Henkel Reports Better-Than-Expected 2009 Results

DUESSELDORF, Germany and ROCKY HILL, Conn., Feb. 25 /PRNewswire/ --

Henkel expects noticeable earnings improvement in 2010

• Laundry & Home Care has substantially higher earnings
• Cosmetics/Toiletries continues very successful performance
• Adhesive Technologies shows strong recovery throughout the year
• Adjusted return on sales in Q4/2009 is 12.4 percent
• Net debt reduced by 1 billion euros
• Proposed dividends kept at prior-year levels

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Henkel anticipates the current financial year will bring a noticeable improvement to its results. While regarding the recovery of the real economy and the financial markets as still fragile, the company expects that its organic sales growth, i.e. growth adjusted for foreign exchange and acquisitions/divestments, will outperform that of its relevant markets.

"For Henkel -- and the world economy as a whole -- 2009 will go down as a challenging year. Nevertheless, we have made good progress towards achieving our 2012 financial targets as proven by our outstanding results in the fourth quarter of 2009," said Kasper Rorsted, Chairman of the Henkel Management Board. "Our Laundry & Home Care and Cosmetics/Toiletries businesses have expanded their market positions and further increased their profitability. In the course of the year, our Adhesive Technologies business has rebounded well from the effects of the economic crisis." Rorsted continued: "Our results reflect the tireless efforts to adapt our structures and reduce our costs. We have shown that, even in adverse market conditions, we can act quickly and decisively. Once again, our strong brands have also made an appreciable contribution to the good performance: our new brand Syoss for example was the most successful launch in the hair care sector in 2009. We have put ourselves in a strong position and expect to improve noticeably our results in the current financial year."

In fiscal 2009, Henkel generated sales of 13,573 million euros. In a generally difficult market environment, this amounts to a decrease of 3.9 percent compared to the previous year. In organic terms, that is to say adjusted for foreign exchange and acquisitions/divestments, sales decreased by 3.5 percent versus prior year. After a substantial decline in sales in the first quarter caused by the economic crisis, the subsequent quarters were characterized by a gradual recovery. However, developments at the company's three business sectors continued to show a very mixed picture. While the consumer goods businesses of Laundry & Home Care and Cosmetics/Toiletries continued to perform very well with organic growth rates of 2.9 percent and 3.5 percent respectively, sales of the Adhesive Technologies business sector decreased organically by 10.2 percent due to the difficulties encountered in major customer industries worldwide.

Operating profit (EBIT) increased by 38.6 percent from 779 million euros to 1,080 million euros. The comparable prior-year figure was burdened by restructuring charges resulting from the company's "Global Excellence" efficiency enhancement program. After adjusting for one-time gains and charges and restructuring charges totaling 284 million euros, operating profit decreased by 6.6 percent, from 1,460 million euros to 1,364 million euros, attributable to the downturn suffered by the Adhesive Technologies business sector.

Return on sales (EBIT margin) was 8.0 percent, while adjusted return on sales decreased slightly from 10.3 percent to 10.0 percent due to the margin decline at Adhesive Technologies. By contrast, adjusted return on sales of the consumer goods businesses Laundry & Home Care and Cosmetics/Toiletries improved to 12.8 percent and 12.9 percent respectively.

Financial result decreased to -195 million euros, with the figure for the previous year having benefitted from a gain of 1,042 million euros arising from the disposal of Henkel's stake in Ecolab. Net interest improved by 84 million euros to -191 million euros. Due to the increase in cash flow and the lack of major acquisitions, Henkel was able to reduce its net debt compared to the prior-year by 1.0 billion euros to 2.8 billion euros. Together with the prevailing lower interest rates, this reduction in debt made a significant contribution to the improvement in Henkel's net interest result. At 29.0 percent, the tax rate was above the level of the previous year.

Due to the gain from the sale of the Ecolab stake in 2008, net earnings decreased by 605 million euros to 628 million euros.  After deducting minority interests of 26 million euros, net earnings totaled 602 million euros. Adjusted net earnings after minority interests declined by 123 million euros to 822 million euros. Earnings per preferred share decreased from 2.83 euros to 1.40 euros. The adjusted figure was 1.91 euros compared to 2.19 euros in the previous year.

Good progress was also made in the management of net working capital. Compared to the prior-year, the ratio of net working capital to sales improved from 11.7 percent to 7.8 percent. Free Cash Flow was increased significantly from 457 million euros to 1,462 million euros compared to the prior year.

The Management Board, Supervisory Board and Shareholders' Committee will be proposing to Henkel's Annual General Meeting that it approve unchanged dividends of 0.53 euros per preferred share and 0.51 euros per ordinary share.

The complete fiscal year 2009 report can be found at www.henkel.com/press.

Henkel in North America:

Henkel markets a wide range of well-known consumer and industrial brands in North America, including Dial® soaps, Purex® laundry detergents, Right Guard® antiperspirants, got2b® hair gels, and Loctite® adhesives. Visit www.henkelna.com for more information.

This information 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, etc. 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 any forward-looking statements.

SOURCE Henkel