Henkel reports successful fiscal 2015

“2015 was an excellent year for Henkel. We recorded double-digit growth rates in sales, profits, earnings per share and our proposed dividends. All three business units delivered solid organic growth and significantly improved their profits,” said Henkel CEO Kasper Rorsted. “Emerging markets continued to be the main growth drivers contributing to our good performance. We also achieved further organic sales growth in mature markets.”

“Despite the difficult economic environment, we delivered a strong financial performance, continued to successfully implement our strategy and laid a strong foundation for our future. After three years of our four-year strategy cycle, we are well on track to meet our main targets for 2016,” said Rorsted summarizing Henkel’s development.

Outlook for 2016

Looking at the current fiscal year and the 2016 financial targets, Rorsted said: “The economic and political environment remains challenging. Therefore we will continue to adapt our processes and structures to the markets, further increasing our efficiency and competitiveness. For the full fiscal year 2016 we expect organic sales growth of 2 to 4 percent. We expect our adjusted EBIT margin to rise to approximately 16.5 percent and adjusted earnings per preferred share to grow between 8 and 11 percent in fiscal 2016. With an average annual growth of adjusted earnings per preferred share of 9.7 percent in the period from 2013 to 2015 we are well on track and fully committed to reach our 10 percent CAGR target for the current strategy cycle.”

At 18,089 million euros, Henkel’s sales in the fiscal year 2015 were significantly above the level of the previous year. All business units reported solid organic sales growth and overall Henkel increased market shares in the relevant markets.

The Laundry & Home Care business unit achieved organic sales growth of 4.9 percent. Sales in the Beauty Care business unit grew organically by 2.1 percent and the Adhesive Technologies business unit recorded organic sales growth of 2.4 percent.

After one-time charges, one-time gains and restructuring charges, adjusted operating profit improved substantially, by 12.9 percent to 2,923 million euros (previous year: 2,588 million euros). All three business units contributed to this positive performance. Reported operating profit (EBIT) amounted to 2,645 million euros compared to 2,244 million euros in the previous year.

Adjusted return on sales (EBIT margin) rose by 0.4 percentage points from 15.8 percent to 16.2 percent. Reported return on sales increased by 0.9 percentage points to 14.6 percent (previous year: 13.7 percent).

Adjusted earnings per preferred share (EPS) grew by 11.4 percent from 4.38 euros to 4.88 euros.

The Management Board, Supervisory Board and Shareholders’ Committee will propose to the Annual General Meeting on April 11, 2016 an increase in the dividend per preferred share of 12.2 percent to 1.47 euros (previous year: 1.31 euros) and an increase in the dividend per ordinary share of 12.4 percent to 1.45 euros (previous year: 1.29 euros). This would give a payout ratio of 30.2 percent

Business Unit Performance

In 2015, the Laundry & Home Care business unit very successfully continued its profitable growth path of previous years.Sales grew organically by 4.9 percent year on year, significantly outperforming the relevant markets. Nominally, sales increased by 11.0 percent to 5,137 million euros, exceeding the 5 billion euro mark for the first time.

Emerging markets were once again the major driver of organic sales growth. The Africa/Middle East region also achieved very strong growth.

The Beauty Care business unit also extended the profitable growth of previous years in the fiscal year 2015. At 2.1 percent, organic sales growth was once again above that of the relevant markets. Nominally, salesrose by 8.1 percent to 3,833 million euros. Business performance was very strong in the emerging markets. In the Africa/Middle East region, the business unit extended its successful development of previous years, recording a solid growth rate.

The Adhesive Technologies business unit business unit generated solid organic sales growth of 2.4 percent, thus growing at the same rate as the market. Nominally, sales increased by 10.6 percent from 8,127 million euros in the previous year to 8,992 million euros.

The business unit achieved a solid increase in organic sales in emerging markets. The Africa/Middle East and Eastern Europe regions recorded strong sales growth, despite the ongoing difficult political situation and challenging economic conditions prevailing.

Regional Performance

Overall, Henkel’s sales in the Africa/Middle East region increased nominally by 17.3 percent to 1,329 million euros. Organic sales growth came in at 6.8 percent, with each of the business units making an important contribution.

Sales in the emerging markets of Eastern Europe, Africa/Middle East, Latin America and Asia (excluding Japan) increased substantially year on year to 7,797 million euros. Organically, sales improved by 5.9 percent, with all business units contributing. The emerging markets again made an above-average contribution to organic sales growth. Due to currency effects, the share of sales from emerging markets declined slightly to 43 percent. Sales in mature markets increased organically by 0.7 percent to 10,164 million euros.

Group’s outlook for 2016

Henkel expects to generate organic sales growth of 2 to 4 percent in the fiscal year 2016. Henkel expects that each business unit will generate organic sales growth within this range. Henkel furthermore expects a slight increase in the share of sales from its emerging markets. For adjusted return on sales, Henkel expects an increase versus the prior year to approximately 16.5 percent. The adjusted return on sales of the individual business units is expected to be at or above the level of the previous year. Henkel expects an increase in adjusted earnings per preferred share of between 8 and 11 percent.