Nov 11, 2015  Düsseldorf / Germany

Full-year guidance for EPS growth raised

Henkel delivers strong increase in Q3 sales and earnings

  • Sales: +8.4% to 4,590 million euros (organic: +3.2%)
  • Operating profit*: +12.3% to 778 million euros
  • EBIT margin*: +0.5 percentage points to 16.9%
  • Earnings per preferred share* (EPS): +11.1% to 1.30 euros
  • Strong organic sales growth in emerging markets: +6.5%

“Despite a persistently challenging market environment, Henkel delivered a strong performance in the third quarter. We significantly increased both sales and earnings across all business units. Organic sales in emerging markets were strong, once again making an above average contribution to growth. Mature markets showed a positive development, driven especially by the solid performance in North America. Here we grew our business for the third consecutive quarter,” said Henkel CEO Kasper Rorsted. “Adjusted operating profit and adjusted EBIT margin reached record levels in the third quarter and all business units reported a higher adjusted EBIT and adjusted EBIT margin than in the previous year.”

“The strong third quarter performance in challenging and volatile markets demonstrates our ability to adjust to the difficult economic environment. Agility and flexibility remain key success factors for us, confirming our strategy of adapting and further simplifying our structures and processes in line with the changing market conditions.”

Guidance for EPS growth raised

Henkel specified the outlook for organic sales growth and raised its guidance for EPS growth for the fiscal year 2015: “We now expect to achieve organic sales growth of around 3 percent in 2015. We continue to expect our adjusted EBIT margin to increase to around 16 percent and now anticipate an increase in adjusted earnings per preferred share of more than 10 percent.”

Sales and earnings performance in the third quarter 2015

In the third quarter of 2015, sales rose significantly by 8.4 percent to 4,590 million euros. Adjusted for positive foreign exchange effects of 2.3 percent, sales improved by 6.1 percent. Organically – i.e. adjusted for foreign exchange and acquisitions/divestments – sales rose by 3.2 percent.

The Laundry & Home Care business unit recorded strong organic sales growth of 5.5 percent. In the Beauty Care business unit, organic sales rose by a solid 2.1 percent. The Adhesive Technologies business unit also posted a solid improvement in organic sales of 2.3 percent.

After one-time charges, one-time gains and restructuring charges, adjusted operating profit improved by 12.3 percent from 693 million euros to 778 million euros. Reported operating profit (EBIT) grew by 10.4 percent from 603 million euros to 666 million euros.

Adjusted return on sales increased by 0.5 percentage points to 16.9 percent. Reported return on sales rose by 0.3 percentage points to 14.5 percent.

Henkel’s financial result of -11 million euros was at the level of the prior-year quarter. The tax rate amounted to 24.6 percent (prior-year quarter: 24.0 percent).

Adjusted net income for the quarter after deducting non-controlling interests increased by 11.0 percent, from 508 million euros to 564 million euros. Reported net income for the quarter grew by 9.8 percent, from 450 million euros to 494 million euros. After deducting 10 million euros attributable to non-controlling interests, quarterly net income increased to 484 million euros (prior-year quarter: 440 million euros).

Adjusted earnings per preferred share (EPS) rose by 11.1 percent from 1.17 euros to 1.30 euros. Reported EPS increased by 10.9 percent from 1.01 euros to 1.12 euros.

Net working capital relative to sales increased year on year by 0.4 percentage points to 6.0 percent. The rise is primarily due to acquisitions.

Business performance January through September 2015

In the first nine months of 2015, Henkel’s sales increased significantly by 1,413 million euros to 13,715 million euros, reaching a new high for Henkel. This was an increase of 11.5 percent compared to the first nine months of 2014. Adjusted for foreign exchange, sales grew by 6.4 percent. Organically – i.e. adjusted for foreign exchange and acquisitions/divestments – sales increased by 3.1 percent, with all three of Henkel’s business units contributing.

Adjusted operating profit grew by 267 million euros from 1,986 million euros to 2,253 million euros (+13.4 percent). Adjusted return on sales increased from 16.1 percent to 16.4 percent.

Adjusted net income for the first nine months, after deducting non-controlling interests, rose by 11.9 percent from 1,459 million euros to 1,632 million euros.

Adjusted earnings per preferred share (EPS) improved by 11.9 percent from 3.37 euros to 3.77 euros.

Henkel’s net financial position as of September 30, 2015 was -336 million euros (December 31, 2014: -153 million euros). The change versus year-end 2014 is mainly due to the dividend payout and payments for acquisitions

Outlook of the Henkel Group 2015

Henkel has specified its guidance for organic sales growth for the fiscal year 2015 and now expects growth of approximately 3 percent. Organic sales growth in the Laundry & Home Care business unit is expected to be between 4 and 5 percent. In the Beauty Care business unit, Henkel continues to expect organic sales growth of approximately 2 percent. Due in particular to slowing growth in China, Henkel now anticipates that organic sales growth in the Adhesive Technologies business unit will be between 2 and 3 percent. As before, Henkel expects a stable development in the share of sales from emerging markets. Henkel confirms its guidance for adjusted return on sales (EBIT) and continues to expect an increase to around 16 percent (2014: 15.8 percent) and that all business units will contribute to this improvement. Henkel has raised its guidance for adjusted earnings per preferred share and now expects an increase of more than 10 percent (2014: 4.38 euros).

* Adjusted for one-time charges/gains and restructuring charges

This document contains forward-looking statements which are based on the current estimates and assumptions made by the corporate 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, forecast 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.

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