EANS-News: Henkel AG & Co. KGaA
Henkel continues solid performance in Q2
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quarterly report/Henkel
Subtitle: Organic sales growth of around 5 percent expected for full fiscal 2011
Düsseldorf (euro adhoc) - August 10, 2011
Organic sales growth of around 5 percent expected for full fiscal 2011
Henkel continues solid performance in Q2
Sales increase of 1.6 percent to 3,953 million euros (organic: + 6.3%)
Adjusted* operating profit: plus 8.0 percent to 514 million euros
Adjusted* EBIT margin: plus 0.8 percentage points to 13.0 percent
Adjusted* earnings per preferred share (EPS): plus 8.2 percent to 0.79
euros
Growth regions post another double-digit increase (organic: + 11.6%)
Market environment characterized by rise in raw material prices and intense
competition
Düsseldorf, Germany - "Henkel continued its solid performance in the second
quarter, despite the challenging market environment. We achieved high organic
sales growth and outperformed once again our relevant markets," said CEO Kasper
Rorsted. "All our business sectors contributed to this growth, and with double-
digit increases in our growth regions we improved the share of total sales in
these markets to 42 percent. Despite higher raw material prices, we improved
our profitability in all business sectors. This was driven by increased selling
prices across all our business sectors, by our strong brands and innovations,
as well as by measures to further enhance our efficiency."
For the fiscal year 2011, Rorsted provided the following guidance: "With
intense competition continuing, an increase in raw material prices and growing
uncertainties in the markets, the economic environment will remain challenging.
Against this background, we will further adapt our structures in order to
respond more quickly and flexibly to changes in our markets and maintain strict
cost control." Henkel also slightly raised its expectations for organic sales
growth in 2011: "We are confident that we will again grow faster than our
relevant markets in 2011 and now expect an organic sales growth of around 5
percent. In line with our previous guidance we expect our adjusted EBIT margin
to increase to around 13 percent and adjusted earnings per preferred share by
about 10 percent," Rorsted added.
Henkel´s sales in the second quarter of 2011 increased to 3,953 million euros,
a rise of 1.6 percent compared to the figure for the prior-year quarter. After
adjusting for foreign exchange, sales improved by 6.0 percent. At 6.3 percent,
organic sales, which exclude the impact of foreign exchange and
acquisitions/divestments, again showed a strong increase. All three business
sectors contributed to this positive development. Laundry & Home Care
registered organic sales growth of 3.7 percent. With organic sales growth of
5.4 percent, the Cosmetics/Toiletries business sector clearly outperformed a
very strong prior-year quarter. Adhesive Technologies significantly surpassed
an already successful prior-year quarter with organic growth of 8.9 percent
both price and volume driven. Henkel was thus able to further expand global
market share in all three business sectors, with the consumer businesses
achieving historic highs.
After allowing for one-time gains, one-time charges and restructuring charges,
adjusted operating profit improved by 8.0 percent, from 476 million euros to
514 million euros, with all three business sectors contributing. Operating
profit (EBIT) increased by 27.5 percent, from 421 million euros to 537 million
euros, positively impacted by the one-time gain of 48 million euros arising
from the sale of the branded consumer goods business in India.
Despite the influence of higher prices for raw materials and packaging,
adjusted return on sales (EBIT margin) rose by 0.8 percentage points, from 12.2
percent to 13.0 percent. Return on sales rose to 13.6 percent, following 10.8
percent in the comparative prior-year period.
Financial result eased from -35 million euros to -41 million euros, due to a
decline in the balance arising from currency hedging activities. The tax rate
amounted to 24.4 percent (prior-year quarter: 27.5 percent).
Net income for the quarter rose by 33.9 percent, from 280 million euros to 375
million euros. After deduction of non-controlling interests totaling 9 million
euros quarterly net income amounted to 366 million euros (prior-year quarter:
273 million euros). Adjusted quarterly net income after non-controlling
interests amounted to 343 million euros compared to 315 million euros in the
second quarter of 2010. Earnings per preferred share (EPS) rose from 0.63 euros
to 0.85 euros. The adjusted figure was 0.79 euros compared to 0.73 euros in the
prior-year quarter.
Further improvement was made in the management of net working capital. Compared
to the prior year, the ratio of net working capital to sales improved by 0.3
percentage points to 8.4 percent. Net debt as of June 30, 2011 amounted to 2.2
billion euros.
Business performance January through June 2011
In the first six months of fiscal 2011, Henkel increased sales versus the prior-
year period by a substantial 5.1 percent to 7,776 million euros. After
adjusting for foreign exchange, sales improved by 6.4 percent. At 6.7 percent,
organic sales growth was also clearly above the level of the prior-year period.
Adjusted operating profit increased by 9.9 percent, from 897 million euros to
987 million euros. This positive development was driven in particular by the
Cosmetics/Toiletries and Adhesive Technologies business sectors. Operating
profit (EBIT) increased by 14.7 percent, from 843 million euros to 967 million
euros. Adjusted return on sales (EBIT margin) improved from 12.1 percent to
12.7 percent. In nominal terms, return on sales rose from 11.4 percent to 12.4
percent.
Net income for the half year rose by 21.8 percent, from 546 million euros to
665 million euros. After deduction of non-controlling interests totaling 14
million euros half-yearly net income amounted to 651 million euros (prior-year
period: 532 million euros). Earnings per preferred share (EPS) improved from
1.23 euros to 1.51 euros, while the adjusted figure rose by 14.3 percent, from
1.33 euros to 1.52 euros.
Business sector performance in the second quarter 2011
The Laundry & Home Care business sector increased organic sales by 3.7 percent.
This significant rise, achieved despite the further contraction of the relevant
markets, was due to continuing strong volume growth of 2.9 percent and a price
effect of 0.8 percent compared to the prior-year quarter, positive for the
first time since the third quarter of 2009. In nominal terms, sales came in at
1,076 million euros compared to 1,086 million in the prior-year quarter.
Despite mixed market developments, all the regions contributed to the organic
growth achieved. Particularly positive momentum came from the growth regions of
Eastern Europe and Africa/Middle East. Some markets in this region have
nevertheless not yet fully recovered from their political upheavals. In Tunisia
and Egypt particularly, Henkel could not yet fully achieve the double-digit
growth rates of the past, although business in these countries did experience a
significant revival. Sales in North America increased substantially, despite
the markets undergoing further contraction. Sales growth was also achieved in
Western Europe - due particularly to further strong growth in Germany. This
positive performance in contracting markets resulted in a historic high of
Henkel´s global market share.
Adjusted operating profit increased by 2.8 percent to 140 million euros.
Adjusted return on sales improved by 0.5 percentage points to 13.0 percent.
Both these key financials were therefore well above the level of the prior-year
quarter, although the significant increase in raw material prices during this
quarter exerted a particularly negative effect. Operating profit rose by 14.8
percent to 157 million euros. Included in this figure is a gain arising from
the disposal of Henkel´s branded consumer goods business in India.
The Cosmetics/Toiletries business sector posted a substantial increase in
organic sales of 5.4 percent in the second quarter, continuing the sequence of
very good performances in recent periods. Once again, the rate of growth
outstripped that of the relevant markets and volumes experienced a significant
rise. Driven by strong innovations, the business sector succeeded in further
expanding its market shares, with new record levels once again the result.
Moreover, higher average selling prices were also achieved, leading to a
positive price effect for the first time in four quarters. Sales came in at 881
million euros, 1.9 percent above the figure for the prior-year quarter.
As in previous quarters, particular impetus came from the excellent performance
achieved in the growth regions of Eastern Europe, Africa/Middle East, Latin
America and Asia. Overall, we were once again able to expand sales in the
emerging markets with double-digit increases. However, sales growth was also
achieved in the mature markets. In North America particularly, Henkel generated
a significant improvement in sales thanks to a number of new product launches.
Business performance in the mature markets of Asia-Pacific was similarly very
good. Sales in Western Europe remained below the strong levels of the prior-
year quarter.
Adjusted operating profit rose by a substantial 11.0 percent to 124 million
euros. Adjusted return on sales improved by 1.2 percentage points to a new
record of 14.1 percent. Once more, cost reductions and efficiency enhancements
made a substantial contribution to the increase in earnings. Again in the
second quarter, the business sector succeeded in offsetting the increase in raw
material and packaging prices. Operating profit rose by 24.7 percent to 140
million euros, with the one-time gain from the sale of the branded consumer
goods business in India making a positive contribution.
Once again in the second quarter of 2011, the Adhesive Technologies business
sector significantly outperformed its relevant markets, increasing sales to
1,963 million euros, an improvement of 3.9 percent versus an already strong
prior-year quarter. Both volume improvements and selling price increases played
their part in this positive development. Organic growth came in at 8.9 percent.
All the regions and business segments contributed to this substantial rise in
sales. Once again, the growth regions generated particular momentum, with
Africa/Middle East, Eastern Europe and Asia registering the highest growth
rates. However, the mature markets also saw an increase in sales.
Adjusted operating profit again improved significantly versus the prior-year
quarter, by 9.0 percent to 278 million euros. Adjusted return on sales
therefore also rose, by 0.7 percentage points to a new high of 14.2 percent.
Although further steep rises in raw material and packaging prices exerted a
distinctly negative effect, the ensuing cost increases were significantly
outweighed by further efficiency enhancement measures and selling price
increases. Compared to the prior-year quarter, operating profit rose by 21.1
percent to 269 million euros. Included in this figure is the one-time gain
arising from the disposal of the company´s roofing membrane business operated
under the Wolfin brand.
Regional performance
In the Western Europe region, sales grew by 2.4 percent to 1,425 million euros;
the organic improvement was 1.5 percent. Positive growth rates posted by
Adhesive Technologies and Laundry & Home Care compensated for the decline
registered by the Cosmetics/Toiletries business sector. Sales in the Eastern
Europe region rose by 7.3 percent to 729 million euros. Organic growth was
even higher at 11.0 percent. All three business sectors contributed to this
improvement, particularly Adhesive Technologies with a double-digit growth
rate. Expansion in the Africa/Middle East region continued to be hampered by
political unrest in some countries. Sales there totaled 231 million euros
compared to 236 million euros in the comparable period of the previous year.
Organically, however, sales rose by 9.5 percent, supported in particular by
Adhesive Technologies and Cosmetics/Toiletries. Sales generated in the North
America region decreased by 5.2 percent to 676 million euros, with foreign
exchange effects exerting major negative impact. Organically, on the other
hand, sales increased by 6.1 percent with support from all three business
sectors. The region of Latin America recorded a sales increase of 5.0 percent
to 272 million euros. Organic growth came in at 9.6 percent, with all three
business sectors contributing. The Asia-Pacific region registered sales growth
of 4.8 percent to 587 million euros. In organic terms, sales again saw a double-
digit rise of 12.1 percent, supported in particular by Adhesive Technologies
and Cosmetics/Toiletries. Developments in Japan only exerted an influence on
local sales growth.
In the growth regions of Eastern Europe, Africa/Middle East, Latin America and
Asia (excluding Japan), sales rose by 4.7 percent to 1,674 million euros.
Organic growth amounted to 11.6 percent, keeping it in the double-digit
percentage range. Particularly Adhesive Technologies and Cosmetics/Toiletries
contributed to this growth. The share of sales attributable to the growth
regions increased from 41 percent in the prior-year quarter to 42 percent this
time.
Sales and profits forecast 2011
Following a solid first half year, Henkel is confident of again outperforming
its relevant markets in terms of organic sales growth. For fiscal 2011, Henkel
now expects an increase in organic sales of around 5 percent (previously: at
the upper end of the 3 to 5 percent range). Henkel confirms its forecast for an
adjusted return on sales (EBIT) of around 13 percent (2010: 12.3 percent) and
an improvement in adjusted earnings per preferred share of about 10 percent.
This guidance is based on increases in Henkel´s selling prices and the ongoing
adaptation of its structures to the constantly changing market conditions.
Through these activities and the maintenance of its strict cost discipline,
Henkel intends to more than offset the effects of increased raw material costs
on its earnings.
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
Tel. +49 211 797 - 2606 Tel. +49 211 797 - 1875
Fax +49 211 798 - 4040 Fax +49 211 798 - 4040
Henkel AG & Co. KGaA
The report for the second quarter of 2011 and other information with download
material and the link to the teleconference broadcast can be found in our press
folder on the internet at:
http://www.henkel.com/press/publication-report-q2-half-year-2011-33054.htm
press@henkel.com
Further inquiry note:
Irene Honisch
Corporate Communications
Tel.: +49 (0)211 797-5668
E-Mail: irene.honisch@henkel.com
end of announcement euro adhoc
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company: Henkel AG & Co. KGaA
Henkelstr. 67
D-40191 Düsseldorf
phone: +49 (0)211 797-0
FAX: +49 (0)211 798-4008
WWW: http://www.henkel.com
sector: Consumer Goods
ISIN: DE0006048432, DE0006048408
indexes: DAX, CDAX, HDAX, Prime All Share
stockmarkets: regulated dealing/prime standard: Frankfurt, free trade: Hamburg,
Stuttgart, Düsseldorf, Hannover, München, regulated dealing: Berlin
language: English
Corporate news transmitted by euro adhoc. The issuer/originator is solely responsible for the content of this announcement. Company Information/quarterly report/9-month report Düsseldorf (euro adhoc) - Düsseldorf, November 10, 2010 Henkel reports outstanding third quarter results CEO Kasper Rorsted: "2010 will be an important step to achieving our 2012 targets" Sales increase by 13.7 percent to 3,961 million euros Organic sales growth ...