DGAP-News: Henkel AG & Co. KGaA: Henkel records strong performance in second
DGAP-News: Henkel AG & Co. KGaA / Key word(s): Quarter Results
Henkel AG & Co. KGaA: Henkel records strong performance in second
08.08.2013 / 07:34
August 8, 2013
2013 guidance confirmed
Henkel records strong performance in second quarter
- Sales rise 1.9% to 4,286 million euros (organic: +4.0%)
- Adjusted operating profit: +8.2% to 660 million euros
- Adjusted EBIT margin: +0.9 percentage points to 15.4%
- Double-digit growth in adjusted earnings per preferred share (EPS):
- At 45 percent, share of sales in emerging markets reaches new high
Düsseldorf - 'Despite the continued challenging market environment, Henkel
delivered a strong second quarter. We significantly increased both sales
and earnings with all our three business sectors contributing. Our adjusted
return on sales has risen to 15.4 percent for the first time,' said Henkel
CEO, Kasper Rorsted. 'While all regions reported growth, once again our
emerging markets made an important contribution. The share of sales in
emerging markets rose substantially reaching 45 percent for the first
Looking forward to the second half of the year, Rorsted stated: 'We expect
the overall economic environment to remain difficult. Hence we will further
improve our competitiveness. We will continue to adapt, simplify and
accelerate our processes in order to respond more flexibly and efficiently
to the volatile market environment in which we operate.'
2013 guidance confirmed
Rorsted confirmed Henkel's previously stated guidance for fiscal 2013: 'We
expect organic sales growth to be between 3 and 5 percent in the full
fiscal year. We expect our adjusted EBIT margin to increase to about 14.5
percent and adjusted earnings per preferred share to grow by about 10
Sales and earnings performance in the second quarter 2013
At 4,286 million euros, Henkel's sales for the second quarter 2013 showed
an increase of 1.9 percent versus the prior-year quarter. Henkel continued
to see strong headwinds from currency effects, mainly coming from Japanese
Yen, US Dollar and Russian Ruble. Organic sales, which excludes the impact
of foreign exchange and acquisitions/divestments, rose by 4.0 percent.
All three business sectors contributed to this solid performance: Laundry &
Home Care recorded strong organic sales growth of 5.8 percent. The Beauty
Care business sector achieved a solid organic growth rate of 2.8 percent.
And the Adhesive Technologies business sector also registered solid growth
with organic sales rising by 3.6 percent year on year.
After allowing for one-time gains, one-time charges and restructuring
charges, adjusted operating profit improved by 8.2 percent, from 609
million euros to 660 million euros, with all three business sectors
contributing. Reported operating profit (EBIT) was 607 million euros
compared to 583 million euros in the second quarter of 2012.
Adjusted return on sales (EBIT margin) showed a very strong increase of 0.9
percentage points, taking it to 15.4 percent. Reported return on sales
amounted to 14.2 percent compared to 13.9 percent in the prior-year
Henkel's financial result improved by 18 million euros to -27 million
euros, due primarily to a stronger net financial position and an improved
result from currency hedging activities. The tax rate was at 25.5 percent
compared to 24.7 percent for the prior-year quarter.
Net income for the quarter rose by 6.7 percent, from 405 million euros to
432 million euros. After deducting 14 million euros attributable to
non-controlling interests, quarterly net income amounted to 418 million
euros (prior-year quarter: 394 million euros). Adjusted net income for the
quarter after deducting non-controlling interests was 461 million euros
compared to 413 million euros for the same period of 2012. Earnings per
preferred share (EPS) rose from 0.91 euros to 0.96 euros. The adjusted
figure was 1.07 euros compared to 0.96 euros in the previous year. Before
application of IAS 19 revised, prior-year EPS was 0.97 euros. Compared to
this figure, adjusted earnings per preferred share increased by 10.3
The ratio of net working capital to sales further improved year on year,
decreasing to 5.2 percent. Despite higher dividend payments, at -130
million euros Henkel's net financial position as of June 30, 2013 was only
slightly below the figure at the turn of the year (-85 million euros). As
of June 30, 2012, Henkel's net debt amounted to 1,269 million euros.
Business performance January through June 2013
In the first six months of fiscal 2013, Henkel increased sales versus the
prior-year period by 1.3 percent to 8,319 million euros. Organic sales
posted solid growth of 3.2 percent compared to the first half of 2012.
Adjusted operating profit rose by 8.6 percent, from 1,160 million euros to
1,260 million euros, with all three business sectors contributing. Adjusted
return on sales (EBIT margin) showed a very strong increase, rising from
14.1 percent to 15.1 percent.
Adjusted net income for the half year grew by 12.5 percent, from 802
million euros to 902 million euros. Deduction of non-controlling interests
totaling 24 million euros left adjusted half-yearly net income attributable
to Henkel shareholders of 878 million euros (prior-year period: 782 million
euros). Adjusted earnings per preferred share (EPS) amounted to 2.03 euros,
representing a significant increase of 12.2 percent compared to the 1.81
euros registered in the first half 2012. Before application of IAS 19
revised, the figure for that period was 1.84 euros. Compared to this EPS
figure the increase was 10.3 percent.
Business sector performance second quarter 2013
The Laundry & Home Care business sector recorded strong sales growth in the
second quarter and a very strong increase in adjusted return on sales. The
business sector also succeeded in further expanding its share of its
relevant markets. Organically, sales rose by 5.8 percent year on year.
Nominal sales increased by 3.4 percent to 1,186 million euros.
This strong organic sales performance was driven primarily by the emerging
markets, in which Laundry & Home Care achieved a double-digit percentage
increase overall. Despite the unrest, this applies also for the
Africa/Middle East region. Eastern Europe also recorded very strong sales
growth, driven mainly by dynamic developments in Russia and Turkey. In the
mature markets, Laundry & Home Care succeeded in producing a stable sales
performance overall, in spite of accelerating market decline and heavy
promotional and price competition. Western Europe showed solid sales growth
despite the extremely difficult market conditions in the countries of
Southern Europe. Germany and France, in particular, reported a very strong
performance. In North America, sales in an increasingly declining market
fell short of the level of the prior-year quarter.
Adjusted operating profit rose by 9.1 percent to 182 million euros, a very
strong improvement over the prior-year quarter. Adjusted return on sales
showed an increase of 0.8 percentage points to 15.3 percent. Reported
operating profit was 167 million euros compared to 153 million euros in the
Beauty Care recorded solid sales growth in the second quarter and a strong
increase in adjusted return on sales. At 2.8 percent, organic sales growth
was once again higher than the growth rate in relevant markets. The
business sector also succeeded in further expanding its share of its
relevant markets. Nominally, sales rose by 0.2 percent to 923 million
All regions contributed to the solid organic sales performance. As in
previous quarters, Africa/Middle East and Asia (excluding Japan) recorded a
particularly strong performance, each region posting double-digit
percentage growth rates. The growth driver in these markets remains China.
Sales in the mature markets increased, despite the difficult business
climate. North America once again registered a solid growth rate, and
Western Europe, too, continued its positive development.
Adjusted operating profit rose by 3.6 percent to 138 million euros.
Adjusted return on sales showed a strong increase of 0.5 percentage points
to 14.9 percent. Reported operating profit increased by 2.7 percent versus
prior year, to 135 million euros.
The Adhesive Technologies business sector recorded solid sales growth in
the second quarter and showed excellent development in adjusted return on
sales. Sales reached 2,138 million euros. Organically, the increase was 3.6
percent versus the same quarter of the previous year.
The emerging markets registered very strong organic sales growth. The Latin
America region recorded the highest growth rate with a double-digit
improvement. Asia (excluding Japan) and Eastern Europe posted a very strong
rise year on year. The sales development in the Africa/Middle East region
was once again solid. The sales performance in the mature markets varied by
region. North America registered a solid increase in sales versus the
prior-year quarter. However, sales in Western Europe decreased due to the
persistently difficult economic conditions. By contrast, business
performance in Germany was positive.
Adjusted operating profit showed a very strong year-on-year increase of 9.7
percent to 362 million euros. Adjusted return on sales reached 16.9 percent
for the first time, an improvement of 1.2 percentage points compared to the
level of the prior-year quarter. Reported operating profit (EBIT) was 333
million euros compared to 327 million euros in the second quarter of 2012.
Regional performance across the Group
In a highly competitive market environment, Henkel's sales in the Western
Europe region were at 1,423 million euros, nearly matching the level of the
prior-year quarter. Organic sales rose by 0.2 percent, with the effects of
the recessionary developments in Southern Europe being offset. Sales in the
Eastern Europe region grew nominally by 3.7 percent to 799 million euros.
Organically, the rise was 5.8 percent, driven primarily by Russia and
Turkey. Expansion in the Africa/Middle East region continued to be affected
by political and social unrest in some countries. Despite this, nominal
sales rose by 10.3 percent to 307 million euros, while organic growth was
18.3 percent with major contributions coming from both Laundry & Home Care
and Beauty Care.
Nominally, sales in the North America region decreased slightly by 0.7
percent to 760 million euros. In organic terms, however, sales rose by 1.1
percent, due to the solid performance of the Beauty Care and Adhesive
Technologies business sectors. Nominal sales in the Latin America region
grew by 4.7 percent to 282 million euros. Organic sales rose by 7.8
percent, with the businesses in Mexico and Brazil making substantial
contributions. Sales in the Asia-Pacific region grew nominally by 2.9
percent to 675 million euros. Organically, sales improved by 6.0 percent.
While sales performance in the emerging markets, especially China, was
solid, sales in Japan declined.
Overall, sales growth was again driven by the emerging markets of Eastern
Europe, Africa/Middle East, Latin America and Asia (excluding Japan).
Nominally, emerging markets sales rose by 6.2 percent to 1,943 million
euros in the second quarter. Organic growth was 8.9 percent with all three
business sectors contributing. The share of sales attributable to the
emerging markets increased from 43 percent in the prior-year quarter to 45
Outlook for the Henkel Group in 2013
Henkel expects to generate organic sales growth of between 3 and 5 percent
in fiscal 2013. The company is confident that each business sector will
grow within this range. Henkel confirms its guidance for adjusted return on
sales (EBIT) of about 14.5 percent (2012: 14.1 percent) and assumes that
all business sectors will contribute to the increase over the prior year.
Henkel further expects an increase in adjusted earnings per preferred share
of about 10 percent (2012: 3.70 euros).
* With application of IAS 19 revised, growth in the prior-year quarter was
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
Tel. +49 211 797 - 2606
Fax +49 211 798 - 4040
Tel. +49 211 797 - 1875
Fax +49 211 798 - 4040
Henkel AG & Co. KGaA
The report for the second quarter of 2013 and other information with
download material and the link to the teleconference broadcast can be found
in our press folder on the internet at:
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Company: Henkel AG & Co. KGaA
Henkel Str. 67
Phone: +49 (0)211 797-0
Fax: +49 (0)211 798-4008
ISIN: DE0006048432, DE0006048408
WKN: 604843, 604840
Listed: Regulierter Markt in Berlin, Düsseldorf, Frankfurt (Prime
Standard), Hamburg, Hannover, München, Stuttgart;
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