Henkel achieves new highs in sales and earnings

Stocks and Financial Services Press Releases Tuesday March 13, 2018 17:50
Bangkok--13 Mar--124 Communications Consulting
  • Sales increase to 20,029 million euros, first time above 20 bn euros: nominal growth +7.0%, organic growth +3.1%
  • EBIT margin* reaches new high: +40 basis points to 17.3%
  • Earnings per preferred share*: +9.1% to new high of 5.85 euros
  • Record dividend** payout: +10.5% to 1.79 euros per preferred share

"2017 was a successful year for Henkel. Despite challenging and volatile market conditions, we reached new record levels in sales and earnings and achieved our financial targets for the year. This strong performance was driven by our engaged and passionate global team. For the first time, we exceeded annual sales of 20 billion euros. We also achieved record margins and new highs in earnings per share – in line with our commitment to deliver sustainable profitable growth," said Henkel CEO Hans Van Bylen.

Outlook for 2018

Based on the strong performance in 2017 and substantial progress made in the implementation of the strategic priorities, for 2018 Henkel expects to generate organic sales growth of 2 to 4 percent with each business unit in this range. For adjusted return on sales (EBIT), Henkel anticipates an increase to more than 17.5 percent with all three business units contributing. Reflecting the uncertainties in the currency markets, especially the US dollar trend, Henkel expects an increase in adjusted earnings per preferred share in euro of between 5 and 8 percent.

Sales and earnings performance 2017

In the fiscal year 2017, sales exceeded 20 billion euros for the first time and increased by 7.0 percent to 20,029 million euros. Foreign exchange movements had an overall negative effect of 2.0 percent on sales. Acquisitions and divestments accounted for 5.9 percent of sales growth. Organic sales, which exclude the impact of foreign exchange effects and acquisitions/divestments, showed a strong increase of 3.1 percent. This improvement is in line with the full year guidance of 2 to 4 percent organic sales growth.

The Adhesive Technologies business unit delivered very strong organic sales growth of 5.0 percent. The Beauty Care business unit generated positive organic sales growth of 0.5 percent. The Laundry & Home Care business unit reported a good increase in organic sales of 2.0 percent.

The emerging markets again made an above-average contribution to the organic growth of the group, showing a very strong increase in organic sales of 5.3 percent. The mature markets registered positive organic sales growth of 1.5 percent.

Sales increased organically in all regions. In the Western Europe region sales showed a positive organic development. In Eastern Europe, sales grew organically by 6.0 percent. Africa/Middle East posted organic sales growth of 1.7 percent. Sales in North America increased organically by 3.0 percent. Latin America achieved organic sales growth of 4.4 percent, and in the Asia-Pacific region, sales grew organically by 5.9 percent.

Adjusted operating profit (EBIT) improved by 9.1 percent from 3,172 million euros to 3,461 million euros. All three business units contributed to this increase.
Adjusted return on sales (EBIT) rose by 0.4 percentage points to 17.3 percent, matching the full year guidance of an increase to more than 17 percent.
The financial result amounted to -51 million euros after -33 million euros in fiscal 2016 due to the financing costs of the acquisitions closed in fiscal 2016 and 2017.
Adjusted net income for the year after non-controlling interests increased by 9.1 percent to 2,534 million euros (2016: 2,323 million euros).
Adjusted earnings per preferred share (EPS) grew by 9.1 percent from 5.36 euros to 5.85 euros. This is in line with the improved guidance for 2017, which anticipated an EPS growth of around 9 percent.

The Management Board, Supervisory Board and Shareholders' Committee will propose to the Annual General Meeting on April 9, 2018 an increase in the dividend per preferred share of 10.5 percent to 1.79 euros (previous year: 1.62 euros).

The proposed dividend per ordinary share is 1.77 euros, an increase of 10.6 percent compared to the previous year (1.60 euros). This would be the highest dividend in the company's history and equal a payout ratio of 30.7 percent, which is in line with Henkel's target payout ratio of 25 to 35 percent.

Net working capital as a percentage of sales was 1.3 percentage points above the prior-year period, reaching 4.8 percent.
The net financial position closed the year at -3,225 million euros (December 31, 2016: -2,301 million euros). The change compared to the end of the previous year was primarily due to payments for acquisitions.
Business unit performance

The Adhesive Technologies business unit generated very strong organic sales growth of 5.0 percent in fiscal 2017. In nominal terms, sales grew by 4.8 percent to 9,387 million euros. Adjusted operating profit increased by 6.4 percent to 1,734 million euros. Adjusted return on sales registered a good increase and reached a new high of 18.5 percent.

The Beauty Care business unit registered positive organic sales growth of 0.5 percent in fiscal 2017. Nominally, sales grew by 0.8 percent to 3,868 million euros. Adjusted operating profit grew by 2.7 percent to 665 million euros. Adjusted return on sales showed a good increase, reaching a new high of 17.2 percent.

The Laundry & Home Care business unit generated good organic sales growth of 2.0 percent in fiscal 2017. Nominally, sales increased by 14.8 percent to 6,651 million euros. Adjusted operating profit grew by 17.0 percent to 1,170 million euros. Adjusted return on sales showed a good increase and reached a new high of 17.6 percent. The acquisition of The Sun Products Corporation contributed significantly to both sales and operating profit.

About Henkel

Henkel operates globally with a well-balanced and diversified portfolio. The company holds leading positions with its three business units in both industrial and consumer businesses thanks to strong brands, innovations and technologies. Henkel Adhesive Technologies is the global leader in the adhesives market – across all industry segments worldwide. In its Laundry & Home Care and Beauty Care businesses, Henkel holds leading positions in many markets and categories around the world. Founded in 1876, Henkel looks back on more than 140 years of success. Henkel employs more than 53,000 people globally – a passionate and highly diverse team, united by a strong company culture, a common purpose to create sustainable value, and shared values. As a recognized leader in sustainability, Henkel holds top positions in many international indices and rankings. Henkel's preferred shares are listed in the German stock index DAX. For more information, please visit www.henkel.com.

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