02/01/2007, Düsseldorf / Germany

 

Henkel reports another strong year

Increase in dividends proposed

  • Sales: plus 6.4 percent to 12.74 billion euros
  • Strong organic sales growth: plus 6.0 percent
  • Operating profit (EBIT): plus 11.7 percent to 1,298 million euro
  • Net earnings: plus 13.1 percent to 871 million euros 

Henkel’s sales and profits enjoyed another significant increase in fiscal 2006. Particularly encouraging was the strong organic sales growth, i.e. sales generated from existing businesses. “2006 was another highly successful year for Henkel – one in which we benefited from the introduction of numerous innovative new products and focused market investments,” said Ulrich Lehner, Chairman of the Management Board of Henkel KGaA. “We have also further enhanced the attractiveness of our portfolio and expanded our presence in the important growth regions.”

In fiscal 2006, Henkel sales were 12,740 million euros, an increase of 6.4 percent over the prior year. Organic sales growth – i.e. growth adjusted for foreign exchange and acquisitions/divestments – was 6.0 percent, exceeding the already good growth of the previous year.

Operating profit (EBIT) improved by 11.7 percent versus the level for the previous year, to 1,298 million euros. Included in this amount is a positive balance of exceptional items realized in the fourth quarter, totaling 23 million euros. Return on sales (EBIT) rose 0.5 percentage points to 10.2 percent.

Financial items were on the prior-year level, amounting to -122 million euros. Earnings before tax increased significantly, up 12.9 percent to 1,176 million euros. Net earnings also increased substantially, to 871 million euros, 13.1 percent above the prior-year figure. Earnings after minority interests were 855 million euros. This corresponds to an increase over the prior year by 12.9 percent. Earnings per preferred share likewise substantially exceeded the previous year, up 12.6 percent to 5.98 euros.

The measures initiated to reduce net working capital again had a positive effect in 2006. This is reflected in a further increase in free cash flow to 786 million euros, 102 million euros above the prior-year level.

In view of the positive development in earnings, the Management Board will, with the agreement of the Supervisory Board and the Shareholders’ Committee, propose to the Annual General Meeting increases in dividends to 1.50 euros per preferred share (previous year: 1.36 euros), and 1.44 euros per ordinary share (previous year: 1.30 euros).

Business Sector Performance

Organic sales growth of the Laundry & Home Care business sector was a very encouraging 4.6 percent. After the sale of the Dial foods business, total sales of 4,117 million euros were 0.7 percent above the level of the previous year. Operating profit increased versus prior year by 3.7 percent to 449 million euros.

Sales of the Cosmetics/Toiletries business sector rose by 8.9 percent to 2,864 million euros. Organic growth was 4.1 percent compared to the previous year. Operating profit rose to 359 million euros or 11.7 percent above the prior-year figure.


Sales of the Consumer and Craftsmen Adhesives business sector grew 13.5 percent to 1,977 million euros. Organic growth was 7.8 percent. Operating profit increased to 209 million euros, 13.0 percent above the figure for the previous year.

The Henkel Technologies business sector posted an increase in sales of 8.2 percent to 3,533 million euros. Organic growth was 8.9 percent. Operating profit improved by 7.2 percent versus prior year, to 370 million euros.


Fourth quarter 2006

Henkel sales in the fourth quarter of 2006 were 3,202 million euros or 3.7 percent above the prior-year quarter. Organic sales grew 6.7 percent. Operating profit rose versus the previous year by 7.3 percent to 323 million euros. This figure includes a positive balance of exceptional items realized in the fourth quarter, totaling 23 million euros. Earnings per preferred share rose by 13 eurocents to 1.54 euros.

The consolidated annual financial statements have already been certified by the auditors. Examination and approval of the annual financial statements by the Supervisory Board is scheduled for mid-February. Henkel will be presenting the 2006 consolidated financial statements at the fiscal press and analysts’ conference in Düsseldorf on February 27, 2007.
 

Outlook

Henkel expects to achieve organic sales growth (after adjusting for foreign exchange and acquisitions/divestments) of 3 to 4 percent in 2007.

Henkel expects an increase in operating profit (EBIT) – adjusted for foreign exchange – in excess of the rise in organic sales growth.

Henkel also expects an increase in earnings per preferred share (EPS) in excess of the rise in organic sales growth.