Henkel delivers strong second-quarter results

DUBAI — In the second quarter of 2016, Henkel – a Germany-headquartered multinational company renowned for its with laundry & home care, beauty care and adhesive technologies – generated organic sales growth of 3.2 percent, adjusted for foreign exchange and acquisitions/divestments.
Nominally, sales decreased by 0.9 percent to 4,654 million euros due to a negative foreign exchange impact of 5.3 percent.

After allowing for one-time charges and gains and restructuring charges, adjusted operating profit (EBIT) rose by 6.6 percent from 768 million euros to 819 million euros. Reported operating profit grew by 5.8 percent from 715 million euros to 757 million euros.
Adjusted return on sales (EBIT margin) showed an increase of 1.2 percentage points to 17.6 percent. Reported return on sales rose from 15.2 percent to 16.3 percent. Henkel’s financial result improved from -11 million euros in the second quarter of 2015 to -1 million euros this time.
Adjusted net income for the quarter after deducting non-controlling interests grew by 8.8 percent from 558 million euros to 607 million euros. Reported net income for the quarter increased by 7.7 percent from 531 million euros to 572 million euros. After deducting 11 million euros attributable to non-controlling interests, quarterly net income amounted to 561 million euros (prior-year quarter: 521 million euros).
Adjusted earnings per preferred share (EPS) rose by 8.5 percent from 1.29 euros to 1.40 euros. Reported EPS increased from 1.20 euros to 1.30 euros. Net working capital related to sales improved year on year by 1.3 percentage points to 5.3 percent.
“Henkel delivered a strong business performance in the second quarter. We generated solid organic sales growth, supported by a strong development in the emerging markets and a positive development in the mature markets. We were also able to significantly increase both earnings and profitability.
Adjusted earnings per preferred share grew by 8.5 percent to 1.40 euros and adjusted return on sales rose to 17.6 percent, representing new record levels for Henkel. The successful development of Henkel was driven by all three business units,” said Henkel CEO Hans Van Bylen.

“We are also very excited about the acquisition of The Sun Products Corporation which we agreed on in the second quarter. This will be a step-change for our position in North America, one of the most important regions for Henkel worldwide,” he added.
The second quarter of 2016 saw the Laundry & Home Care business unit successfully extend its profitable growth path. Sales grew organically by 5.3 percent year on year, once again outperforming the relevant markets. The Africa/Middle East region posted very strong growth under the challenging conditions of a still difficult market environment
The Beauty Care business unit also successfully extended its long-established path of profitable growth in the second quarter of 2016.
Organically, sales rose by 2.1 percent. Nominally, sales amounted to 988 million euros after 1,006 million euros in the prior-year quarter.

The Adhesive Technologies business unit generated solid organic sales growth of 2.6 percent in the second quarter. Nominally, sales amounted to 2,290 million euros after 2,343 million euros in the prior-year quarter.
In a highly competitive market environment, Henkel’s growth in the Africa/Middle East region continued to be impacted by the geopolitical unrest prevailing in some countries. Nevertheless, organic sales growth was at 4.4 percent. Nominal sales amounted to 333 million euros after 342 million euros in the second quarter of 2015.
Henkel has updated its guidance for fiscal 2016. Henkel continues to expect to generate organic sales growth of 2 to 4 percent, with each business unit generating growth within this range. Regarding the share of sales from emerging markets, Henkel now anticipates a slight decrease compared to the prior-year level due to foreign exchange effects. For adjusted return on sales (EBIT), Henkel now expects an increase to more than 16.5 percent and the adjusted return on sales of each individual business unit is expected to be above the level of the previous year. Henkel continues to expect an increase in adjusted earnings per preferred share of between 8 and 11 percent.