2/20/2014, Düsseldorf / Germany
Henkel delivers on 2013 financial targets
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Strong performance in a challenging environment
"2013 was a very successful year for Henkel. Despite a challenging and highly competitive market environment, we achieved our financial targets and made significant progress in implementing our strategy 2016,” said Henkel CEO Kasper Rorsted. “We achieved profitable growth and increased market share in all our business units. All regions contributed to the solid organic sales growth. As in previous years, emerging markets showed a very strong development. In these countries, however, foreign exchange effects had a stronger impact on reported sales.”
Looking at the fiscal year 2014, Rorsted said: “The economic environment remains challenging and we expect persisting foreign exchange effects, particularly in the first half of the year. Thus, we will continue to further simplify and improve our processes and structures, making us more flexible and more efficient. We are focused on implementing our strategy in order to deliver on our ambitious financial targets for 2016.”
“For the full fiscal year 2014 we expect organic sales growth to be between 3 and 5 percent. We expect our adjusted EBIT margin to increase to around 15.5 percent and adjusted earnings per preferred share to increase in the high single digits,” Rorsted said, summarizing the financial targets for 2014.
Commenting on the proposed increase of Henkel's dividend payout ratio, Rorsted said: "We want our shareholders to benefit from our improved performance. Our significantly increased profitability and financial strength allow us to raise the dividend payout ratio from around 25 percent currently to 30 percent for 2013. In the future, the ratio should be between 25 percent and 35 percent of net income after non-controlling interests and adjusted for exceptional items. The dividend increase will not impact our strategic flexibility or our conservative financial strategy."
Sales and earnings performance 2013
At 16,355 million euros, sales in the fiscal year 2013 remained slightly below the prior-year level. Organic sales growth, which excludes the impact of foreign exchange and acquisitions/divestments, reached a solid 3.5 percent. This growth was driven by both price and volume, with the rate of increase accelerating in the course of the year. Organic growth in the first half year amounted to 3.2 percent, rising to 3.8 percent in the second half.
In all business units, sales rose organically and market shares increased further in relevant markets. The Laundry & Home Care business unit showed very strong organic sales growth of 5.7 percent. Solid organic sales growth of 3.0 percent was achieved by the Beauty Care business unit. At 2.7 percent, the Adhesive Technologies business unit likewise showed a solid increase in organic sales.
After allowing for one-time charges, one-time gains and restructuring charges, adjusted operating profit (EBIT) rose by 7.8 percent, from 2,335 million euros to 2,516 million euros, with all three business units contributing. Reported operating profit (EBIT) amounted to 2,285 million euros compared to 2,199 million euros in the previous year.
Adjusted return on sales (EBIT margin) rose by 1.3 percentage points, from 14.1 percent to 15.4 percent. Reported return on sales amounted to 14.0 percent compared to 13.3 percent in the previous year.
Financial result improved by 68 million euros to -113 million euros, due primarily to a stronger net financial position and an improved result from currency-hedging activities. Moreover, net interest expense for pension obligations declined. The tax rate was 25.2 percent compared to 24.4 percent in the previous year.
Adjusted net income after deducting non-controlling interests rose by 12.1 percent, from 1,573 million euros to 1,764 million euros. Reported net income increased by 6.5 percent, from 1,526 million euros in the previous year to 1,625 million euros. After deduction of non-controlling interests of 36 million euros, net income was 1,589 million euros (previous year: 1,480 million euros). Earnings per preferred share (EPS) rose from 3.42 euros to 3.67 euros. The adjusted figure was 4.07 euros compared to 3.63 euros in the previous year. Before application of IAS 19 revised, the prior-year figure was 3.70 euros. Compared to this figure, adjusted earnings per preferred share increased by 10.0 percent.
The Management Board, Supervisory Board and Shareholders’ Committee propose that the Annual General Meeting approves a 28.4 percent higher dividend per preferred share of 1.22 euros (previous year: 0.95 euros) and a 29.0 percent increased dividend per ordinary share of 1.20 euros (previous year: 0.93 euros). The payout ratio would then amount to 30.0 percent.
The ratio of net working capital to sales once again improved significantly, ending the year at 2.3 percent, 1.5 percentage points below the level at the end of 2012. As of December 31, 2013, the net financial position changed from a net debt to a net cash position of 959 million euros. Net debt as of December 31, 2012 amounted to 85 million euros.
* When applying IAS 19 revised to the prior year, growth amounts to 12.1 percent.
This document contains forward-looking statements which are based on the current estimates and assumptions made by the executive 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 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.