Henkel Reports Strong Performance in Third Quarter 2017

“Henkel reports a strong performance in the third quarter. In an increasingly challenging environment, we further improved sales and earnings. All three business units contributed to this positive development. We delivered strong organic sales growth of 3 percent, while nominal sales grew around 5 percent,” said Henkel CEO Hans Van Bylen. “We achieved a significant increase in adjusted EBIT, and our adjusted EBIT margin reached a new high of 18 percent. We delivered significant growth in adjusted earnings per preferred share. In addition, we successfully closed three acquisition projects which will substantially strengthen our business portfolio.”

“We expect the overall volatile and uncertain market environment to continue. Currency effects will have an increasingly negative impact. The difficult conditions in the consumer goods markets are likely to persist. We are fully committed to continue our successful development and implement our strategic priorities,” said Hans Van Bylen.

For the full fiscal year 2017, Henkel confirmed its sales guidance. Despite the increasingly negative currency impact, Henkel raised its EPS guidance. “We continue to expect organic sales growth of 2 to 4 percent on group level and an increase of our adjusted EBIT margin to more than 17.0 percent. For adjusted earnings per preferred share we now expect an increase of around 9 percent,” said Hans Van Bylen.

Sales and earnings performance in the third quarter 2017

In the third quarter 2017 sales grew nominally by 4.9 percent to 4,981 million euros. Foreign exchange movements had an overall negative effect of 4.2 percent on sales. Acquisitions and divestments accounted for 6.1 percent of sales growth. Organic sales, which exclude the impact of foreign exchange effects and acquisitions/divestments, showed a strong increase of 3.0 percent.

The Adhesive Technologies business unit posted very strong organic sales growth of 4.9 percent. The Beauty Care business unit generated positive organic sales growth of 0.5 percent. The Laundry & Home Care business unit reported a positive increase in organic sales of 1.8 percent.

The emerging markets again made an above-average contribution to the organic growth of the group, showing a very strong increase in organic sales of 5.0 percent. The mature markets registered positive organic sales growth of 1.5 percent. Africa/Middle East posted sales growth of 3.2 percent.

Adjusted operating profit (EBIT) improved by 7.1 percent to 897 million euros. All three business units contributed to this increase.

Adjusted return on sales (EBIT) rose by 0.4 percentage points to 18.0 percent.

Adjusted earnings per preferred share (EPS) grew by 8.5 percent from 1.42 euros to 1.54 euros.

Net working capital as a percentage of sales was 0.4 percentage points above the prior-year period, reaching 5.6 percent.

Business unit performance

The Adhesive Technologies business unit generated very strong organic sales growth of 4.9 percent in the third quarter. In nominal terms, sales grew by 4.5 percent to 2,373 million euros. Adjusted operating profit increased by 5.5 percent and reached 454 million euros. Adjusted return on sales recorded a good increase, reaching 19.1 percent.

The Beauty Care business unit registered positive organic sales growth of 0.5 percent in the third quarter. Nominally, sales were below the prior-year quarter and reached 941 million euros. Adjusted operating profit showed a positive increase of 0.5 percent and reached 171 million euros. Adjusted return on sales recorded a very strong growth to 18.1 percent.

The Laundry & Home Care business unit generated positive organic sales growth of 1.8 percent in the third quarter. Nominally, sales increased by 10.6 percent to 1,636 million euros compared to the prior-year quarter. Adjusted operating profit grew by 10.9 percent to 294 million euros. Adjusted return on sales was at the level of the prior-year quarter, reaching 17.9 percent.

Strong business performance in the first nine months of 2017

For the first time, nine-month sales exceeded 15 billion euros and increased by 9.3 percent to 15,143 million euros. Organic sales, which exclude the impact of foreign exchange effects and acquisitions/divestments, showed a strong increase of 3.1 percent. All three business units contributed to this performance.

Improved outlook for 2017

Henkel updates the outlook for the fiscal year 2017. Henkel confirms its expectation for organic sales growth of 2 to 4 percent for the Henkel Group. Henkel’s expectations for organic growth are now 4 to 5 percent for the Adhesive Technologies business unit, 0 to 1 percent for the Beauty Care business unit, and around 2 percent for the Laundry & Home Care business unit. For adjusted return on sales (EBIT), Henkel continues to anticipate an increase versus the prior year to more than 17.0 percent. Given the strong business performance, Henkel updates its guidance for adjusted earnings per preferred share and now forecasts an increase of around 9 percent.