by NR INDRAN / INT

Mumbai : “2011 was another very successful year for Henkel. Despite major challenges in a volatile economic environment, we fully achieved our ambitious targets – and even over delivered on some of them. Sales and profits are higher than ever before,” said Henkel CEO Kasper Rorsted. “A major factor driving Henkel’s strong performance was the further expansion of our position in the emerging markets, where we once again registered double-digit growth. We made considerable progress in 2011, establishing a strong platform for Henkel’s future. Thus, we are very confident of achieving the targets for fiscal 2012that we set in 2008.”

For the fiscal year 2012, Rorsted provided the following guidance: “The economic environment remains challenging. It is significantly more volatile today than in the past. As a consequence we need to constantly adapt in order to respond quickly and flexibly to changes in our markets. However, we consider Henkel to be well-positioned. We expect organic sales growth for the full fiscal year to be between 3 and 5 percent. We also expect to increase our adjusted EBIT margin to 14 percent and improve adjusted earnings per preferred share by at least 10 percent.”

Operating in a challenging economic environment, Henkel increased sales in fiscal 2011 to15,605 million euros, a rise of 3.4 percent compared to the prior-year figure. Organic sales, which exclude the impact of foreign exchange and acquisitions/divestments, increased by an even stronger 5.9 percent.

All the company’s business sectors contributed to this positive development,further expanding their market shares in the relevant markets. Adhesive Technologies increased sales organically by 8.3 percent to a new high of 7,746million euros. The Cosmetics/Toiletries business sector continued its strong growth trend of recent years and, with organic sales growth of 5.4 percent,grew significantly stronger than the predominantly declining market. Laundry& Home Care achieved a solid improvement in organic sales of 2.9 percent ina slightly declining market.

After allowing for one-time gains, one-time charges and restructuring charges,adjusted operating profit improved by 9.0 percent, from 1,862 million euros to2,029 million euros, with all three business sectors contributing. Operating profit (EBIT) totaled 1,857 million euros and was 7.8 percent above the comparable prior-year level.

Despite the substantial increase in prices on the procurement markets, adjusted return on sales (EBIT margin) improved 0.7 percentage points, from 12.3 percent to13.0 percent, thus achieving Henkel’s guidance. Return on sales came in at 11.9percent, following 11.4 percent in the previous year.

Adjusted net income for the year after deducting non-controlling interests rose by 11.4percent compared to the previous year, from 1,217 million euros to 1,356million euros. Net income for 2011 was 1,283 million euros compared to 1,143million euros in 2010. After deducting non-controlling interests of 30 million euros, net income for the year came in at 1,253 million euros (previous year:1,118 million euros). Adjusted earnings per preferred share (EPS) rose by 11.3percent to 3.14 euros compared to 2.82 euros in the previous year. The nominal figure was 2.90 euros versus 2.59 euros in 2010.

The Management Board, Supervisory Board and Shareholders’ Committee will be proposing to the Henkel Annual General Meeting to increase the dividend per preferred share to 0.80 (previous year: 0.72) euros and the dividend per ordinary share to 0.78 (previous year:0.70) euros.

Business sector performance

Laundry& Home Care achieved an increase in organic sales of 2.9 percent, thus substantially outstripping its slightly declining relevant markets. Average selling prices rose by 1.6 percent, while volume increase contributed 1.3percent to organic sales growth. Nominally, sales declined slightly by 0.3percent to 4,304 million euros. The increase in market shares was mainly driven by the positive development in both Europe and North America. Adjusted operating profit rose by 1.4 percent to 570 million euros. Adjusted return on sales increased by 0.2 percentage points to 13.2 percent. Due to higher restructuring charges, nominal operating profit amounted to 511 million euros versus 542million euros in the previous year.

Again in 2011, the Cosmetics/Toiletries business sector continued its strong growth path of recent years and, with organic growth of 5.4 percent, once more significantly outperformed its relevant markets. The foundation for this success was again provided by a strong innovation program. Nominally, sales rose by 4.0 percent, reaching 3,399 million euros. Adjusted operating profit significantly increased versus prior year, by 10.5 percent to 482 million euros, the business sector’s highest earnings figure to date. As a result,adjusted return on sales rose by 0.9 percentage points to 14.2 percent,likewise reaching a new high. Operating profit increased compared to the previous year by 14.6 percent to 471 million euros, likewise reaching a new high.

2011saw the Adhesive Technologies business sector continue its profitable growth trend. In an increasingly difficult economic environment, sales improved nominally by 6.0 percent to a new high of 7,746 million euros. At 8.3 percent,organic growth was once again significantly higher than that of the relevant markets. This very strong performance was achieved through both price and volume increases. Once again, adjusted operating profit rose significantly compared to the prior year, by 14.7 percent to 1,075 million euros. As a result, adjusted return on sales improved by 1.1 percentage points to another new high of 13.9 percent. With an EBIT of 1,002 million euros, operating profit passed the 1 billion euro mark for the first time.

Regional performance

In the highly competitive market environment of Western Europe, sales increased by2.8 percent to 5,624 million euros. Organic sales growth amounted to 2.3percent, driven primarily by expansion in Germany and France. Sales in Eastern Europe rose by 6.2 percent to 2,813 million euros. Organic sales growth here was an impressive 10.3 percent, generated primarily by the businesses in Turkey and the adhesives business in Russia. Growth in the Africa/Middle East region was adversely affected by the political unrest in some countries. Sales rose nominally by 3.7 percent to 934 million euros, although organic sales growth did pass the double-digit mark with a 10.0 percent increase, achieved as a result of double-digit growth rates in the United Arab Emirates, Saudi Arabia and Algeria.

Due to foreign exchange factors, sales of the North America region decreased slightly, by 0.3 percent to 2,716 million euros. Despite a reluctant consumer climate in the USA, organic sales growth of the region came in at 4.4 percent. The Latin America region continued to develop very strongly, posting sales growth of 8.4 percent to 1,065 million euros. The double-digit organic sales growth of 11.0 percent was driven in particular by Henkel’s business performance in Mexico, Brazil and Venezuela. Within Asia-Pacific, the consequences of the natural disaster in Japan exerted a dampening influence onregional sales growth. This amounted to 5.9 percent, taking the total to 2,296million euros. With an organic growth rate of 8.6 percent, however, the region continued to show a very strong development, driven particularly by double-digit growth rates in China, India and South Korea.

Sales in the emerging markets of Eastern Europe, Africa/Middle East, Latin America and Asia (excluding Japan) increased by 6.2 percent to 6,512 million euros. Organic growth reached 10.8 percent, with contributions coming particularly from the Adhesive Technologies and Cosmetics/Toiletries business sectors, both of which posted double-digit increases. The share of Henkel’s sales accounted for by the emerging markets rose from 41 to 42 percent.

Sales and profits guidance for 2012

The Henkel Group expects to generate organic sales growth of between 3 and 5 percent in fiscal 2012. Henkel is confident of continuing the positive growth trend posted by its consumer goods businesses, with sales likely to expand in the low single-digit percentage range. For the Adhesive Technologies business sector, Henkel expects sales to grow in the mid-single-digit percentage range. In recent years, Henkel has introduced a number of measures that have had a positive impact on its cost structure. Also in this year, Henkel intends to further adapt its structures to the constantly changing market conditions while maintaining its strict cost discipline. Henkel also aims to counteract the burden on earnings caused by high raw material costs. These factors, together with the expected increase in sales, should positively influence earnings development. Based on the 2011results, Henkel anticipates achieving an increase in adjusted return on sales(EBIT) to 14 percent (2011: 13.0 percent) and an increase in adjusted earnings per preferred share of at least 10 percent.

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