Henkel KGaA

Henkel holds course in second quarter

Organic sales growth again outpaces market developments

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companies/Second quarter

Düsseldorf (euro adhoc) - Düsseldorf, August 1, 2007 Organic sales growth again outpaces market developments

Henkel holds course in second quarter

@@start.t2@@. Sales increased by 1.9 percent to 3,293 million euros
      . Organic sales grew 4.3 percent
      . Adjusted operating profit (EBIT) up 6.4 percent to 345 million euros
      . Continued dynamic expansion in the growth regions

"We have continued our good start  to  the  current  fiscal  year  with  further@@end@@

success in the second  quarter.    All  our  business  sectors   reported  organic growth outpacing developments in our markets.  We were also able to harness  the continuing dynamism prevalent in the growth regions in order to  further  expand our market positions," said Ulrich Lehner, Chairman of the Management  Board  of Henkel KGaA.  "Thanks to successful developments in  the  first  half  year, we anticipate achieving an increase in organic sales of 4 to  5   percent  for  full fiscal 2007.  We also continue to expect  an   increase  in  operating  profit  - adjusted for foreign exchange - in excess of organic sales growth."

Düsseldorf - In the second quarter of  2007,  Henkel  reported  sales of  3,293 million euros, an increase of 1.9 percent compared to  the prior-year  quarter. The rise in organic  sales,  i.e.  growth   adjusted  for  foreign  exchange  and acquisitions/divestments,  was 4.3    percent,    with    all    business    sectors contributing. Following a  very  strong  first  quarter  which  was  boosted  by special marketing activities  initiated  to  celebrate  the  Persil   centennial, organic growth in the Laundry & Home Care  business   sector  normalized  at  3.1 percent.    Sales  growth  at   Cosmetics/Toiletries  amounted  to  4.3    percent. Adhesives Technologies, which had benefited from  building  sector  activity   in the first quarter due to favorable weather conditions, turned in   the  strongest performance with a rise of 4.8 percent. This business sector was established  on April 1, 2007, as a result of  the  merger of  the  previously  separately  run Consumer and Craftsmen Adhesives and Henkel Technologies business sectors.

Operating profit (EBIT) decreased by 5.5 percent to 339 million   euros,  and  by 3.6 percent after adjusting for foreign exchange. The figure for the  prior-year quarter included one-time gains amounting to 41 million euros arising  from  the divestment  of  the   insulating  glass  sealant  and    rubber-to-metal    bonding chemicals businesses, while this quarter's results included a gain of 8   million euros from the sale of  land  in  Turkey.  In  addition,   Henkel  increased  its restructuring charges from 6 million euros  in the  prior-year  quarter  to  14 million euros in this quarter. After adjusting for these  items,  EBIT  rose  by 6.4 percent, from 324 million euros to 345 million euros.

At 10.3 percent, return on sales (EBIT) fell by 0.8 percentage points below  the level of the previous year's quarter.  After  adjusting   for  the  above  items, return on sales increased by 0.5 percentage points, from 10.0  percent  to  10.5 percent. Return on capital employed (ROCE) amounted to 15.4 percent. Net  income from participations increased by 3  million  euros  to  24  million   euros,  due primarily to the results of  our  Ecolab  participation. Net  interest  expense improved by 11 million euros to -37 million euros, mainly due to  higher  income from the fund assets covering   our  German  pension  obligations.  Overall,  net financial items increased by 14 million euros to  -13  million  euros.  The  tax rate was 26.7 percent.

Due to lower EBIT, quarterly net earnings fell by 3.6  percent  to   239  million euros. After minority interests amounting to 5 million euros, net  earnings  for the quarter were 234 million euros (-3.7 percent). Earnings per preferred  share amounted to 0.54 euros (-5.3 percent). Business Sector Performance

Organic sales of the Laundry & Home Care business sector rose  by  
3.1  percent, while foreign exchange rates and
acquisitions/divestments had a negative  effect of      -3.4 percent.
Registering double-digit percentage growth rates,  sales  in Eastern
Europe remained very buoyant, while in Western Europe the  
exceptionally high growth rate of the first quarter normalized as
expected.  Operating  profit increased by 2.8 percent to 111  million
euros;  after  adjusting  for  foreign exchange, the rise was 5.7
percent. The growth in sales in the  Laundry  segment was  largely  
the  result  of  the  good  performance  generated  by  heavy-duty
detergents and fabric softeners. As  part  of  the  campaign  to  
celebrate  the Persil centennial, new "Persil 100 - Better than
ever!" was  launched  onto  the German market. In Eastern Europe, the
aromatherapy line of the  fabric  softener Silan was expanded through
the  inclusion  of  new  fragrances.  The  Home  Care segment
benefited from a number of successful innovations. Europe, for  
example, saw the launch  of  new  gel  toilet  cleaner  Bref  Jumbo  
with  anti-bacterial cleaning power, and a further variant was added
to  the  Clin  range  of  window cleaners. In North America, the
first bath cleaner under the  Soft  Scrub  brand was introduced into
the market.

The  Cosmetics/Toiletries  business  sector  achieved    organic     sales    growth amounting to 4.3 percent. This was once again significantly above  the  relevant market growth rate, re-affirming the successful  trend  of  preceding  quarters. Aside from continuing good developments in Western Europe, the  business  sector performed particularly well in Eastern Europe and Latin America. This  was   also reflected in the operating  profit  figure  which  showed  an   increase  of  3.0 percent to 98 million euros; after adjusting for foreign exchange, the rise  was 4.7 percent. The  Hair  Cosmetics   business  continued  to  achieve  significant growth. The  company's market  positions  in  all  the  relevant  categories  - colorants, care and styling -  were  further  expanded  through  the  launch  of numerous innovations, achieving record levels in Europe. The Body Care  business showed further appreciable growth, due in particular to the good development  of the two major brands Fa and Dial,  both   of  which  increased  sales  thanks  to successful  innovations  and portfolio  extensions.  The  Skin  Care    business profited from the market debut of the anti-age innovation Diadermine 3D  Wrinkle

@@start.t3@@Filler Pen and the relaunch of the Aok  brand  in  Germany.  In  the  Oral  Care segment, the focus was on the launch  of  the  new  Freshness  variants  to  the Theramed  line.  The  Hair  Salon  business  also  continued  to  develop    very positively, benefiting from the introduction into  the  market  of  various  new products plus a range of relaunch activities.

With organic sales growing by 4.8 percent, Adhesives Technologies continued  its@@end@@

positive  development.  Double-digit  percentage    growth    rates     were    again registered in Eastern Europe, Africa/Middle East and Asia-Pacific, with  Western Europe and Latin America also performing well. Business  developments  in  North America were rather more sluggish due to market conditions,  especially  in  the construction sector.  Operating profit for the prior-year quarter included  one- time divestment gains amounting to 41 million euros. Compared  to   that  quarter EBIT fell by 13.7 percent, or  by  11.7  percent  after adjusting  for  foreign exchange.  Without  this  exceptional  item, however,  a  substantial  rise  in operating profit was achieved, with positive results  particularly  from  strict cost management, economies of  scale  arising  from  the  strong  organic  sales growth achieved, and implemented price increases. In the Consumer and Craftsmen segment, the company's instant adhesives were again  its   strongest  performers. As in the recent past, growth in the Building Adhesives segment was again  above average, benefiting both from further brisk building activity in Eastern  Europe and  sustained   recovery  in  important  Western  European  sales  markets.  The Industry segment also continued  to  exhibit  very  good  growth.   The  business operating under  the  Loctite  brand  for  industrial   maintenance,  repair  and overhaul performed  very  well.  In  our   North  American  automotive  business, weakening due to the sluggish market,  the  measures  initiated  brought  their first  successes.   Business  activities  involving  the    aircraft    and    steel industries continued to exhibit strong growth. Here, Henkel  was   able  to  both expand its market positions with  innovative  surface treatment  products,  and implement price increases.

Regional Performance

Sales in the Europe/Africa/Middle East region came in at 2,111 million euros,  a rise of 4.3 percent or 4.4 percent after adjusting for  foreign  exchange.  All business sectors contributed to this growth.  In  Eastern  Europe,  sales  again increased in the double-digit percentage range,  while  in  Western  Europe  the growth dynamism of the first quarter  slackened  somewhat.  There   was  also  an absence of sales volume due to  the  divestment  of   various  marginal  business activities. At 64 percent, the share of   sales  accounted  for  by  this  region remained at roughly the same level as in the previous  year.  Due  primarily  to foreign exchange effects,  sales  of  the  North  America  region  fell  by  7.7 percent; after  adjusting  for  foreign  exchange,  the  decline  was just  1.1 percent. The cosmetics business in North  America   exhibited  gratifying  growth supported by successful innovations.   With  sales  of  646  million  euros,  the region's share of total sales amounted to 20 percent. The Latin  America  region registered sales of 178 million  euros,  an  increase  of  5.2  percent  or  7.8 percent  after  adjusting  for  foreign  exchange.  This  growth  was generated primarily  by  the  Cosmetics/Toiletries  and  Adhesives   Technologies  business sectors. The share of sales attributable to the region remained unchanged  at  5 percent. Henkel's businesses in the Asia-Pacific region performed  exceptionally well. At 298 million euros, sales rose significantly by 8.4 percent,  increasing further to  11.4  percent  after  adjusting  for  foreign  exchange.  Here,   the Adhesives Technologies business sector  exhibited  a   particularly  high  growth rate. The region's share of total sales increased slightly to 9 percent.

Overall, the highly encouraging developments encountered in the   growth  regions of Eastern Europe, the Middle  East,  Africa,  Latin America  and  Asia-Pacific continued through the second quarter, with Henkel once again achieving a double- digit percentage increase in sales in these markets.

Major Participation

Ecolab Inc., St. Paul, Minnesota, USA,  in  which  Henkel  has  a   29.6  percent stake, reported sales of 1,362 million US  dollars  in the  second  quarter  of 2007, an increase of 11.1 percent compared to the previous  year.  Net  earnings for the quarter rose by 18.4 percent to 110.3 million  US  dollars.  The  market value of this participation as of June 30, 2007, amounted to around 2.3  billion euros.

Updated Sales and Profit Forecast 2007

Taking into account the encouraging business developments observed in the  first half of the year, Henkel now expects to achieve an organic growth  rate  (after adjusting for foreign exchange and acquisitions/divestments) of 4 to  5  percent for the full fiscal year.

Henkel continues to expect an increase in operating  profit  (EBIT)   -  adjusted for foreign exchange - in excess of organic sales growth.

Henkel likewise expects an increase in earnings per  preferred  share (EPS)  in excess of organic sales growth.

This document  contains  forward-looking  statements  which  are   based  on  the current estimates and assumptions made by the   corporate  management  of  Henkel 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 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.

Photo material available for downloading at: http://henkel.com/press

Further detailed information on the facts and figures for the second quarter 2007 can be found in the internet at: http://www.henkel.com/ir



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ots Originaltext: Henkel KGaA
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Branche: Consumer Goods
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