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  • Henkel reports sales and earnings at record levels

    Henkel reports sales and earnings at record levels

    “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.”

    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 

    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.

    Business unit performance

    The Adhesive Technologies business unit generated solid organic sales growth of 2.8 percent in fiscal 2016, thus outperforming market expansion. Nominally, sales were at 8,961 million euros after 8,992 million euros in the previous year.

    The emerging markets continued their successful performance with strong organic sales growth, with double-digit increases in the Latin America region and strong growth in the Eastern Europe region. Sales in Asia (excluding Japan) showed a solid development. Sales performance in the Africa/Middle East region was positive, despite the ongoing uncertain political situation and deterioration in the economic conditions prevailing in parts of the region. Sales in the mature markets were on prior-year level. Sales performance in North America was positive, while sales in the Western Europe region were the same year-on-year. In the mature markets of the Asia-Pacific region, sales remained below the level of the prior year.

    Adjusted operating profit of the Adhesive Technologies business unit rose by 6.2 percent to 1,629 million euros compared to the previous year. Adjusted return on sales showed an excellent increase of 1.1 percentage points, reaching a new high of 18.2 percent. Reported operating profit increased by 6.8 percent to 1,561 million euros.

    In 2016, the Beauty Care business unit continued its profitable growth path of previous years. At 2.1 percent, organic sales growth was once again above that of the relevant markets. Nominally, sales rose to 3,838 million euros (2015: 3,833 million euros).

    From a regional perspective, business performance was very strong in the emerging markets. Eastern Europe and Latin America achieved double-digit organic sales growth. Sales in Asia (excluding Japan) and in Africa/Middle East showed a positive development. Mature markets continued to be impacted by intense price and promotional pressure. In this challenging environment, sales in mature markets remained slightly below the level of the prior year. In Western Europe and in the mature markets of the Asia-Pacific region, sales were lower year-on-year. Beauty Care recorded solid growth compared to the previous year in North America.

    Adjusted operating profit of the Beauty Care business unit increased by 6.1 percent to 647 million euros. Adjusted return on sales showed an excellent increase of 1.0 percentage points to a new high of 16.9 percent. Reported operating profit amounted to 526 million euros, after 561 million euros in the previous year.

    The Laundry & Home Care business unit also continued the profitable growth of previous years in the fiscal year 2016. Sales grew organically by 4.7 percent year-on-year, significantly outperforming the relevant markets. Nominally, sales increased by 12.8 percent to 5,795 million euros, driven by the acquisitions closed in 2016.

    With a very strong increase, emerging markets were once again the major driver of organic sales growth. In Asia (excluding Japan), Laundry & Home Care recorded double-digit organic sales growth. Sales in Africa/Middle East showed a very strong development. Sales in the Eastern Europe and Latin America regions achieved a strong increase, contributing to the successful development. Performance in the mature markets was solid. North America recorded a solid increase in sales, while sales growth in Western Europe was positive.

    Adjusted operating profit of the Laundry & Home Care business unit increased double-digit by 13.7 percent to 1,000 million euros. Adjusted return on sales increased by 0.2 percentage points, reaching a new high of 17.3 percent. Reported operating profit rose by 2.2 percent from 786 million euros to 803 million euros.

    Regional performance

    In a market environment that continues to be highly competitive, sales in Western Europe were organically on the level of the previous year. The positive performance in Southern Europe could not entirely compensate the decline in France. At 5,999 million euros, nominal sales in the region were slightly down year-on-year, due to negative currency effects. In Eastern Europe, sales grew organically by 7.0 percent. The main contribution to this performance came from the businesses in Russia and Turkey. Nominally, sales in the region increased by 0.7 percent to 2,713 million euros (2015: 2,695 million euros). Despite the political and social unrest in some countries, organic sales growth of 5.6 percent was achieved in the Africa/Middle East region. Nominal sales increased by 3.7 percent to 1,378 million euros (2015: 1,329 million euros).

    Sales in the North America region increased organically by 1.7 percent. At 4,202 million euros, nominal sales increased by 15.2 percent (2015: 3,648 million euros). The acquisition of The Sun Products Corporation contributed substantially to the increase in nominal sales. Organic sales in Latin America increased by 13.8 percent, with business performance in Mexico making a significant contribution to this improvement, delivering a double-digit increase. Nominal sales amounted to 1,055 million euros, following 1,110 million euros in the previous year. Sales in the Asia-Pacific region grew organically by 3.2 percent. Nominal sales increased by 3.6 percent to 3,246 million euros.

    With an increase in organic sales of 6.8 percent, driven by all business units, the emerging markets again made an above-average contribution to the organic growth of the Group. Nominal sales were slightly higher year-on-year at 7,814 million euros. The share of sales from emerging markets was 42 percent, which was slightly lower year-on-year due to foreign exchange and acquisition effects. In the mature markets, sales grew organically by 0.4 percent to 10,779 million euros.

    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.

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  • Henkel opens global supply chain hub in Singapore

    Henkel opens global supply chain hub in Singapore

    Henkel has officially opened its global supply chain hub in Singapore. This is a major milestone which follows the successful set-up of the company’s global supply chain headquarters in Amsterdam. Working closely together, the two hubs in Amsterdam and Singapore will steer Henkel’s strategic initiative to consolidate all its supply chains company-wide around the world.

    A single global supply chain is a key initiative of Henkel‘s strategic priority to continuously simplify the organization in order to drive operational excellence and build a scalable business model, increasing Henkel’s competitiveness in terms of speed, agility and efficiency. As such, the initiative will be a key driver for realizing the company’s vision to be ‘a global leader in brands and technologies’.

    The global hubs will centrally manage the purchasing, production and logistics processes of Henkel’s three business units – Adhesive Technologies, Beauty Care and Laundry & Home Care. The effort spans across supply planning, sourcing, manufacturing, inventory and distribution. This harmonization across the entire company will lead to higher process standardization, improved customer service levels and enhanced efficiency.

    Bertrand Conquéret, Corporate Senior Vice President of Global Purchasing at Henkel, said, “Together, the Amsterdam and Singapore global supply chain hubs will steer Henkel’s biggest initiative in business transformation. Singapore was selected for its excellent logistics capabilities, availability of supply chain talent and geographical location in the heart of Asia, which is a key growth market for Henkel.”

    Singapore also serves as a conduit to the trade routes that extend to India and the Middle East and Africa region. Both Singapore and Amsterdam are amongst the largest sea ports and logistics centres in the world. With their strategic locations, the two global hubs are well-positioned to manage the supply chains that connect all our markets globally.

    Notably, the new global supply chain hub builds upon the success of Henkel Singapore, which was established in 1983 and serves as a strategic business and technical services sub-regional hub for the company’s adhesive and beauty care businesses in Southeast Asia.

    Thomas Holenia, Managing Director of the global supply chain hub in Singapore and President of Henkel Singapore, said, “Our successful business presence here of more than 30 years and the global supply chain hub provide a strong foundation for developing Singapore into a global centre of excellence for Henkel – through the implementation of best practices in supply chain management, sustainability, digitalization and talent management.”

    In terms of sustainability, the Singapore hub is partnering with suppliers and business partners to continually improve the sustainability impact across the entire value chain.

    Digitalization is a key component of the global supply chain hub, enabling the standardization and harmonization of data and processes across the businesses and functions. It creates transparency on the vast amount of data on customers, products, raw materials and logistics. This improves the exchange of knowledge significantly, brings consistency in customer service and enables managers to make informed decisions faster resulting in quality processes across markets.

    With a corporate culture that strongly promotes diversity and inclusion, the global supply chain hub currently employs an international and cross-functional team of more than 14 nationalities. In the global supply chain hub, employees from purchasing, supply chain, operations and IT collaborate with other departments as an integrated team on a common agenda. As a result, the team is able to harness the diversity of knowledge, insights and experiences to deliver best solutions.

    In its ramp-up phase, the global hub is in the process of hiring new graduates and experienced managers. It is working closely with the National University of Singapore and Nanyang Technological University to identify local talents who have a global mind-set and strong leadership skills. With an inclusive corporate culture and attractive career development opportunities, Henkel aims to be an employer of choice.

    Chan Ih-Ming, Director of Consumer Businesses for the Singapore Economic Development Board (EDB), said, “Henkel’s decision to house one of its two global supply chain bases in Singapore marks a significant milestone in the Henkel-Singapore partnership. Henkel’s expansion in Singapore is testament to our strategic position as a key supply chain control tower for both Asia and the world. This investment also builds on the growing community of German companies – both Mittelstand and multi-national companies – that are using Singapore as a business hub for the region.

    “The EDB will accelerate our work with companies to equip the Singapore workforce with the right capabilities to seize the exciting professional opportunities in the logistics industry, such as those created to enable Henkel’s sustainable supply chain.

    Dr Steffen Koch, Acting Head of Mission of the German Embassy in Singapore, congratulated Henkel on choosing the city-state to base its global supply chain hub, and said, “Singapore’s prime geo-economic location at the core of the dynamically developing Asia, its business-friendliness as well as its highly efficient ports and airport make it an ideal choice for all kinds of logistical operations.”

    Dr Tim Philippi, Executive Director of the Singaporean-German Chamber of Industry and Commerce (SGC) congratulated Henkel on opening the new global supply chain hub in Singapore, which is a highly desired location in Southeast Asia for its favourable business environment. “The SGC is tasked to promote bilateral business relations between Singapore and Germany and as a chamber, we welcome companies such as Henkel as they contribute towards the bilateral relations between our two nations.”