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quarterly report/9-month report/Henkel
Düsseldorf (euro adhoc) - Organic sales growth between 5 and 6 percent expected
for full fiscal 2011
Henkel continues solid performance in Q3
Sales increase of 1.7 percent to 4,028 million euros (organic: +6.5%)
Adjusted* operating profit: plus 4.7 percent to 541 million euros
Adjusted* EBIT margin: plus 0.4 percentage points to 13.4 percent
All business sectors delivered substantial margin increases
Adjusted* earnings per preferred share (EPS): plus 6.3 percent to 0.85
euros
Further double-digit increase in the growth regions (organic: +10.9%)
Düsseldorf, Germany - "Henkel continued its solid performance in the third
quarter. Despite the challenging market environment, we outperformed once again
our relevant markets in terms of organic sales growth," said Henkel CEO, Kasper
Rorsted. "All our business sectors contributed to this growth, and with further
double-digit increases in our growth regions, we improved their share to 43
percent of our total sales. Despite higher raw material prices, we managed to
improve profitability in all our business sectors."
For the full fiscal year 2011, Rorsted provided the following guidance: "The
economic environment remains challenging. In addition to intense competition
and high raw material prices, the debt crisis in the eurozone is bringing
additional uncertainty into the markets. Against this background, we will
continue to 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 guidance for organic sales growth in 2011: "We now expect
organic sales growth for the full fiscal year to be between 5 and 6 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 third quarter of 2011 increased to 4,028 million euros, a
rise of 1.7 percent compared with the prior-year quarter. After adjusting for
foreign exchange, sales improved by 5.7 percent. At 6.5 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 performance: Laundry &
Home Care registered encouraging organic growth of 3.8 percent, driven
exclusively by price. The strong organic sales growth at the
Cosmetics/Toiletries business sector was 5.6 percent, achieved through
significant volume increases. Adhesive Technologies attained strong organic
sales growth of 8.7 percent generated through both volume increases and
implemented price increases. As a result, Henkel was able to further expand
global market share in all three business sectors.
After allowing for one-time charges, one-time gains and restructuring charges,
adjusted operating profit improved by 4.7 percent, from 517 million euros to
541 million euros, with all three business sectors contributing. Operating
profit (EBIT) totaled 451 million euros compared to 501 million euros in the
same quarter of 2010.
Despite the influence of higher prices for raw materials and packaging,
adjusted return on sales (EBIT margin) rose by 0.4 percentage points, from 13.0
percent to 13.4 percent. Return on sales came in at 11.2 percent, following
12.7 percent in the comparative prior-year period.
At -37 million euros, the financial result remained at the level of the prior-
year quarter. The tax rate amounted to 24.2 percent (prior-year quarter: 26.1
percent).
Adjusted quarterly net income after deducting non-controlling interests
amounted to 366 million euros compared to 349 million euros in the third
quarter of 2010, a rise of 4.9 percent. Net income for the quarter was 314
million euros compared to 343 million euros in the prior-year quarter. After
deducting non-controlling interests of 7 million euros, net income for the
quarter totaled 307 million euros (prior-year quarter: 337 million euros).
Adjusted earnings per preferred share (EPS) rose by 6.3 percent to 0.85 euros
compared to 0.80 euros in the prior-year quarter. The nominal figure was 0.71
euros compared to 0.78 euros in the third quarter of 2010.
The ratio of net working capital to sales was 8.0 percent, about the same as in
the prior-year quarter. Net debt as of September 30, 2011 amounted to 1,859
million euros, some 1 billion euros below the level of the previous year and
falling below the 2 billion euro mark for the first time since the acquisition
of the National Starch businesses in 2008.
Business performance from January through September 2011
In the first nine months of fiscal 2011, Henkel increased sales versus the
prior-year period by 3.9 percent to 11,804 million euros. After adjusting for
foreign exchange, sales improved by 6.2 percent. At 6.6 percent, organic sales
growth also came in significantly above the level of the prior-year period.
Adjusted operating profit rose by 8.0 percent, from 1,414 million euros to
1,528 million euros, with the Cosmetics/Toiletries and Adhesive Technologies
business sectors making a particularly significant contribution. Operating
profit (EBIT) increased by 5.5 percent, from 1,344 million euros to 1,418
million euros. Adjusted return on sales (EBIT margin) improved from 12.4
percent to 12.9 percent. Return on sales rose from 11.8 percent to 12.0
percent.
Adjusted net income for the nine months after deducting non-controlling
interests rose by 11.0 percent, from 922 million euros to 1,023 million euros.
Net income for the nine months came in at 979 million euros compared to 889
million euros in the prior-year period. After deducting non-controlling
interests of 21 million euros, net income for the period totaled 958 million
euros (previous year: 869 million euros). Adjusted earnings per preferred share
(EPS) rose by 11.3 percent, from 2.13 euros to 2.37 euros. The nominal figure
was 2.22 euros compared to 2.01 euros in the prior-year period.
Business sector performance in the third quarter 2011
The Laundry & Home Care business sector increased organic sales by 3.8 percent.
The positive price developments of the second quarter were further accelerated
with the result that organic growth in the third quarter was entirely price-
driven. Despite a slight decline in the relevant markets, volumes remained at
the level of the prior-year quarter. In nominal terms, sales came in at 1,110
million euros compared to 1,123 million in the prior-year quarter.
Positive momentum in organic sales development emanated primarily from the
growth regions of Eastern Europe, Africa/Middle East and Latin America. The
Africa/Middle East region continued its recovery following the political
upheavals, contributing to organic expansion with a high single-digit growth
rate. Sales in North America increased despite a further contraction in the
market. An improvement in sales was also achieved in Western Europe, due
particularly to continuing strong growth in Germany. This positive sales
performance in generally declining markets led to a further increase in
Henkel´s global market share.
Adjusted operating profit increased by 1.6 percent to 155 million euros.
Adjusted return on sales improved by 0.4 percentage points to 14.0 percent. The
third quarter was again characterized by high raw material prices. However, by
increasing its own prices and with ongoing measures to reduce cost and enhance
efficiency in both production and the supply chain, the business sector
succeeded in largely offsetting the impact of rising material costs on gross
margin. Return on sales further improved as a result of cost reductions.
Operating profit totaled 125 million euros, compared to 139 million euros in
the prior-year quarter.
The third quarter again saw the Cosmetics/Toiletries business sector continue
its upward growth curve. As in the previous quarters, organic sales growth
significantly outstripped the relevant markets, coming in this time at 5.6
percent. Despite the persistently difficult and intensely competitive market
environment, the business sector was able to further expand its market shares.
With prices slightly below the level of the prior-year quarter, organic growth
was driven by significant volume increases, backed up by a strong innovation
program. Sales totaled 860 million euros, 1.9 percent above the figure for the
prior-year quarter.
Sales increases were reported in each of the company´s regions. The strongest
rises and another double-digit growth rate were registered in the growth
markets of Eastern Europe, Africa/Middle East, Latin America and Asia
(excluding Japan). Development in China was particularly dynamic with a strong
core business and numerous new product launches. Sales growth was also achieved
in the mature markets. Aside from substantial sales increases in Western
Europe, there were also positive developments in North America, with expansion
in our business there outpacing the relevant markets.
Adjusted operating profit increased by 7.0 percent to 123 million euros, and
return on sales improved by 0.7 percentage points, rising to a new high of 14.3
percent. Further margin improvement was supported by ongoing measures to reduce
cost and enhance efficiency. Persistently high prices for raw materials and
packaging could be partially offset. Operating profit totaled 111 million
euros, compared to 113 million euros in the prior-year quarter.
Once again in the third quarter of 2011, the Adhesive Technologies business
sector significantly outperformed its relevant markets, increasing sales
organically by 8.7 percent versus the prior-year quarter. This positive
development was driven by both volume increases and successfully implemented
price rises. In nominal terms, sales rose by 3.9 percent to 2,020 million
euros, thus exceeding the 2 billion euro mark for the first time in a quarter.
Growth was achieved in each of the business sector´s regions. In addition to a
significant increase in sales in the mature markets, appreciable momentum was
also once again generated in the emerging markets, with Africa/Middle East and
Eastern Europe - driven by Russia particularly - once again exhibiting the
highest growth rates.
Adjusted operating profit again improved significantly versus the prior-year
quarter, by 8.6 percent to 291 million euros. As a result, adjusted return on
sales rose by 0.6 percentage points to 14.4 percent, with the substantial
increases in raw material and packaging prices being largely offset by the
business sector increasing its own prices as well as reducing costs and
enhancing efficiency. Operating profit totaled 254 million euros, compared to
268 million euros in the prior-year quarter.
Regional performance
In the highly competitive market environment of the Western Europe region,
sales improved organically by 3.8 percent to 1,422 million euros. Organic
growth also came in at 3.8 percent. The main driver of this increase was sales
growth generated in Germany. Despite the increasing severity of the financial
crisis in Southern Europe, growth in Italy was particularly positive. Sales in
the Eastern Europe region rose by 4.2 percent to 775 million euros. Organic
growth was even higher at 10.3 percent. Among the primary reasons for the
improvement were the company´s businesses in Turkey and the adhesives
operations in Russia. Although sales growth in the Africa/Middle East region
continued to be hampered by political unrest in some countries, a double-digit
organic improvement of 13.1 percent was nevertheless achieved, with the
adhesives business making a particularly strong contribution. Sales of the
region totaled 237 million euros compared to 229 million euros in the
comparable period of the previous year. Sales generated in the North America
region decreased by 4.6 percent to 699 million euros, with foreign exchange
rates exerting major negative impact. Organically, however, sales rose by 4.0
percent despite the sluggish consumer climate prevailing in the USA. The region
of Latin America recorded a sales increase of 5.4 percent to 273 million euros.
Organic growth came in at 11.0 percent, with business performance in Mexico and
Venezuela a major contributor. The Asia/Pacific region saw sales increase by
1.2 percent to 586 million euros, albeit with developments in Japan exerting a
dampening influence. Organic growth in the region was 7.6 percent, supported in
particular by the double-digit rates of increase achieved in China and India.
Sales expansion was again given a particular boost by the growth regions of
Eastern Europe, Africa/Middle East, Latin America and Asia (excluding Japan).
Sales increased by 3.4 percent to 1,713 million euros, with organic growth
again double-digit at 10.9 percent. Total sales were boosted in particular by
higher sales generated by Adhesive Technologies and Cosmetics/Toiletries. The
share of sales attributable to these growth markets increased from 42 percent
in the prior-year quarter to 43 percent this time.
Sales and profits forecast 2011
Following the first three quarters, Henkel is confident of again outperforming
its relevant markets in terms of organic sales growth. The company now expects
an increase in organic sales of between 5 and 6 percent (previous outlook:
around 5 percent). 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 around 10 percent. This guidance is based on
increases achieved 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 effect on its earnings arising from increased raw material
costs.
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,
forecast 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 third 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-q3-
2011-33938.htm
press@henkel.com
Further inquiry note:
Irene Honisch
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