Menu
Search

Management system and performance indicators

At Henkel, we shape our future guided by a long-term strategic framework based on our purpose, our vision, our mission and values. This framework will help us to win the 20s for Henkel with a clear focus on purposeful growth.

Our management system and key performance indicators are derived from our aspiration to generate purposeful growth. The key performance indicators are organic sales growth, development of adjusted return on sales, and growth in adjusted earnings per preferred share at constant exchange rates.

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

The key performance indicators are represented in both our year and our medium-term plans. A regular comparison of these plans with current developments and the regular reporting of 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 ambitions.

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.

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

WACC before tax by business unit

2019

2020

Adhesive Technologies

10.00 %

9.00 %

Beauty Care

8.00 %

7.25 %

Laundry & Home Care

8.00 %

7.25 %

Henkel Group7.75 %

7.25 %

  

WACC after tax by business unit

2019

2020

Adhesive Technologies

7.25 %

6.75 %

Beauty Care

6.00 %

5.25 %

Laundry & Home Care

6.00 %

5.25 %

Henkel Group5.75 %

5.25 %