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Henkel AG & Co. KGaA

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

Düsseldorf (euro adhoc) -

Henkel reports better-than-expected 2009 results
  Corporate news transmitted by euro adhoc. The issuer/originator is solely
  responsible for the content of this announcement.
annual report/Annual Reports/Company Information/Earnings
Subtitle: Henkel reports better-than-expected 2009 results
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.
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
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
[pic]
end of announcement                               euro adhoc

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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