02/02/2006, Düsseldorf


Henkel delivers strong 2005

The Henkel Group's results for fiscal 2005 substantially exceeded the previous year's, with sales up 13.0 percent and comparable operating profit (EBIT) increasing 16.7 percent. Henkel's free cash flow also significantly improved to 684 million euros. The group financial statements have already been audited.

"2005 was another successful year for Henkel. We generated profitable growth, further expanded our market positions and achieved our primary targets" said Ulrich Lehner, Chairman of the Management Board of Henkel KGaA. "The introduction of numerous innovative products, strong performance in emerging markets as well as the on-schedule implementation of measures to enhance our efficiency and to reduce our net working capital all contributed to the success we achieved."

Sales for the Henkel Group in fiscal 2005 were 11,974 million euros, an increase of 13.0 percent above the previous year, and 12.0 percent after adjusting for foreign exchange. Organic growth - growth adjusted for foreign exchange and acquisitions/divestments - was 3.5 percent.

Operating profit (EBIT) rose to 1,162 million euros, or 16.7 percent above the comparable prior-year figure. Return on sales (EBIT) improved 0.3 of a percentage point to 9.7 percent.

Comparable financial items decreased to -120 million euros. This is primarily due to the exchange of the Clorox participation and the absence of the respective income, which in 2004 amounted to 100 million euros. Earnings before tax, measured on a comparable basis, rose by 3.5 percent to 1,042 million euros. Net earnings were 770 million euros, 2.9 percent above the comparable level for 2004. After deducting minority interests, amounting to 13 million euros, earnings after minorities were 757 million euros. Earnings per preferred share, measured on a comparable basis, increased 1.3 percent to 5.31 euros.

The measures introduced to reduce net working capital had a positive effect, particularly in the fourth quarter. This is also reflected in a marked increase in free cash flow to 684 million euros.

Given the positive development in operating profit and the company's solid cash flow generation, the Management Board will, with the agreement of the Supervisory Board and the Shareholders' Committee, propose to the Annual General Meeting an increase in the dividends per preferred share from 1.30 euros to 1.36 euros, and per ordinary share from 1.24 euros to 1.30 euros.

Business Sector Performance

Laundry & Home Care sales rose 13.0 percent above the previous year to 4,088 million euros. Organic growth was 3.0 percent. Operating profit increased to 433 million euros, or 23.7 percent above the comparable 2004 level.

Cosmetics/Toiletries sales increased 6.2 percent to 2,629 million euros. Organic growth was 1.3 percent. Operating profit improved 10.5 percent above the comparable prior-year figure, to 321 million euros.

Consumer and Craftsmen Adhesives sales rose by 20.5 percent to 1,742 million euros. Organic growth amounted to 5.0 percent. Operating profit rose to 185 million euros, or 9.7 percent above the comparable 2004 level.

Henkel Technologies sales increased 17.0 percent to 3,266 million euros. Organic growth was 5.5 percent. Operating profit improved 15.9 percent above the comparable figure for the previous year, reaching 345 million euros.

Fourth quarter 2005

At 3,088 million euros, sales of the Henkel Group in the fourth quarter of 2005 were 13.5 percent above prior year quarter, and up 8.7 percent after adjusting for foreign exchange. Organic growth was 3.0 percent. At 301 million euros, operating profit was 8.9 percent above the comparable prior-year figure. Here, the first-time recognition of share-based payments as an expense had a reducing effect on operating profit. Comparable earnings per preferred share amounted to 1.41 euros.

Examination and approval of the group financial statements by the Supervisory Board is scheduled for mid-February. Henkel will present its 2005 group financial statements (the figures for the previous year have been restated and rendered comparable in order to improve the information content - see attached notes) at the press and analysts' conference in Düsseldorf on February 21, 2006.


The Henkel Group expects a slight improvement in the underlying market conditions and intends again to grow faster than the relevant markets in 2006.

The Henkel Group expects to achieve an organic sales growth (after adjusting for foreign exchange and acquisitions/divestments) of 3 to 4 percent in 2006. Henkel expects an increase in operating profit (EBIT) of around 10 percent after adjusting for foreign exchange. Earnings per preferred share (EPS) is also expected to rise by around 10 percent.

Earnings forecasts include profit contributions from assets held for sale.

This document contains forward-looking statements which are based on the current estimates and assumptions made by the corporate management of Henkel 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 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.