Henkel Continues Solid Performance in Q2

Organic sales growth of around 5 percent expected for full fiscal 2011

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Aug 10, 2011, 10:47 ET

DUESSELDORF, Germany and ROCKY HILL, Conn., Aug. 10, 2011 /PRNewswire/ --

Sales increase of 1.6 percent to 3,953 million euros (organic: + 6.3%)
Adjusted* operating profit: plus 8.0 percent to 514 million euros
Adjusted* EBIT margin: plus 0.8 percentage points to 13.0 percent
Adjusted* earnings per preferred share (EPS): plus 8.2 percent to 0.79 euros
Growth regions post another double-digit increase (organic: + 11.6%)
Market environment characterized by rise in raw material prices and intense competition

(Logo: http://photos.prnewswire.com/prnh/20091111/HENKELLOGO )

"Henkel continued its solid performance in the second quarter, despite the challenging market environment. We achieved high organic sales growth and outperformed once again our relevant markets," said CEO Kasper Rorsted. "All our business sectors contributed to this growth, and with double-digit increases in our growth regions we improved the share of total sales in these markets to 42 percent. Despite higher raw material prices, we improved our profitability in all business sectors. This was driven by increased selling prices across all our business sectors, by our strong brands and innovations, as well as by measures to further enhance our efficiency."

For the fiscal year 2011, Rorsted provided the following guidance: "With intense competition continuing, an increase in raw material prices and growing uncertainties in the markets, the economic environment will remain challenging. Against this background, we will further 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 expectations for organic sales growth in 2011: "We are confident that we will again grow faster than our relevant markets in 2011 and now expect an organic sales growth of around 5 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 second quarter of 2011 increased to 3,953 million euros, a rise of 1.6 percent compared to the figure for the prior-year quarter. After adjusting for foreign exchange, sales improved by 6.0 percent. At 6.3 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 development. Laundry & Home Care registered organic sales growth of 3.7 percent. With organic sales growth of 5.4 percent, the Cosmetics/Toiletries business sector clearly outperformed a very strong prior-year quarter. Adhesive Technologies significantly surpassed an already successful prior-year quarter with organic growth of 8.9 percent both price and volume driven. Henkel was thus able to further expand global market share in all three business sectors, with the consumer businesses achieving historic highs. In North America, Henkel markets a range of well-known consumer and industrial brands, including Dial® soaps, Purex® laundry detergents, Right Guard® antiperspirants, and Loctite® adhesives.

After allowing for one-time gains, one-time charges and restructuring charges, adjusted operating profit improved by 8.0 percent, from 476 million euros to 514 million euros, with all three business sectors contributing. Operating profit (EBIT) increased by 27.5 percent, from 421 million euros to 537 million euros, positively impacted by the one-time gain of 48 million euros arising from the sale of the branded consumer goods business in India. Despite the influence of higher prices for raw materials and packaging, adjusted return on sales (EBIT margin) rose by 0.8 percentage points, from 12.2 percent to 13.0 percent. Return on sales rose to 13.6 percent, following 10.8 percent in the comparative prior-year period.

Business performance January through June 2011

In the first six months of fiscal 2011, Henkel increased sales versus the prior-year period by a substantial 5.1 percent to 7,776 million euros. After adjusting for foreign exchange, sales improved by 6.4 percent. At 6.7 percent, organic sales growth was also clearly above the level of the prior-year period. Adjusted operating profit increased by 9.9 percent, from 897 million euros to 987 million euros. This positive development was driven in particular by the Cosmetics/Toiletries and Adhesive Technologies business sectors. Operating profit (EBIT) increased by 14.7 percent, from 843 million euros to 967 million euros. Adjusted return on sales (EBIT margin) improved from 12.1 percent to 12.7 percent. In nominal terms, return on sales rose from 11.4 percent to 12.4 percent.

Sales and profits forecast 2011

Following a solid first half year, Henkel is confident of again outperforming its relevant markets in terms of organic sales growth. For fiscal 2011, Henkel now expects an increase in organic sales of around 5 percent (previously: at the upper end of the 3 to 5 percent range). 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 about 10 percent. This guidance is based on increases 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 effects of increased raw material costs on its earnings.

The complete report for the second 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-q2-half-year-2011-33054.htm

* Adjusted for one-time charges/gains and restructuring charges

Contact
Cindy Demers (North America)
Phone: 480-754-4090
E-mail: [email protected]

Wulf Klueppelholz (International)
Phone: +49 (0)211 797-1875
Fax: +49 (0)211 798-4040
E-mail: [email protected]

www.henkelna.com

SOURCE Henkel