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 Outlook and Financial Targets 2016

  • Outlook for the Henkel Group 2016
  • Financial Targets 2016

We updated our guidance for full fiscal 2016 in August of this year:

We expect the Henkel Group to generate organic sales growth of 2 to 4 percent. We anticipate that each business unit will generate growth within this range.

Regarding the share of sales from our emerging markets, we expect a slight decrease compared to the prior-year level due to foreign exchange effects.

The starting point for our expected organic sales growth is our strong competitive position. We have consolidated and further developed this in recent years through our innovative strength, strong brands and leading market positions, as well as the quality of our portfolio.

For adjusted return on sales (EBIT), we forecast an increase to more than 16.5 percent for fiscal 2016 and anticipate that the adjusted return on sales of each individual business unit will be above the level of the previous year. We expect an increase in adjusted earnings per preferred share of between 8 and 11 percent.

We confirm this guidance for fiscal 2016.

Furthermore, we have updated the following expectations for 2016:

  • Prices for raw materials, packaging, and purchased goods and services approximately at the level of the previous year (unchanged)
  • Restructuring charges of 250 to 300 million euros (previously: 150 to 200 million euros); increase due to adaptation of structures in North America as a result of the acquisition of The Sun Products Corporation
  • Investments in property, plant and equipment and intangible assets of between 550 and 600 million euros (previously: 650 to 700 million euros)

Dividends

In accordance with our dividend policy and depending on the company’s asset and profit positions as well as its financial requirements, we expect a dividend payout by Henkel AG & Co. KGaA in the range of 25 percent to 35 percent of net income after non-controlling interests, and adjusted for exceptional items.

Capital expenditures

We are planning to increase our investments in property, plant and equipment and intangible assets to between 650 and 700 million euros in fiscal 2016. We intend to allocate our budget to expanding our businesses in the emerging markets and the mature markets in approximately equal proportions.

Considerable investments are planned in the Laundry & Home Care and Beauty Care business units for expanding production in Europe and Africa/Middle East. In the Adhesive Technologies business unit, the focus will be on further expanding our production capacity in the emerging markets of Asia and Eastern Europe. In addition, investments in IT infrastructure will contribute substantially to optimizing our processes.

Guidance versus performance 2016

Guidance for 20161Results first nine months 2016

Organic sales growth
 


Henkel Group: 2–4 percent
      
All business units within this range
 
 

Henkel Group: 3.0 percent
  
Laundry & Home Care: 4.7 percent
Beauty Care: 2.5 percent
Adhesive Technologies: 2.4 percent

Percentage of sales
from emerging markets
Slight decrease compared to
prior-year level
Slight decrease compared to
prior-year level
Adjusted return on
sales (EBIT)
Increase to more than 16.5 percentIncrease to 17.4 percent
Adjusted earnings
per preferred share
Increase of 8–11 percentIncrease of 8.5 percent
1 Updated in August 2016.

Growth in revenues after adjusting for effects arising from acquisitions, divestments and foreign exchange differences – i.e. “top line” growth generated from within.

Organic sales growth Schließen

Abbreviation for Earnings before Interest and Taxes. Standard profit metric that enables the earning power of the operating business activities of a company to be assessed independently of its financial structure, enabling comparability between entities where these are financed by varying levels of debt capital. 

EBIT Schließen

Abbreviation for “Kommanditgesellschaft auf Aktien.” A KGaA is a company with a legal identity (legal entity) in which at least one partner has unlimited liability with respect to the company’s creditors (personally liable partner), while the liability for such debts of the other partners participating in the share-based capital stock is limited to their share capital (limited shareholders). 

KGaA Schließen

Proportion of equity attributable to third parties in subsidiaries included within the scope of consolidation. Previously termed “minority interests.” Valued on a proportional net asset basis. A pro-rata portion of the net earnings of a corporation is due to shareholders owning non-controlling interests.

Non-controlling interests Schließen

By the end of 2016, we aim to generate net sales of 20 billion euros in order to further strengthen our position in the competitive global market environment. The setting of our target reflects the growing importance of emerging markets. We aim to continue achieving above-average growth in these markets and to generate net sales of 10 billion euros there by the end of 2016.

We intend to continue our outstanding financial performance through a balanced combination of growth and increasing profitability. Consequently, we aim to increase adjusted earnings per preferred share by an average of 10 percent per year (CAGR: compound annual growth rate) between 2013 and 2016.

The definition of our financial targets up to the end of 2016 assumes not only that we will constantly adapt our structures to market conditions, but also that we will strive to continuously optimize our portfolio. This will encompass both smaller and mid-sized acquisitions as well as divestments or the discontinuation of non-strategic activities (representing total sales of around 500 million euros in the period between 2013 and 2016). Potential major acquisitions or divestments are not accounted for in the financial targets.

We have defined clear selection criteria for possible acquisitions to make sure they fit our strategy, both in terms of financial attractiveness and implement­ability. The focus in Laundry & Home Care and Beauty Care will center on strengthening our categories in the respective regions, while the focus in Adhesive Technologies will primarily be on advancing technology leadership.

Progress in fiscal 2015:

  • Sales increased in 2015 by 10.1 percent to 18,089 million euros. This positive sales performance was comprised of solid organic growth of 3.0 percent, positive foreign exchange effects of 4.4 percent, and acquisitions that contributed 2.7 percent.
  • Sales in our emerging markets matched the strong performance of previous years, with organic growth coming in at 5.9 percent. Nominal sales amounted to 7,797 million euros.
  • In a difficult environment, we increased adjusted earnings per preferred share by 11.4 percent in 2015 compared to the level of 2014.
  • We also effectively strengthened our position in all three business units through acquisitions.

Year-over-year rate of growth, e.g. of an investment, over a defined period. 

Compound annual growth rate Schließen

Additional Information

Investor Relations Team
Investor Relations Henkel AG & Co. KGaA 40589 Düsseldorf/Germany Henkelstraße 67