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Henkel AG & Co. KGaA

EANS-News: Henkel AG & Co. KGaA
Henkel makes a good start to the year

Düsseldorf (euro adhoc) -

Substantial increase in sales and profits in the first quarter
  Corporate news transmitted by euro adhoc. The issuer/originator is solely
  responsible for the content of this announcement.
annual result/Company Information/Earnings/Financial Figures/Balance
Sheet/Further Education/Marketing/New Products/Finance,
Subtitle: Substantial increase in sales and profits in the first 
quarter
Düsseldorf, May 5, 2010
• Sales increase by 7.8 percent to 3,512 million euros
    • Organic sales growth of 8.8 percent
    • Adjusted operating profit: plus 79.1 percent to 421 million euros
    • Adjusted EBIT margin: plus 4.8 percentage points to 12.0 percent
    • Adjusted earnings per preferred share (EPS): plus 93.5 percent
"Henkel has made a good start to the fiscal year, with all our 
business  sectors contributing. Despite the persistently challenging 
environment, Laundry  &  Home Care and Cosmetics/Toiletries continued
their successful development  of  recent quarters, while Adhesive 
Technologies also returned to  robust  rates  of  sales growth," said
Kasper Rorsted, Chairman of the Henkel Management  Board,  adding: 
"Once again our strong brands made a  further  major  contribution  
to  Henkel´s gratifying Q1 results. However, this very good 
performance is also down  to  our efforts in adapting our structures 
and reducing  our  costs,  coupled  with  the good progress we have 
made in the implementation of  our  strategic  priorities. Now we are
looking forward to a noticeable improvement in our  results  of  more
than 15 percent for the full fiscal year versus 2009."
In the first quarter of 2010, Henkel generated sales of 3,512 million
euros.  In a recovering market environment, this constitutes an  
increase  of  7.8  percent compared to the figure for the prior-year 
quarter. After adjusting  for  foreign exchange, sales rose by 7.5  
percent.  Organically,  i.e.  after  adjusting  for foreign exchange,
acquisitions and divestments, the increase was  a  substantial 8.8 
percent, representing  the  first  significant  rise  against  a  
prior-year period for four quarters. And it was a development to 
which  all  the  company´s business sectors contributed. Laundry  &  
Home  Care  again  turned  in  a  very positive performance with 
organic growth at 3.6 percent.  And  having  increased sales 
organically by  5.5  percent,  the  Cosmetics/Toiletries  business  
sector outstripped both the high levels of growth achieved in recent 
quarters  and  the overall rate of market expansion. Against a 
prior-year quarter weakened  by  the impact of  the  crisis,  
Adhesive  Technologies  reported  double-digit  organic growth 
amounting to a highly encouraging 14.5 percent.
Due primarily to the substantial improvement posted  by  Adhesive  
Technologies, operating profit (EBIT) increased by 93.3 percent, from
218  million  euros  to 422 million euros. After allowing for 
restructuring charges (31  million  euros) and one-time gains (32 
million euros), adjusted  operating  profit  improved  by 79.1 
percent, from 235 million euros to 421 million euros.
Return on sales (EBIT margin) increased significantly, from 6.7 
percent to  12.0 percent. Adjusted return on  sales  rose  from  7.2 
percent  to  likewise  12.0 percent.
Financial result decreased slightly  from  -52  million  euros  to  
-54  million euros, with the positive effect of reducing net debt 
being  more  than  canceled out by higher interest paid. At 27.7 
percent, the tax rate  was  slightly  above the level of the previous
year.
Due to the increased EBIT, net income for the quarter  rose  by  
119.8  percent, from 121 million euros to 266 million  euros.  After 
deducting  non-controlling interests totaling 7 million euros, net 
income for the quarter amounted  to  259 million euros (prior-year 
quarter: 117 million euros).  Adjusted  quarterly  net income after 
non-controlling interests amounted to 258  million  euros  compared 
to 130 million euros in the prior-year quarter.  Earnings  per  
preferred  share (EPS) increased from 0.28 euros to 0.60 euros.  The 
adjusted  figure  was  also 0.60 euros compared to 0.31 euros 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 4.7 percentage points, 
to 8.5 percent.
Net debt versus prior-year quarter has undergone a substantial 
reduction of  1.4 billion euros to 2.7 billions euros.
Business sector performance
In the first quarter of 2010, the Laundry & Home Care business sector
increased sales by 3.5 percent to 1,049 million euros.  Organic  
growth  amounted  to  3.6 percent. This gratifying rise in sales was 
due not only to  performance  in  the emerging economies but also, 
and to a high degree, to  a  sales  improvement  in the mature 
markets Western Europe and North  America.  The  organic  improvement
was exclusively  volume-driven.  Significantly  outpacing  the  rise 
in  sales, operating profit increased by 41.2 percent to 151  million
euros.  Included  in this figure is a gain of 15 million euros from 
the  sale  of  licensing  rights. Successful measures geared to 
reducing cost and enhancing efficiency also  again contributed 
noticeably to the increase in income. At  14.4  percent,  return  on 
sales improved by a substantial 3.8 percentage points  compared  to  
the  prior- year quarter. In the Laundry segment, positive 
developments in sales  came  from successes in the growth regions of 
Africa/Middle East and  Latin  America,  with Western Europe also 
contributing. These developments were further aided  by  the success 
of a number of innovations.  One  example  is  Henkel´s  Persil  
Hygiene Rinser, which was launched in a number  of  countries  in  
Western  Europe.  And Eastern European markets  saw  the  rollout  of
Persil  Gold  Plus  Active,  an innovative product that reduces the 
amount of energy required per laundry  wash. The Home Care business 
made a  disproportionate  contribution  to  the  rise  in sales. The 
geographic breakdown shows that Henkel registered growth momentum  in
virtually all its regions, particularly in Africa/Middle East,  Asia 
and  North America. In North America the focus was on the  launch  of
products  under  the Soft Scrub brand for gentle  surface  cleaning  
in  the  bathroom  and  kitchen. Suitable for removing a wide range 
of soil types,  they  reduce  the  amount  of effort required and 
accelerate the cleaning process on all surfaces.
The first quarter of 2010 saw the Cosmetics/Toiletries business 
sector  continue unerringly  along  its  successful  growth  path.   
In  an  unrelenting,  highly competitive market environment, it 
posted a strong 5.5 percent rise  in  organic sales against already 
high prior-year levels. Registering double-digit rates  of increase 
across the board, the growth  regions  of  Asia-Pacific,  
Africa/Middle East, Latin America and Eastern  Europe  turned  in  
excellent  results,  and  a significant contribution to growth also 
came from the mature markets of  Western Europe. This highly 
impressive sales performance was  supported  by  a  rigorous and 
ongoing innovation offensive  which  led  to  the  launch  of  
numerous  new products. At 10.1 percent, the rise in  operating  
profit  far  outstripped  the increase in sales, with the 100 million
euro mark being reached  for  the  first time in a first quarter. 
Return on sales improved by 0.5  percentage  points  to 13.1 percent.
The Hair Cosmetics segment reported a remarkably positive  set  of 
figures, expanding its market shares and posting record results in 
all three  of its subsegments. The Hair  Care  business  developed  
exceptionally  well  as  a result of  a  relaunch  of  the  Schauma  
Volume  series  with  push-up  effect, accompanied by the 
introduction of the new Gliss  Shea  Cashmere  line.  In  the 
Colorants business, priority was given to the launch of  the  Syoss  
Color  line and driving forward the further successful expansion  of 
Essential  Colors.  In the Styling business, the introduction of the 
Taft Volume line  for  tired  hair contributed to a positive overall 
performance.  The  focus  in  the  Body  Care segment was on a number
of innovations launched around  the  world.  In  Europe, the Fa brand
was extended by the new deodorant line Active Pearls and  the  body 
wash series Fa Yogurt Smoothies. In the USA, the introduction  into  
the  market of NutriSkin under the Dial brand also helped generate 
further growth  momentum. The priority in the Skin Care business was 
on  expanding  the  anti-aging  line Diadermine Lift+. The Oral Care 
segment successfully strengthened  the  Theramed 2in1 series with the
launch of the new freshness variant 16h Xtra Fresh. And  in the Hair 
Salon business, Schwarzkopf Professional returned to a  good  level  
of growth in the  first  quarter,  expanding  its  market  share  in 
a  continuing difficult market environment. The main impetus here was
provided by a number  of high-performing innovations in the colorants
category.
Sales of the Adhesive Technologies business sector exceeded by 12.4 
percent  the level of the first quarter of 2009,  rising  to  1,651  
million  euros.  And  in organic terms, revenues increased by an even
more respectable 14.5 percent,  due in large part to  substantial  
volume  increases.  All  businesses  and  regions contributed to this
exceptional expansion in sales: the growth regions of  Asia- Pacific,
Africa/Middle  East,  Latin  America  and  Eastern  Europe  once  
again performed above average, and there were also substantial 
increases in  sales  in the mature markets Western Europe and North 
America. Operating  profit  likewise underwent a significant 
improvement - compared  to  the  prior-year  quarter  it almost 
quadrupled, coming in at 185 million  euros.  The  basis  for  this  
very strong increase was provided by measures introduced in the last 
financial  year aligned to optimizing  earnings.  Return  on  sales  
rose  by  a  substantial  8 percentage points to 11.2 percent. After 
adjusting  for  the  disposal  of  the adhesive  tapes  business  in 
North  America,  the  Adhesives  for   Craftsmen, Consumers and  
Building  business  posted  further  growth,  with  all  segments 
contributing.  Substantial  improvements  versus  the  prior-year  
quarter  were achieved in North America and Africa/Middle East 
especially. After  considerable market-related declines in the 
previous year, the Transport and  Metal  business registered 
significant increases in sales in the quarter under review.  Business
with customers  in  the  metals  industry  and,  in  particular,  
sales  to  the automotive sector were significantly higher than in 
the first quarter  of  2009. The General Industry business also 
showed an improvement compared to the  prior- year period, with the 
highest growth rates  being  achieved  in  North  America, 
Asia-Pacific  and  Africa/Middle  East.  The  Packaging,  Consumer   
Goods   and Construction Adhesives business likewise made gains, with
sales in  the  regions of Asia-Pacific and Africa/Middle East 
substantially above  the  levels  of  the first quarter of 2009. 
However, the strongest growth rate was  achieved  by  the Electronics
business. Here, not only  were  sales  in  all  the  growth  regions 
significantly above the  levels  of  the  prior-year  quarter,  the  
regions  of Western Europe and North America also developed 
exceptionally well.
Regional performance
In the Europe/Africa/Middle East  region,  sales  improved  
organically  by  6.0 percent compared to the first quarter  of  2009,
coming  in  at  2,139  million euros, with all three business sectors
contributing.  Africa/Middle  East  once again realized  double-digit
organic  growth,  while  developments  in  Eastern Europe continued 
in the positive single-digit range.  Western  Europe  including 
Germany returned to growth in  the  mid  single-digit  range  after  
an  organic decline in sales in the fourth quarter of 2009. The share
of total  Group  sales attributable to the region as a whole remained
unchanged at 61 percent. After  a decrease in the fourth quarter of  
2009,  sales  in  the  North  America  region improved organically by
7.9 percent compared to the prior-year quarter,  closing at  645  
million  euros.  Sales  of  the  Laundry  &  Home  Care  and   
Adhesive Technologies business sectors developed exceptionally well. 
The  region´s  share of Group sales declined,  ending  the  period  
at  18  percent.  Meanwhile,  the successful development of the Latin
America  region  continued  unabated.  Here, organic sales increased 
by 10.6 percent to 216 million euros, with all  business sectors 
contributing. At 6 percent, the share of  Group  sales  attributable 
to the region remained constant. Sales in  the  Asia-Pacific  region 
continued  to recover compared to the fourth quarter of  2009,  
growing  organically  by  27.6 percent versus the prior-year quarter 
and  ending  the  period  at  462  million euros.   Strong   sales   
increases   in   the   Adhesive    Technologies    and 
Cosmetics/Toiletries business sectors contrasted with stagnation  at 
Laundry  & Home Care. The share of total sales accounted for by  this
region  rose  to  13 percent. In the growth regions of  Eastern  
Europe,  Africa/Middle  East,  Latin America and Asia (excluding 
Japan), sales increased by  17.2  percent  to  1,339 million euros. 
Compared to the prior-year quarter, organic  growth  amounted  to 
14.2 percent, which was also an improvement  over  the  figure  for  
the  fourth quarter of 2009. All our  business  sectors  contributed 
to  this  achievement, particularly Adhesive Technologies and 
Cosmetics/Toiletries which each  recorded double-digit organic growth
rates. The share of  sales  of  the  growth  regions increased from 
35 to 38 percent.
Sales and profits forecast 2010
In Henkel´s estimation, the overall mildly positive market conditions
currently prevailing in the real economy and in  the  financial  
markets  remain  fragile. Based on the forecasts for the current 
year, Henkel expects  the  world  economy to grow by around 3  
percent,  but  without  any  anticipation  of  a  sustained upturn.
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, it 
anticipates further  contributions  to  profit  arising both from the
synergies created through the integration of the  National  Starch 
businesses and from a strictly disciplined cost management approach. 
All  these factors will positively influence the development of 
adjusted  operating  profit (EBIT) and adjusted earnings per  
preferred  share  (EPS).  Following  the  very successful start made 
to the new  financial  year,  Henkel  expects  both  these metrics to
show a noticeable improvement of more than  15  percent  compared  to
the figures for 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
Phone: +49-211-797-2606
Phone: +49-211-797-1875
Fax: +49-211-798-4040
Photo material available for downloading at http://henkel.com/press. 
For more detailed facts and figures relating to the first quarter of 
2010, please go to: http://www.henkel.com/ir.
press@henkel.com
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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