Nov 17, 2016 Düsseldorf / Germany
Henkel 2020+: Focus on growth, digitalization and agility
- Henkel pursues compelling ambition for 2020 and beyond:
- Continue to deliver profitable growth and attractive returns
- More customer-focused, innovative, agile, and fully digitalized
- Targeted acquisitions to strengthen portfolio
- Clear strategy with four priorities:
- Drive growth
- Accelerate digitalization
- Increase agility
- Fund growth
- Financial ambition for 2020:
- Organic sales growth: average 2% to 4%
- Adjusted* earnings per preferred share: 7% to 9% CAGR**
- Improve adjusted* EBIT margin
- Expand free cash flow
Today, Henkel presented its new strategic priorities and financial ambition, which will shape Henkel until 2020 and beyond – summarized as “Henkel 2020+”. Based on its strong foundation, Henkel aims to generate continued profitable growth by focusing on four strategic priorities: Driving growth, accelerating digitalization, increasing agility, and funding growth.
“We will build our future on a strong foundation, which will enable us to generate sustainable profitable growth in the coming years. We have an excellent track record of outperforming our markets, a balanced and well-diversified business portfolio with exciting brands, innovative technologies and leading positions in highly attractive markets and categories – and a passionate global team with a strong culture, common purpose and shared values,” said Hans Van Bylen, Chief Executive Officer of Henkel.
“At Henkel, we share the common purpose to create sustainable value – for our customers and consumers, our employees, our shareholders, as well as for our stakeholders and the communities in which we operate. In addition, our values guide all our actions, decisions and behavior,” said Hans Van Bylen.
Ambition for 2020+: Continue Henkel’s successful development
“We want to continue Henkel’s successful development in a highly volatile business environment, characterized by globalization, accelerating digitalization, rapidly changing markets, and an increasing relevance of resource scarcity and social responsibility. By 2020 and beyond, our ambition for Henkel is to generate more profitable growth and to become more customer-focused, more innovative, more agile, and fully digitized in our internal processes and customer-facing activities. In addition, we aim to promote sustainability in all our business activities, reinforcing our leading position,” Hans Van Bylen explained.
“In order to achieve this ambition, we will focus on driving growth, accelerating digitalization across all our businesses and functions, increasing agility in our organization and teams, and funding our growth through targeted initiatives. In addition to organic growth, acquisitions will continue to be an integral part of our strategy in order to further strengthen our portfolio. We will begin to implement our strategic priorities in a highly energized way from day one, to continue our successful development and create sustainable value,” said Hans Van Bylen, summarizing Henkel’s future strategic direction.
Profitable growth and attractive returns
In a highly volatile and uncertain market environment, Henkel has defined a concrete financial ambition for the period until 2020: Over the next four years, Henkel aims to achieve an average organic sales growth between 2 and 4% with an over-proportionate contribution from emerging markets. For adjusted earnings per preferred share, Henkel targets a compound annual growth rate (CAGR) of 7 to 9%. This ambition for EPS growth includes the impact of currency developments and excludes major acquisitions as well as share buy-back. In addition, Henkel aims for continued improvements of its adjusted EBIT margin and free cash flow expansion.
“We have set financial ambitions for 2020 which reinforce our strong confidence in our ability to deliver excellent financial performance and attractive returns,” said Carsten Knobel, Chief Financial Officer of Henkel. “We will continue to focus on cost discipline, improving our profitability, optimizing net working capital and generating strong cash flows. This will enable us to further invest in both organic and inorganic growth.”
Overview of strategic priorities
- Drive growth
- Accelerate digitalization
- Increase agility
- Fund growth
Driving growth in mature and emerging markets is a key Strategic priority for Henkel. In order to achieve this, we are implementing a range of targeted initiatives to further deepen the relationships with customers and consumers worldwide, strengthen our leading brands and technologies, develop exciting innovations and services, and capture new sources of growth.
Accelerating digitalization helps us to successfully grow our business, strengthen the relationships with our customers and consumers, optimize our processes and transform the entire company. We are implementing a range of initiatives to drive our digital business, leverage Industry 4.0, and eTransform the organization.
In a highly volatile and dynamic business environment, increasing the agility of the organization is a critical success factor for Henkel. This requires energized and empowered teams, fastest time-to-market as well as smart and simplified processes.
In order to fund growth, we are implementing new approaches to optimize resource allocation, focus on “Net Revenue Management,” further increase efficiency in our structures, and continue to expand our Global Supply Chain organization. Together, these initiatives will contribute to further improving profitability and enable us to fund our growth ambitions for 2020 and beyond.
Sustainable value generation
“Henkel aims to create sustainable value in all dimensions of its business activities. This purpose unites all of our employees and is aligned with a set of strong values: customers and consumers, people, financial performance, sustainability, and family business,” said Hans Van Bylen.
To reinforce its commitment to sustainability, Henkel has defined clear targets to improve its resource efficiency, for example by creating more value with less resources. Henkel has defined ambitious sustainability milestones which would result in an overall efficiency improvement of 75 percent by 2020 compared to 2010.
Engaging all Henkel employees globally to act as sustainability ambassadors toward customers and consumers, business partners and society will be a driver of Henkel’s sustainability leadership.
* Adjusted for one-time charges/gains and restructuring charges
** CAGR: Compound Annual Growth Rate
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. This document has been issued for information purposes only and is not intended to constitute an investment advice or an offer to sell, or a solicitation of an offer to buy, any securities.