Significant decline in demand in industrial business
Start into first quarter restrained
The start of 2009 saw the challenging world economic situation continue and this was reflected in Henkel’s business performance. While the Laundry & Home Care and Cosmetics/Toiletries businesses continue to develop very successfully, the Adhesive Technologies business sector has been affected by the worldwide difficult situation of major industry segments. Here, the declining demand for industrial commodities is particularly noticeable, as already communicated in the announcement of the figures for the full fiscal year in February 2009.
According to preliminary figures the effects of the worldwide economic crisis have resulted in an organic sales decrease of around 7 percent. Operating profit (EBIT) declined from 320 million euros to about 215 million euros, while total sales increased by around 3 percent to about 3.25 billion euros. This increase is mainly due to the acquisition of the National Starch businesses.
Sales of the Adhesive Technologies business sector decreased organically by about 19 percent. Total sales increased by around 7 percent to about 1.46 billion euros due to the businesses acquired from National Starch, while operating profit (EBIT) decreased from 150 million euros to about 45 million euros. In contrast, the Laundry & Home Care business sector increased operating profit (EBIT) from 100 million euros to about 105 million euros. At 1.01 billion euros, sales were slightly below prior-year level. Organically, sales increased slightly. The Cosmetics/Toiletries business sector increased sales organically by a good 3 percent. With sales slightly up to about 720 million euros, operating profit (EBIT) also increased disproportionately from 87 million euros to around 90 million euros.
“In the Adhesive Technologies business the decline in demand is especially noticeable in those industries, where also our industrial customers themselves and their products are affected by the recession. This concerns mainly the automotive, electronics and metal processing industries. Other segments such as the business with adhesives for the packaging and paper processing industries as well as for consumers and craftsmen prove to be more stable,“ says Kasper Rorsted, Chairman of the Henkel Management Board. “Despite the difficult development we continue to realize profit in our adhesives business and our businesses outperform the relevant markets. Moreover, the very good development of our Laundry & Home Care and Cosmetics/Toiletries business sectors is encouraging.”
Henkel has responded early to the slowdown of the economic environment and introduced appropriate countermeasures. Already one year ago a worldwide efficiency enhancement program was launched. Targeted additional countermeasures introduced in the Adhesive Technologies business sector to support growth, profitability and liquidity are already showing initial success. In addition, Henkel expects further earnings potential to arise from the integration of the National Starch businesses.
“We are certainly not satisfied with our start into the year 2009. However, we have taken the necessary measures and have the necessary financial strength to emerge from the continuing difficult economic environment further strengthened. We are still truly convinced that 2009 will not be a lost year but a major step towards achieving our long-term targets,” says Rorsted.
Henkel will inform in more detail on the development in the first quarter when publishing its Q1 report on May 6, 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.
Henkel AG & Co. KGaA
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