Henkel reports sales and earnings at record levels

Sales: +3.5% to 18,714 million euros ‏(organic: +3.1%)
Emerging markets sales growth: organic +6.8%
Strong increase of operating profit*: +8.5% to 3,172 million euros
Very strong EBIT margin* improvement: +70 basis points to 16.9%
Excellent earnings per preferred share*: +9.8% to 5.36 euros
Double-digit dividend** increase: +10.2% to 1.62 euros per preferred share

“2016 was a very successful year for Henkel. In a challenging market environment, we achieved again new record levels for sales and earnings and met our financial targets for the fiscal year. We delivered a high quality of earnings. For the first time we reached an adjusted operating profit of more than 3 billion euros,” said Henkel CEO Hans Van Bylen. “In September, we closed the acquisition of Sun Products, which was the second-largest transaction in our company’s history. This marks a major step for Henkel and substantially strengthens our Laundry & Home Care business in North America. In November, we presented our new ambitions and strategic priorities for 2020 and beyond. Based on our strong foundation, our excellent results in 2016 and our clear priorities for the coming years, we are committed to continue our successful development in the future.”

Important facts and figures about our company at a glance.

Outlook for 2017

Looking at the current fiscal year 2017, Hans Van Bylen said: “We expect the highly volatile and uncertain market environment to continue. Nevertheless, based on our clear strategic direction, our strong global team and our innovative brands and technologies with leading market positions, we are well-positioned for further profitable growth: For the full fiscal year 2017, we expect organic sales growth of 2 to 4 percent. We expect our adjusted EBIT margin to increase to more than 17.0 percent and adjusted earnings per preferred share to grow between 7 and 9 percent.”

Sales and earnings performance 2016

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Annual Report 2016

At 18,714 million euros, sales in the fiscal year 2016 reached a new record level and grew by 3.5 percent compared to the previous year. Adjusted for foreign exchange effects, sales grew by 7.1 percent. The positive effect from acquisitions and divestments amounted to 4.0 percent, mainly as a result of acquiring The Sun Products Corporation. Organic sales, which exclude the impact of foreign exchange and acquisitions/divestments, showed a solid increase of 3.1 percent.

All business units reported solid organic sales growth. The Adhesive Technologies business unit achieved organic sales growth of 2.8 percent. Sales in the Beauty Care business unit grew organically by 2.1 percent and the Laundry & Home Care business unit recorded organic sales growth of 4.7 percent.

After allowing for one-time charges, one-time gains and restructuring charges, adjusted operating profit ‏(EBIT) improved by 8.5 percent to a new high of 3,172 million euros (previous year: 2,923 million euros). All three business units contributed to this positive performance. Reported operating profit (EBIT) amounted to 2,775 million euros compared to 2,645 million euros in the previous year.

Adjusted return on sales (EBIT margin) rose by 0.7 percentage points from 16.2 percent to 16.9 percent, reaching a new record level. Reported return on sales increased by 0.2 percentage points to 14.8 percent (previous year: 14.6 percent).

The financial result improved from -42 million euros to -33 million euros. The financing costs relating to the acquisition of The Sun Products Corporation were more than offset by the positive effects from the repayment of the hybrid bond.

Adjusted net income for the year after non-controlling interests increased by 10.0 percent to 2,323 million euros (2015: 2,112 million euros). After deducting 40 million euros attributable to non-controlling interests, reported net income increased by 6.9 percent from 1,921 million euros to 2,053 million euros.

Adjusted earnings per preferred share grew by 9.8 percent from 4.88 euros to 5.36 euros and reached a new record level. Reported earnings per preferred share rose from 4.44 euros to 4.74 euros.

The Management Board, Supervisory Board and Shareholders’ Committee will propose to the Annual General Meeting on April 6, 2017 an increase in the dividend per preferred share of 10.2 percent to 1.62 euros (previous year: 1.47 euros) and an increase in the dividend per ordinary share of 10.3 percent to 1.60 euros (previous year: 1.45 euros). This would be the highest dividend in the company’s history and equal a payout ratio of 30.3 percent.

Net working capital as a percentage of sales improved by 0.3 percentage points from 3.8 percent to 3.5 percent.

The net financial position closed the year at -2,301 million euros (December 31, 2015: 335 million euros). The change compared to the end of the previous year was primarily due to payments for acquisitions.

Outlook for the Henkel Group 2017

Henkel expects to generate organic sales growth of 2 to 4 percent in the fiscal year 2017. Henkel expects that each business unit will generate organic sales growth within this range. For adjusted return on sales ‏(EBIT), Henkel expects an increase versus the prior year to more than 17.0 percent. Henkel expects an increase in adjusted earnings per preferred share of between 7 and 9 percent.

* Adjusted for one-time charges/gains and restructuring charges
** Proposal to shareholders for the Annual General Meeting on April 6, 2017.

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 the 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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