Management system and performance indicators

Henkel plans to continue generating sustainable profitable growth through to 2020 and beyond. To this end, we have defined four strategic priorities – drive growth, accelerate digitalization, increase agility and fund growth. To enable efficient management of the Group, we align our actions to these strategic priorities translated into strategy plans for our central functions, the three business units Adhesive Technologies, Beauty Care and Laundry & Home Care, and their respective business areas.

Our management system and key performance indicators are derived from our ambition to continue generating sustainable profitable growth. The key performance indicators are organic sales growth, developments in adjusted return on sales, and growth in adjusted earnings per preferred share at constant exchange rates.

Mid- to long-term, Henkel is aiming to achieve organic sales growth of 2 to 4 percent. For adjusted earnings per preferred share, Henkel is targeting growth in the mid- to high-single digit percentage range, based on constant exchange rates.

The key performance indicators are represented in both the year and the medium-term plans. A regular comparison of these plans with current developments and expected figures enables focused management of the company based on the described performance indicators.

Moreover, we report further key performance indicators, such as adjusted earnings per preferred share, net working capital as a percentage of sales, return on capital employed (ROCE), and free cash flow, which we are aiming to further expand as described in our mid- to long-term financial ambition.

Cost of capital

The cost of capital is calculated as a weighted average of the cost of equity and debt capital (WACC). We regularly review our cost of capital in order to reflect changing market conditions. In addition, we apply different WACC rates depending on the business unit involved. These are based on business unit-specific beta factors determined from a peer group benchmark. The following two tables indicate the WACC rates before and after tax for the Henkel Group and each business unit.

WACC before tax by business unit  

Adhesive Technologies

10.50 %10.00 %

Beauty Care

9.00 %8.00 %

Laundry & Home Care

9.00 %8.00 %
Henkel Group8.00 %7.75 %
WACC after tax by business unit  
Adhesive Technologies7.25 %7.25 %
Beauty Care6.25 %6.00 %
Laundry & Home Care6.25 %6.00 %
Henkel Group5.50 %5.75 %

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

Financial Glossary Schließen

Inventories plus payments on account, receivables from suppliers and trade accounts receivable, less trade accounts payable, liabilities to customers and current sales provisions.

Financial Glossary Schließen

Capital invested in company assets and operations. Equity + interest-bearing liabilities. 

Financial Glossary Schließen

Cash flow actually available for acquisitions, dividend payments, the reduction of borrowings and contributions to pension funds.

Financial Glossary Schließen