EANS-News: Henkel AG & Co. KGaA / Henkel continues solid performance in Q2

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quarterly report/Henkel

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

Düsseldorf (euro adhoc) - August 10, 2011

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

Henkel continues solid performance in Q2

• 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

Düsseldorf, Germany - "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.

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.

Financial result eased from -35 million euros to -41 million euros,
due to a decline in the balance arising from currency hedging
activities. The tax rate amounted to 24.4 percent (prior-year
quarter: 27.5 percent).

Net income for the quarter rose by 33.9 percent, from 280 million
euros to 375 million euros. After deduction of non-controlling
interests totaling 9 million euros quarterly net income amounted to
366 million euros (prior-year quarter: 273 million euros).
Adjusted quarterly net income after non-controlling interests
amounted to 343 million euros compared to 315 million euros in
the second quarter of 2010. Earnings per preferred share (EPS) rose
from 0.63 euros to 0.85 euros. The adjusted figure was 0.79 euros
compared to 0.73 euros in the prior-year quarter.

Further improvement was made in the management of net working
capital. Compared to the prior year, the ratio of net working
capital to sales improved by 0.3 percentage points to 8.4
percent. Net debt as of June 30, 2011 amounted to 2.2 billion
euros.

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. Net
income for the half year rose by 21.8 percent, from 546 million
euros to 665 million euros. After deduction of non-controlling
interests totaling 14 million euros half-yearly net income amounted
to 651 million euros (prior-year period: 532 million euros).
Earnings per preferred share (EPS) improved from 1.23 euros to
1.51 euros, while the adjusted figure rose by 14.3 percent, from
1.33 euros to 1.52 euros.

Business sector performance in the second quarter 2011

The Laundry & Home Care business sector increased organic sales by
3.7 percent. This significant rise, achieved despite the further
contraction of the relevant markets, was due to continuing strong
volume growth of 2.9 percent and a price effect of 0.8 percent
compared to the prior-year quarter, positive for the first time
since the third quarter of 2009. In nominal terms, sales came in at
1,076 million euros compared to 1,086 million in the prior-year
quarter.

Despite mixed market developments, all the regions contributed to
the organic growth achieved. Particularly positive momentum came
from the growth regions of Eastern Europe and Africa/Middle East.
Some markets in this region have nevertheless not yet fully
recovered from their political upheavals. In Tunisia and Egypt
particularly, Henkel could not yet fully achieve the
double-digit growth rates of the past, although business in these
countries did experience a significant revival. Sales in North
America increased substantially, despite the markets undergoing
further contraction. Sales growth was also achieved in Western
Europe - due particularly to further strong growth in Germany.
This positive performance in contracting markets resulted in a
historic high of Henkel´s global market share.

Adjusted operating profit increased by 2.8 percent to 140
million euros. Adjusted return on sales improved by 0.5 percentage
points to 13.0 percent. Both these key financials were therefore
well above the level of the prior-year quarter, although the
significant increase in raw material prices during this quarter
exerted a particularly negative effect. Operating profit rose by
14.8 percent to 157 million euros. Included in this figure is a
gain arising from the disposal of Henkel´s branded consumer goods
business in India.

The Cosmetics/Toiletries business sector posted a substantial
increase in organic sales of 5.4 percent in the second quarter,
continuing the sequence of very good performances in recent
periods. Once again, the rate of growth outstripped that of the
relevant markets and volumes experienced a significant rise. Driven
by strong innovations, the business sector succeeded in further
expanding its market shares, with new record levels once again
the result. Moreover, higher average selling prices were also
achieved, leading to a positive price effect for the first time in
four quarters. Sales came in at 881 million euros, 1.9 percent above
the figure for the prior-year quarter.

As in previous quarters, particular impetus came from the excellent
performance achieved in the growth regions of Eastern Europe,
Africa/Middle East, Latin America and Asia. Overall, we were once
again able to expand sales in the emerging markets with
double-digit increases. However, sales growth was also achieved
in the mature markets. In North America particularly, Henkel
generated a significant improvement in sales thanks to a number of
new product launches. Business performance in the mature markets of
Asia-Pacific was similarly very good. Sales in Western Europe
remained below the strong levels of the prior- year quarter.

Adjusted operating profit rose by a substantial 11.0 percent to
124 million euros. Adjusted return on sales improved by 1.2
percentage points to a new record of 14.1 percent. Once more,
cost reductions and efficiency enhancements made a substantial
contribution to the increase in earnings. Again in the second
quarter, the business sector succeeded in offsetting the increase in
raw material and packaging prices. Operating profit rose by 24.7
percent to 140 million euros, with the one-time gain from the sale
of the branded consumer goods business in India making a positive
contribution.

Once again in the second quarter of 2011, the Adhesive
Technologies business sector significantly outperformed its
relevant markets, increasing sales to 1,963 million euros, an
improvement of 3.9 percent versus an already strong prior-year
quarter. Both volume improvements and selling price increases played
their part in this positive development. Organic growth came in at
8.9 percent.

All the regions and business segments contributed to this
substantial rise in sales. Once again, the growth regions
generated particular momentum, with Africa/Middle East, Eastern
Europe and Asia registering the highest growth rates. However,
the mature markets also saw an increase in sales.

Adjusted operating profit again improved significantly versus the
prior-year quarter, by 9.0 percent to 278 million euros.
Adjusted return on sales therefore also rose, by 0.7 percentage
points to a new high of 14.2 percent. Although further steep
rises in raw material and packaging prices exerted a distinctly
negative effect, the ensuing cost increases were significantly
outweighed by further efficiency enhancement measures and
selling price increases. Compared to the prior-year quarter,
operating profit rose by 21.1 percent to 269 million euros.
Included in this figure is the one-time gain arising from the
disposal of the company´s roofing membrane business operated under
the Wolfin brand.

Regional performance

In the Western Europe region, sales grew by 2.4 percent to 1,425
million euros; the organic improvement was 1.5 percent. Positive
growth rates posted by Adhesive Technologies and Laundry & Home
Care compensated for the decline registered by the
Cosmetics/Toiletries business sector. Sales in the Eastern Europe
region rose by 7.3 percent to 729 million euros. Organic growth
was even higher at 11.0 percent. All three business sectors
contributed to this improvement, particularly Adhesive
Technologies with a double-digit growth rate. Expansion in the
Africa/Middle East region continued to be hampered by political
unrest in some countries. Sales there totaled 231 million
euros compared to 236 million euros in the comparable period of the
previous year. Organically, however, sales rose by 9.5 percent,
supported in particular by Adhesive Technologies and
Cosmetics/Toiletries. Sales generated in the North America region
decreased by 5.2 percent to 676 million euros, with foreign
exchange effects exerting major negative impact. Organically, on
the other hand, sales increased by 6.1 percent with support from
all three business sectors. The region of Latin America recorded a
sales increase of 5.0 percent to 272 million euros. Organic growth
came in at 9.6 percent, with all three business sectors
contributing. The Asia-Pacific region registered sales growth of
4.8 percent to 587 million euros. In organic terms, sales again saw a
double- digit rise of 12.1 percent, supported in particular by
Adhesive Technologies and Cosmetics/Toiletries. Developments in
Japan only exerted an influence on local sales growth.

In the growth regions of Eastern Europe, Africa/Middle East, Latin
America and Asia (excluding Japan), sales rose by 4.7 percent to
1,674 million euros. Organic growth amounted to 11.6 percent,
keeping it in the double-digit percentage range. Particularly
Adhesive Technologies and Cosmetics/Toiletries contributed to this
growth. The share of sales attributable to the growth regions
increased from 41 percent in the prior-year quarter to 42 percent
this time.

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.

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.

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 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/p
ress/publication-report-q2-half-year-2011-33054.htm

press@henkel.com

Further inquiry note:
Irene Honisch
Corporate Communications
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