Henkel Reports Strong Second-Quarter Performance

Sales reached EUR 5.098 billion thanks to 9.6% nominal sales growth. Organic growth came in at 2.2%. Operating profit grew double-digit, rising 11.0% to EUR 909 million. Pre-tax profit (EBIT) margin improved, reaching 17.8% with a 20 basis point increase. Earnings per preferred share rose 10.7% to EUR 1.55. Düsseldorf – Henkel CEO Hans Van Bylen said: "In the second quarter, Henkel achieved strong performance, reaching new highs for preferred share earnings as well as quarterly sales, operating profit and pre-tax profit margin. All three business units contributed to this positive development. Sales grew substantially to EUR 5.1 billion. We increased our operating profit and pre-tax profit margin. Preferred share earnings showed double-digit growth. This is a very strong performance under challenging market conditions. We anticipate that the generally unstable and uncertain market environment will continue throughout the year," he said. Van Bylen added: "Currency fluctuations are expected to persist. We also expect increased pressure in consumer products markets. We are committed to continuing our successful development and implementing our strategic priorities. We affirm our financial targets for 2017. We expect organic growth between 2% and 4%. We anticipate pre-tax profit margin above 17% and preferred share earnings growth between 7% and 9%." Second Quarter 2017 Sales and Profit Performance Second quarter 2017 sales reached a new record level of EUR 5.098 billion and showed 9.6% nominal growth compared to the prior-year quarter. Acquisitions and divestitures, particularly resulting from the purchase of The Sun Products Corporation, accounted for 7.4% of this growth. Currency effects generally neutralized. Organic sales, adjusted for currency, acquisitions and divestitures, showed strong growth of 2.2%. The Adhesive Technologies business unit achieved strong organic growth of 3.4%. Organic growth in the Beauty Care business unit was at prior-year quarter levels. The Laundry & Home Care business unit recorded strong organic growth of 2.1%. With strong organic growth of 4.7%, emerging markets again contributed above-average to the group's organic growth. Developed markets recorded 0.5% organic growth. In a highly competitive market environment due to rising promotional and pricing pressure, organic growth in the Western Europe region declined 1.2%. All other regions recorded organic growth. Sales in Eastern Europe rose 5.2%. Africa/Middle East sales increased 1.1%. North America region sales grew 3.2%. Latin America region sales rose 6.1% and Asia-Pacific region sales increased 4.8%. Operating profit (EBIT) grew 11.0% to EUR 909 million. All three business units contributed to this positive development. Operating margin (EBIT) rose 0.2 percentage points to 17.8%. Earnings per preferred share (EPS) increased 10.7%, rising from EUR 1.40 to EUR 1.55. Net working capital rose to 5.2% as a percentage of sales, up 0.1 percentage points.

Business Unit Performance

The Adhesive Technologies business unit showed strong organic growth of 3.4% in the second quarter. Nominally, sales rose 3.5% to EUR 2.370 billion. Operating profit increased 6.6% to EUR 455 million. Operating margin recorded very strong growth, reaching a new record at 19.2%. In the Beauty Care business unit, organic growth was at prior-year quarter levels. Nominally, sales rose 0.9% to EUR 997 million. Operating profit increased 4.3% to EUR 180 million. Operating margin recorded very strong growth, reaching an all-time high of 18%. The Laundry & Home Care business unit showed strong organic growth of 2.1% in the second quarter. Nominally, sales reached EUR 1.703 billion, up 26.6% compared to the prior-year quarter. Operating profit rose 22.2% to EUR 298 million. The acquisition of The Sun Products Corporation made a substantial contribution to sales and operating profit. Operating margin was at 17.5%.

Strategic Acquisitions Strengthen Portfolio

Following the successful acquisitions of global Darex Packaging Technologies and Sonderhoff Group at the start of the third quarter, Henkel further strengthened its Adhesive Technologies unit and consolidated its technology portfolio.

Strong Business Performance in First Half 2017

For the first time, first-half sales exceeded EUR 10 billion, rising 11.5% to EUR 10.162 billion. Organic growth showed strong growth of 3.1%. All three business units contributed to this performance. Operating profit rose 12.3%, increasing from EUR 1.570 billion to EUR 1.763 billion. Operating margin rose from 17.2% to 17.4%. Earnings per preferred share (EPS) grew 10.9%, rising EUR 0.29 to increase from EUR 2.67 to EUR 2.96. The Adhesive Technologies business unit showed very strong organic growth of 4.4% in the first half of 2017. Operating margin recorded very strong growth, reaching 18.6%. The Beauty Care business unit showed strong organic growth of 1.1%. Operating margin recorded very strong growth, reaching 17.4%. The Laundry & Home Care business unit showed high organic growth of 2.5%. Operating margin was at 17.4%.

2017 Outlook

Henkel affirms its full-year 2017 outlook. Henkel expects to achieve organic growth between 2% and 4%. Each business unit is also expected to achieve organic growth within this range. Henkel expects sales revenue growth above 17% compared to the prior year. Earnings per preferred share (EPS) are expected to grow 7% to 9%.