Henkel Makes a Good Start to the Year

DUESSELDORF, Germany and ROCKY HILL, Conn., May 5 /PRNewswire/ --

• 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

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.

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"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 due 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."

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 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.

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.

Henkel in North America:

Henkel markets a wide range of well-known consumer and industrial brands in North America, including Dial® soaps, Purex® laundry detergents, Right Guard® antiperspirants, got2b® hair gels, and Loctite® adhesives. Visit www.henkelna.com for more information.

The complete 2010 first quarter report can be found at www.henkel.com/press.

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.

SOURCE Henkel

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