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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 and have translated them 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.

Over the years until 2020, Henkel is aiming to achieve organic sales growth of 2 to 4 percent on average. For adjusted earnings per preferred share, Henkel is targeting a compound annual growth rate (CAGR) of 7 to 9 percent. We are also aiming for a continued improvement of the adjusted EBIT margin.

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 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 financial ambition for 2020.

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

10.25 %

10.50 %

Beauty Care

9.00 %

9.00 %

Laundry & Home Care

9.00 %

9.00 %
Henkel Group7.75 %8.00 %
WACC after tax by business unit
Adhesive Technologies7.00 %7.25 %
Beauty Care6.25 %6.25 %
Laundry & Home Care6.25 %6.25 %
Henkel Group5.50 %5.50 %

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

Compound annual growth rate Year-over-year rate of growth, e.g. of an investment.

Compound annual growth rate Schließen

Earnings Before Interest and Taxes (EBIT) adjusted for exceptional items in the form of one-time charges, one-time gains and restructuring expenses.

Adjusted EBIT Schließen

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

Net working capital Schließen

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

Capital employed Schließen

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

Free cash flow Schließen