Henkel AG & Co. KGaA

EANS-News: Henkel AG & Co. KGaA
Henkel expects noticeable earnings improvement in 2010

Henkel reports better-than-expected 2009 results

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annual report/Annual Reports/Company Information/Earnings

Subtitle: Henkel reports better-than-expected 2009 results

Düsseldorf (euro adhoc) - Düsseldorf, February 25, 2010

Henkel expects noticeable earnings improvement in 2010

Henkel reports better-than-expected 2009 results

• Laundry & Home Care has substantially higher earnings
    • Cosmetics/Toiletries continues very successful performance
    • Adhesive Technologies shows strong recovery throughout the year
    • Adjusted return on sales in Q4/2009 is 12.4 percent
    • Net debt reduced by 1 billion euros
      • Proposed dividends kept at prior-year levels

Henkel  anticipates  the  current  financial  year  will  bring    a   noticeable improvement to its results. While regarding the recovery   of  the  real  economy and the financial markets  as  still  fragile, the  company  expects  that  its organic  sales  growth,  i.e.   growth  adjusted    for    foreign    exchange    and acquisitions/ divestments, will outperform that of its relevant markets.

"For Henkel - and the world economy as  a  whole  -  2009  will  go   down  as  a challenging year. Nevertheless, we have made  good   progress  towards  achieving our 2012 financial targets as proven by our outstanding results  in  the  fourth quarter of 2009," said Kasper Rorsted, Chairman of the Henkel Management  Board. "Our Laundry & Home  Care  and  Cosmetics/Toiletries  businesses  have   expanded their market positions and further increased their profitability. In the  course of the year, our Adhesive Technologies business  has  rebounded  well  from  the effects of the economic crisis." Rorsted continued:  "Our  results  reflect  the tireless efforts to adapt our structures and reduce our  costs.  We  have   shown that, even in adverse market conditions, we  can  act  quickly and  decisively. Once again, our strong brands have also made an appreciably contribution to  the good performance: our new brand   Syoss  for  example  was  the  most  successful launch in the hair care sector in 2009.  We  have  put  ourselves  in  a  strong position and expect to improve noticeably our results in the  current financial year."

In fiscal 2009, Henkel generated sales of 13,573 million euros. In  a generally difficult market  environment,  this  amounts  to  a   decrease  of  3.9  percent compared to the previous year. In organic terms, that is  to  say  adjusted  for foreign exchange and acquisitions/divestments, sales decreased  by  3.5  percent versus prior year. After a substantial decline in sales  in  the  first   quarter caused by the economic crisis, the subsequent quarters were characterized  by  a gradual recovery. However, developments at the company´s three business  sectors continued to show a very mixed picture. While the consumer goods  businesses  of Laundry & Home Care and Cosmetics/Toiletries  continued  to  perform  very  well with organic growth rates of 2.9 percent and 3.5 percent respectively, sales  of the Adhesive Technologies business sector decreased organically by 10.2  percent due to the difficulties encountered in major customer industries worldwide.

Operating profit (EBIT) increased by 38.6 percent  from  779  million euros  to 1,080  million  euros.  The  comparable  prior-year  figure was    burdened    by restructuring  charges  resulting  from  the     company´s    "Global    Excellence" efficiency enhancement program. After adjusting for one-time gains  and  charges and  restructuring   charges  totaling  284  million  euros,    operating    profit decreased by 6.6 percent, from 1,460  million  euros  to  1,364   million  euros, attributable to the downturn suffered  by  the   Adhesive  Technologies  business sector.

Return on sales (EBIT margin) was 8.0 percent, while adjusted  return on  sales decreased slightly from 10.3 percent to 10.0 percent due to the  margin  decline at Adhesive Technologies. By contrast, adjusted return on sales of the  consumer goods businesses Laundry & Home Care and Cosmetics/Toiletries improved  to  12.8 percent and 12.9 percent respectively.

Financial result decreased to -195  million  euros,  with  the   figure  for  the previous year having benefitted from a gain of 1,042 million euros arising  from the disposal of Henkel´s stake in Ecolab. Net interest improved  by  84  million euros to -191 million euros. Due to the increase in cash flow and  the  lack  of major acquisitions, Henkel was able to reduce  its  net  debt  compared  to the prior-year by 1.0  billion  euros  to  2.8  billion  euros.   Together  with  the prevailing lower interest rates, this  reduction in  debt  made  a  significant contribution to the  improvement  in   Henkel´s  net  interest  result.  At  29.0 percent, the tax rate was above the level of the previous year.

Due to the gain from the  sale  of  the  Ecolab  stake  in  2008,   net  earnings decreased by 605 million euros to 628 million euros.   After  deducting  minority interests of 26 million euros, net earnings totaled 602 million euros.  Adjusted net earnings after minority interests declined  by  123  million  euros  to  822 million euros. Earnings per preferred share decreased from 2.83  euros  to   1.40 euros. The adjusted figure  was  1.91  euros  compared  to  2.19 euros  in  the previous year.

Good progress was also made in the management of net working   capital.  Compared to the prior-year, the ratio of net working capital to sales improved from  11.7 percent to 7.8 percent. Free Cash Flow  was  increased  significantly  from  457 million euros to 1,462 million euros compared to the prior year.

The Management Board, Supervisory Board  and  Shareholders´   Committee  will  be proposing  to  Henkel´s  Annual  General  Meeting that  it  approve    unchanged dividends of 0.53 euros per preferred share and 0.51 euros per ordinary share.

Business sector performance

The Laundry & Home Care business  sector  increased  sales   organically  by  2.9 percent in fiscal 2009. In nominal terms, sales decreased  by  1.0  percent  to 4,129 million euros. The generally gratifying  increase  in  organic  sales  was particularly attributable to double-digit improvements in the growth regions  of Eastern Europe and Africa/Middle East. Sales performance in Asia was influenced by the exit from the Chinese market at  the  end  of   2008.  Adjusted  operating profit increased substantially by 17.8 percent, from 450 million  euros  to  530 million euros. This improvement reflects the  benefits  accruing  from  measures introduced to reduce cost and enhance efficiency and lower   prevailing  material prices. Adjusted return on sales increased by   2.0  percentage  points  to  12.8 percent. In the Laundry business segment,  the  strongest  growth  momentum  was generated by heavy-duty detergents and fabric softeners. Henkel  also  benefited from successful innovations such as Persil ActicPower, which requires only  half the usual detergent dosage and develops  its  full   laundry  power  at  just  15 degrees Celsius, and Vernel Crystals - innovative  fragrance  crystals  for  the wash. The Laundry business also enjoyed major  success  in  North  America  with Purex Complete 3-in-1. Organic sales growth in the Home  Care  business  segment was generated primarily by improved  sales  of  dishwashing  detergents   and  WC products. While sales in machine dishwashing products increased particularly  in Eastern Europe, hand dishwashing product sales experienced their highest  growth rates in the Africa/Middle East subregion. The strongest growth in the  case  of the WC products was in Eastern Europe. With new products  having  been  launched onto the market here, the company  also  succeeded  in  increasing  its   overall market share.

With organic sales growth of  3.5  percent,  the   Cosmetics/Toiletries  business sector was able to continue its   highly  gratifying  growth  rates  of  previous years, despite the recessive market environment. In nominal  terms,  sales  were stable at 3,010 million euros due to foreign exchange  effects  and   divestments in North America. Organic growth was boosted by the encouraging  performance  of the branded consumer goods  business  in Eastern  Europe  and  the  regions  of Africa/Middle East, Latin America and Asia-Pacific. But also in  Western  Europe developments were positive  despite  the  adverse  market  environment.  At  387 million euros, adjusted operating profit was 2.1 percent  above  the level  for the  previous  year.  Systematic  cost  reduction   measures  and    the    further elimination of complexity resulted in an improvement in  the  business  sector´s cost structures. Adjusted return on sales increased  by  0.3  percentage  points versus prior year,  reaching  a  record  high  of  12.9  percent.  In  the  Hair Cosmetics business, sales experienced substantial organic  growth   while  market shares rose to new heights. The primary growth drivers were the  Hair  Care  and Colorants businesses, due particularly to the  highly  successful  international launches of the  Syoss  brand and  Schwarzkopf  Essential  Color,  a  permanent colorant formulated without ammonia. In the  Styling  segment  too,  significant share gains in a declining market were made with  new  launches  under   Europe´s leading styling brand Taft and the young fashion  brand   Got2b.  The  Body  Care business  also  continued  to  perform  well. The  core  brands  Fa  and    Dial successfully continued their innovation offensive, gaining market shares with  a number of  new   launches.  In  the  Skin  Care  business,  the  introduction  of Diadermine´s Dr. Caspari Method Dermo-Ident  treatment  contributed   to  further consolidation of the position enjoyed by the Diadermine   brand  in  the  rapidly growing anti-aging segment.  In  the  Oral   Care  business,  good  results  were achieved with the new freshness variant Theramed 2-in-1  Arctic  White.  Despite the difficulties of the market environment, the Hair Salon segment was  able  to further expand its position as the world´s number three.

In  a  significantly  contracting  overall  market,  sales    of    the Adhesive Technologies business sector decreased by 7.1 percent to   6,224  million  euros. In organic terms, sales were 10.2 percent below the level of the previous  year. The decreases in the growth regions were less  pronounced  than  in  the  mature markets of Western Europe and North America. In Latin  America,  sales  actually increased compared to prior year.  At  506  million  euros,  adjusted operating profit was 25.6 percent  lower  due  to  considerable   volume  decreases  and  a resulting  lower  level  of  capacity   utilization.  Adjusted  return  on  sales declined by 2.0 percentage points to 8.1 percent,  although  steady  improvement was registered in the course of the year. This gradual  upturn  is  attributable to the accelerated process of synergy realization arising from  the   integration of the National Starch  businesses,  the  benefits   accruing  from  the  "Global Excellence" program and  further   measures  implemented  to  reduce  costs.  The Adhesives for Craftsmen, Consumers and Building business was impacted by  market decreases in purchases by consumers, destocking by customers and the prevailing recession  in  the  building  industry.  Overall,   however,  business  with  the building sector has increased on the back of  encouraging  developments  in  the regions of Eastern Europe and  Africa/Middle  East.  The  Transport  and  Metal business was especially hard hit by the effects of the global  economic  crisis, although here too, there were slight signs of recovery as the  year   progressed. Through close collaborative partnerships  with  major   OEM  customers  from  the automotive and metal processing industries the  business  was  able  to  create further positive momentum. The   General  Industry  business  suffered  from  the decline in industrial production and  a  low  level  of  propensity  to  invest, particularly in the case of durable goods, leaving sales overall well below  the prior-year  levels  for  this  segment.  Operations     involving    products    for industrial maintenance, repair and overhaul under the  Loctite  brand  performed at a more stable level and even  posted  a  small  degree  of  growth  in  North America. The Packaging,  Consumer  Goods  and  Construction  Adhesives   business remained somewhat more robust in a market environment characterized  by  falling demand for  consumer  goods.  Adhesives   for  flexible  packaging  continued  to perform well: here, the   product  portfolio  has  significantly  expanded  as  a result of the integration of the National  Starch  businesses.  The  Electronics business was heavily affected  by  developments  in  the   semiconductor  market. Significant shrinkage in sales during the first half of the  year,  compared  to 2008 levels, was followed by a degree of recovery in the second half.

Regional performance

At 8,335 million euros, the  organic  sales  of  the   Europe/Africa/Middle  East region were 1.9 percent  below  the  level of  the  previous  year.  While  the consumer goods businesses succeeded  in  generating  a  gratifying  increase  in sales, Adhesive Technologies posted a decline  in  the  double-digit   percentage range. There was a decrease in sales in Western Europe. In Eastern  Europe,  on the other hand,  organic  sales  underwent  a   single-digit  increase,  and  the Africa/Middle East subregion once again  posted  double-digit  growth.  Overall, the share of sales of the region declined from 63 to 61 percent.  Sales  in  the North America region decreased organically  by  8.6  percent  to  2,546   million euros. All  the  company´s  business  sectors  suffered   considerably  from  the underlying economic conditions, particularly during the first half of the  year. The region´s share of sales remained constant at 19 percent. The  Latin  America region continued to perform very encouragingly, posting organic sales growth  of 5.0 percent to 825 million euros, with all business  sectors   contributing.  The share of sales attributable to Latin America increased  from  5  to  6  percent. Like Europe and North America, the Asia-Pacific region felt the effects  of  the economic crisis, with sales declining organically to 1,657  million  euros,  5.8 percent below the prior-year level. Reported sales  amounted  to   1,657  million euros. An increase in sales posted  by   Cosmetics/Toiletries  was  offset  by  a decline in Laundry & Home Care which resulted from the  discontinuation  of  the business sector´s operations in China at the end  of  2008.  The  organic   sales performance of the Adhesive Technologies business sector likewise experienced  a downturn, although positive growth returned in the second half of the year.  The share of total sales accounted for by this region rose to 12 percent.  Sales  in the growth regions of Eastern Europe,  Africa/Middle  East,  Latin  America  and Asia (excluding Japan) increased organically by  3.7  percent,  with   continuous improvement apparent during the course of  the  year.  The consumer  businesses made a particularly  important  contribution  to the  gains  made,  registering growth rates close to the double-digit percentage mark,  while  developments  at Adhesive Technologies were slightly regressive. In nominal terms, sales fell  by 1.0 percent to 5,114 million euros. The share of sales  of  the  growth  regions increased from 37 to 38 percent.

Fourth quarter 2009

In the fourth quarter  of  2009,  Henkel  was  able  to  continue   the  positive development of its consumer goods businesses from previous quarters,  while  its Adhesive  Technologies  business   sector  performed    noticeably    better    than expected. Sales amounted to 3,345 million euros compared to 3,541 million  euros in the same quarter of 2008. Organically sales increased by 0.6  percent versus the  prior-year  quarter.  Operating  profit  amounted  to   293  million  euros. Included in this figure are  restructuring   charges  and  one-time  charges  and gains  totaling  121  million   euros.  Adjusted    operating    profit    increased significantly from 379 million euros to 414 million euros.  Adjusted  return  on sales rose by 1.7 percentage points to 12.4 percent.

Due to the gain from the sale of the Ecolab stake in 2008, net earnings for  the quarter decreased by 684 million euros to 177 million  euros.    After  deduction of minority interests in the amount of 7 million euros, quarterly  net  earnings came in at 170 million euros. Earnings per preferred  share  (EPS)  amounted  to 0.39 euros, while the adjusted figure increased from 0.57 euros to 0.64 euros.

Sales and profits forecast 2010

Henkel regards the mildly encouraging market conditions prevailing in the  real economy and on the financial markets as  still  fragile.   The  general  economic climate and its further development therefore remain difficult to gage with  any degree of accuracy. Henkel´s guidance for the current financial  year  is  based on the assumption of moderate economic growth overall, but  without  expectation of a sustained upturn or any major growth dynamic.

Henkel is confident of again outperforming its  relevant  markets  in terms  of organic sales growth. A number of measures have already been introduced  on  the operational side,  from  which  Henkel   expects  further  positive  momentum  to develop. For  example,  the company  anticipates  additional  contributions  to profitability to emanate from the synergies arising from the integration of  the National Starch businesses and its strict cost  discipline.  All   these  factors will positively influence the development of adjusted operating  profit  (EBIT) and adjusted earnings per preferred share (EPS). Henkel expects both metrics  to undergo a noticeable improvement of more than 10 percent compared to the  levels of 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.

Lars Witteck        Wulf Klüppelholz
Phone: +49-211-797-2606        Phone: +49-211-797-1875
Fax: +49-211-798-4040  Fax: +49-211-798-4040

Photo material available for downloading at http://henkel.de/presse and henkel.com/press For more detailed facts and figures relating to fiscal 2009, 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
              Hamburg / free trade
              Stuttgart / free trade
              Düsseldorf / free trade
              Hannover / free trade
              München / free trade
              Berlin / regulated dealing

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