EANS-News: Henkel AG & Co. KGaA / Henkel expects noticeable earnings improvement in 2010

Henkel reports better-than-expected 2009 results

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annual report/Annual Reports/Company Information/Earnings

Subtitle: Henkel reports better-than-expected 2009 results

Düsseldorf (euro adhoc) - Düsseldorf, February 25, 2010

Henkel expects noticeable earnings improvement in 2010

Henkel reports better-than-expected 2009 results

• Laundry & Home Care has substantially higher earnings
• Cosmetics/Toiletries continues very successful performance
• Adhesive Technologies shows strong recovery throughout the year
• Adjusted return on sales in Q4/2009 is 12.4 percent
• Net debt reduced by 1 billion euros
• Proposed dividends kept at prior-year levels

Henkel anticipates the current financial year will bring a
noticeable improvement to its results. While regarding the recovery
of the real economy and the financial markets as still fragile,
the company expects that its organic sales growth, i.e.
growth adjusted for foreign exchange and acquisitions/
divestments, will outperform that of its relevant markets.

"For Henkel - and the world economy as a whole - 2009 will go
down as a challenging year. Nevertheless, we have made good
progress towards achieving our 2012 financial targets as proven by
our outstanding results in the fourth quarter of 2009," said
Kasper Rorsted, Chairman of the Henkel Management Board. "Our
Laundry & Home Care and Cosmetics/Toiletries businesses have
expanded their market positions and further increased their
profitability. In the course of the year, our Adhesive Technologies
business has rebounded well from the effects of the economic
crisis." Rorsted continued: "Our results reflect the tireless
efforts to adapt our structures and reduce our costs. We have
shown that, even in adverse market conditions, we can act quickly
and decisively. Once again, our strong brands have also made an
appreciably contribution to the good performance: our new brand
Syoss for example was the most successful launch in the hair
care sector in 2009. We have put ourselves in a strong
position and expect to improve noticeably our results in the current
financial year."

In fiscal 2009, Henkel generated sales of 13,573 million euros. In a
generally difficult market environment, this amounts to a
decrease of 3.9 percent compared to the previous year. In organic
terms, that is to say adjusted for foreign exchange and
acquisitions/divestments, sales decreased by 3.5 percent versus
prior year. After a substantial decline in sales in the first
quarter caused by the economic crisis, the subsequent quarters were
characterized by a gradual recovery. However, developments at the
company´s three business sectors continued to show a very mixed
picture. While the consumer goods businesses of Laundry & Home Care
and Cosmetics/Toiletries continued to perform very well with
organic growth rates of 2.9 percent and 3.5 percent respectively,
sales of the Adhesive Technologies business sector decreased
organically by 10.2 percent due to the difficulties encountered in
major customer industries worldwide.

Operating profit (EBIT) increased by 38.6 percent from 779 million
euros to 1,080 million euros. The comparable prior-year figure
was burdened by restructuring charges resulting from the
company´s "Global Excellence" efficiency enhancement program.
After adjusting for one-time gains and charges and restructuring
charges totaling 284 million euros, operating profit
decreased by 6.6 percent, from 1,460 million euros to 1,364
million euros, attributable to the downturn suffered by the
Adhesive Technologies business sector.

Return on sales (EBIT margin) was 8.0 percent, while adjusted return
on sales decreased slightly from 10.3 percent to 10.0 percent due to
the margin decline at Adhesive Technologies. By contrast, adjusted
return on sales of the consumer goods businesses Laundry & Home Care
and Cosmetics/Toiletries improved to 12.8 percent and 12.9 percent
respectively.

Financial result decreased to -195 million euros, with the
figure for the previous year having benefitted from a gain of 1,042
million euros arising from the disposal of Henkel´s stake in Ecolab.
Net interest improved by 84 million euros to -191 million euros.
Due to the increase in cash flow and the lack of major
acquisitions, Henkel was able to reduce its net debt compared to
the prior-year by 1.0 billion euros to 2.8 billion euros.
Together with the prevailing lower interest rates, this reduction
in debt made a significant contribution to the improvement in
Henkel´s net interest result. At 29.0 percent, the tax rate was
above the level of the previous year.

Due to the gain from the sale of the Ecolab stake in 2008,
net earnings decreased by 605 million euros to 628 million euros.
After deducting minority interests of 26 million euros, net
earnings totaled 602 million euros. Adjusted net earnings after
minority interests declined by 123 million euros to 822 million
euros. Earnings per preferred share decreased from 2.83 euros to
1.40 euros. The adjusted figure was 1.91 euros compared to 2.19
euros in the previous year.

Good progress was also made in the management of net working
capital. Compared to the prior-year, the ratio of net working
capital to sales improved from 11.7 percent to 7.8 percent. Free
Cash Flow was increased significantly from 457 million euros to
1,462 million euros compared to the prior year.

The Management Board, Supervisory Board and Shareholders´
Committee will be proposing to Henkel´s Annual General Meeting
that it approve unchanged dividends of 0.53 euros per preferred
share and 0.51 euros per ordinary share.

Business sector performance

The Laundry & Home Care business sector increased sales
organically by 2.9 percent in fiscal 2009. In nominal terms, sales
decreased by 1.0 percent to 4,129 million euros. The generally
gratifying increase in organic sales was particularly
attributable to double-digit improvements in the growth regions of
Eastern Europe and Africa/Middle East. Sales performance in Asia was
influenced by the exit from the Chinese market at the end of
2008. Adjusted operating profit increased substantially by 17.8
percent, from 450 million euros to 530 million euros. This
improvement reflects the benefits accruing from measures
introduced to reduce cost and enhance efficiency and lower
prevailing material prices. Adjusted return on sales increased by
2.0 percentage points to 12.8 percent. In the Laundry business
segment, the strongest growth momentum was generated by
heavy-duty detergents and fabric softeners. Henkel also benefited
from successful innovations such as Persil ActicPower, which requires
only half the usual detergent dosage and develops its full
laundry power at just 15 degrees Celsius, and Vernel Crystals -
innovative fragrance crystals for the wash. The Laundry business
also enjoyed major success in North America with Purex Complete
3-in-1. Organic sales growth in the Home Care business segment was
generated primarily by improved sales of dishwashing detergents
and WC products. While sales in machine dishwashing products
increased particularly in Eastern Europe, hand dishwashing product
sales experienced their highest growth rates in the Africa/Middle
East subregion. The strongest growth in the case of the WC products
was in Eastern Europe. With new products having been launched onto
the market here, the company also succeeded in increasing its
overall market share.

With organic sales growth of 3.5 percent, the
Cosmetics/Toiletries business sector was able to continue its
highly gratifying growth rates of previous years, despite the
recessive market environment. In nominal terms, sales were stable
at 3,010 million euros due to foreign exchange effects and
divestments in North America. Organic growth was boosted by the
encouraging performance of the branded consumer goods business in
Eastern Europe and the regions of Africa/Middle East, Latin
America and Asia-Pacific. But also in Western Europe developments
were positive despite the adverse market environment. At 387
million euros, adjusted operating profit was 2.1 percent above the
level for the previous year. Systematic cost reduction
measures and the further elimination of complexity resulted in
an improvement in the business sector´s cost structures. Adjusted
return on sales increased by 0.3 percentage points versus prior
year, reaching a record high of 12.9 percent. In the Hair
Cosmetics business, sales experienced substantial organic growth
while market shares rose to new heights. The primary growth drivers
were the Hair Care and Colorants businesses, due particularly to
the highly successful international launches of the Syoss brand
and Schwarzkopf Essential Color, a permanent colorant formulated
without ammonia. In the Styling segment too, significant share
gains in a declining market were made with new launches under
Europe´s leading styling brand Taft and the young fashion brand
Got2b. The Body Care business also continued to perform well.
The core brands Fa and Dial successfully continued their
innovation offensive, gaining market shares with a number of new
launches. In the Skin Care business, the introduction of
Diadermine´s Dr. Caspari Method Dermo-Ident treatment contributed
to further consolidation of the position enjoyed by the Diadermine
brand in the rapidly growing anti-aging segment. In the Oral
Care business, good results were achieved with the new freshness
variant Theramed 2-in-1 Arctic White. Despite the difficulties of
the market environment, the Hair Salon segment was able to further
expand its position as the world´s number three.

In a significantly contracting overall market, sales of the
Adhesive Technologies business sector decreased by 7.1 percent to
6,224 million euros. In organic terms, sales were 10.2 percent
below the level of the previous year. The decreases in the growth
regions were less pronounced than in the mature markets of
Western Europe and North America. In Latin America, sales actually
increased compared to prior year. At 506 million euros, adjusted
operating profit was 25.6 percent lower due to considerable
volume decreases and a resulting lower level of capacity
utilization. Adjusted return on sales declined by 2.0 percentage
points to 8.1 percent, although steady improvement was registered
in the course of the year. This gradual upturn is attributable to
the accelerated process of synergy realization arising from the
integration of the National Starch businesses, the benefits
accruing from the "Global Excellence" program and further
measures implemented to reduce costs. The Adhesives for
Craftsmen, Consumers and Building business was impacted by market
decreases in purchases by consumers, destocking by customers and the
prevailing recession in the building industry. Overall,
however, business with the building sector has increased on the
back of encouraging developments in the regions of Eastern Europe
and Africa/Middle East. The Transport and Metal business was
especially hard hit by the effects of the global economic crisis,
although here too, there were slight signs of recovery as the year
progressed. Through close collaborative partnerships with major
OEM customers from the automotive and metal processing industries
the business was able to create further positive momentum. The
General Industry business suffered from the decline in
industrial production and a low level of propensity to invest,
particularly in the case of durable goods, leaving sales overall well
below the prior-year levels for this segment. Operations
involving products for industrial maintenance, repair and
overhaul under the Loctite brand performed at a more stable level
and even posted a small degree of growth in North America.
The Packaging, Consumer Goods and Construction Adhesives
business remained somewhat more robust in a market environment
characterized by falling demand for consumer goods. Adhesives
for flexible packaging continued to perform well: here, the
product portfolio has significantly expanded as a result of the
integration of the National Starch businesses. The Electronics
business was heavily affected by developments in the
semiconductor market. Significant shrinkage in sales during the
first half of the year, compared to 2008 levels, was followed by a
degree of recovery in the second half.

Regional performance

At 8,335 million euros, the organic sales of the
Europe/Africa/Middle East region were 1.9 percent below the level
of the previous year. While the consumer goods businesses
succeeded in generating a gratifying increase in sales,
Adhesive Technologies posted a decline in the double-digit
percentage range. There was a decrease in sales in Western Europe. In
Eastern Europe, on the other hand, organic sales underwent a
single-digit increase, and the Africa/Middle East subregion once
again posted double-digit growth. Overall, the share of sales of
the region declined from 63 to 61 percent. Sales in the North
America region decreased organically by 8.6 percent to 2,546
million euros. All the company´s business sectors suffered
considerably from the underlying economic conditions, particularly
during the first half of the year. The region´s share of sales
remained constant at 19 percent. The Latin America region continued
to perform very encouragingly, posting organic sales growth of 5.0
percent to 825 million euros, with all business sectors
contributing. The share of sales attributable to Latin America
increased from 5 to 6 percent. Like Europe and North America,
the Asia-Pacific region felt the effects of the economic crisis,
with sales declining organically to 1,657 million euros, 5.8
percent below the prior-year level. Reported sales amounted to
1,657 million euros. An increase in sales posted by
Cosmetics/Toiletries was offset by a decline in Laundry & Home
Care which resulted from the discontinuation of the business
sector´s operations in China at the end of 2008. The organic
sales performance of the Adhesive Technologies business sector
likewise experienced a downturn, although positive growth returned
in the second half of the year. The share of total sales accounted
for by this region rose to 12 percent. Sales in the growth regions
of Eastern Europe, Africa/Middle East, Latin America and Asia
(excluding Japan) increased organically by 3.7 percent, with
continuous improvement apparent during the course of the year. The
consumer businesses made a particularly important contribution to
the gains made, registering growth rates close to the double-digit
percentage mark, while developments at Adhesive Technologies were
slightly regressive. In nominal terms, sales fell by 1.0 percent to
5,114 million euros. The share of sales of the growth regions
increased from 37 to 38 percent.

Fourth quarter 2009

In the fourth quarter of 2009, Henkel was able to continue
the positive development of its consumer goods businesses from
previous quarters, while its Adhesive Technologies business
sector performed noticeably better than expected. Sales
amounted to 3,345 million euros compared to 3,541 million euros in
the same quarter of 2008. Organically sales increased by 0.6 percent
versus the prior-year quarter. Operating profit amounted to
293 million euros. Included in this figure are restructuring
charges and one-time charges and gains totaling 121 million
euros. Adjusted operating profit increased significantly from
379 million euros to 414 million euros. Adjusted return on sales
rose by 1.7 percentage points to 12.4 percent.

Due to the gain from the sale of the Ecolab stake in 2008, net
earnings for the quarter decreased by 684 million euros to 177
million euros. After deduction of minority interests in the
amount of 7 million euros, quarterly net earnings came in at 170
million euros. Earnings per preferred share (EPS) amounted to
0.39 euros, while the adjusted figure increased from 0.57 euros to
0.64 euros.

Sales and profits forecast 2010

Henkel regards the mildly encouraging market conditions prevailing in
the real economy and on the financial markets as still fragile.
The general economic climate and its further development therefore
remain difficult to gage with any degree of accuracy. Henkel´s
guidance for the current financial year is based on the assumption
of moderate economic growth overall, but without expectation of a
sustained upturn or any major growth dynamic.

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, the
company anticipates additional contributions to profitability to
emanate from the synergies arising from the integration of the
National Starch businesses and its strict cost discipline. All
these factors will positively influence the development of adjusted
operating profit (EBIT) and adjusted earnings per preferred share
(EPS). Henkel expects both metrics to undergo a noticeable
improvement of more than 10 percent compared to the levels of 2009.

This information 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, etc.
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 any forward-looking statements.

Contact:
Lars Witteck Wulf Klüppelholz
Phone: +49-211-797-2606 Phone: +49-211-797-1875
Fax: +49-211-798-4040 Fax: +49-211-798-4040

Photo material available for downloading at http://henkel.de/presse
and henkel.com/press For more detailed facts and figures relating to
fiscal 2009, please go to: http://www.henkel.com/ir.

press@henkel.com
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ots Originaltext: Henkel AG & Co. KGaA
Im Internet recherchierbar: http://www.presseportal.de

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
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Hamburg / free trade
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