic sales growth. A number of measures have been introduced and  implemented on the operational side, from which Henkel expects further positive momentum  to ensue. For example, it anticipates further contributions to profit arising  both from the synergies created  through  the  integration  of  the  National   Starch businesses, backed up by a strictly disciplined cost management approach.  These factors and the  expected  increase  in   sales  will  positively  influence  the development of adjusted   operating  profit  (EBIT)  and  adjusted  earnings  per preferred share (EPS). Henkel expects both  metrics  to  undergo  a   substantial improvement of more than 25 percent compared to the levels of 2009.

This document  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 and similar formulations. 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 forward-looking statements.

Contact
Lars Witteck        Wulf Klüppelholz

@@start.t4@@Tel.  +49 211 797 - 2606      Tel.  +49 211 797 - 1875
Fax    +49 211 798 - 4040      Fax    +49 211 798 - 4040

Henkel AG & Co. KGaA

Photo material available for downloading at http://www.henkel.com/press. For@@end@@

more detailed facts and figures relating to the second quarter of 2010, 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
Börsen:  Frankfurt / regulated dealing/prime standard
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              Berlin / regulated dealing



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