04-Mar-2015 Düsseldorf / Germany
Good performance in a challenging environment
- Sales rise 0.4% to 16,428 million euros (organic: +3.4%)
- Operating profit*: +2.9% to 2,588 million euros
- EBIT margin*: +0.4 percentage points to 15.8%
- Earnings per preferred share* (EPS): +7.6% to 4.38 euros
- Proposed dividend: +7.4% to 1.31 euros per preferred share
“2014 was a successful year for Henkel. In a challenging and very competitive market environment we achieved our financial targets and made very good progress in implementing our strategy 2016,” said Henkel CEO Kasper Rorsted. “All three business units contributed with profitable organic growth to our good performance. The emerging markets were once again the main growth drivers for Henkel, with very strong organic sales growth of almost 8 percent. But also in mature markets, organic sales were up slightly.”
Looking at the fiscal year 2015, Rorsted said: “The economic environment remains challenging and very volatile. Due to the continuing conflict between Russia and Ukraine, we expect stagnation in Eastern Europe in 2015 as well as further pressure on the Russian economy and currency. We will continue to adapt our processes and structures, making us more flexible and efficient. We are focused on implementing our strategy in order to reach our ambitious financial targets for 2016.”
“For the full fiscal year 2015 we expect organic sales growth of 3 to 5 percent. We expect our adjusted EBIT margin to rise to around 16 percent and adjusted earnings per preferred share to increase by approximately 10 percent,” Rorsted said, summarizing the financial targets for 2015.
Sales and profit performance 2014
At 16,428 million euros, sales in the fiscal year 2014 were slightly higher than in the previous year. Adjusted for negative foreign exchange effects of 4.0 percent, sales improved by 4.4 percent. Organic sales, which excludes the impact of foreign exchange and acquisitions/divestments, showed a solid 3.4 percent increase.
All business units posted solid organic sales growth and increased market share in the relevant markets. The Laundry & Home Care business unit achieved organic sales growth of 4.6 percent. Sales in the Beauty Care business unit grew organically by 2.0 percent and the Adhesive Technologies business unit recorded organic sales growth of 3.7 percent.
After allowing for one-time gains, one-time and restructuring charges, adjusted operating profit (EBIT) improved by 2.9 percent from 2,516 million euros to 2,588 million euros. All three business units contributed to this positive development. Reported operating profit (EBIT) amounted to 2,244 million euros compared to 2,285 million euros in the previous year.
Adjusted return on sales (EBIT margin) rose by 0.4 percentage points from 15.4 to 15.8 percent. Reported return on sales amounted to 13.7 percent compared to 14.0 percent in the previous year.
The financial result improved by 64 million euros to -49 million euros. This is mainly due to the improvement in net interest result, which was attributable in part to the repayment of senior bonds in June 2013 and March 2014, as well as maturing interest rate fixings in March 2014. The tax rate was 24.3 percent compared to 25.2 percent in the previous year.
Adjusted net income for the year after deducting non-controlling interests grew by 7.5 percent year-on-year, from 1,764 million euros to 1,896 million euros. Net income for the year increased by 2.3 percent from 1,625 million euros to 1,662 million euros. After deducting 34 million euros attributable to non-controlling interests, net income for the year was 1,628 million euros (previous year: 1,589 million euros).
Adjusted earnings per preferred share (EPS) increased by 7.6 percent from 4.07 euros to 4.38 euros. Reported EPS rose from 3.67 euros to 3.76 euros.
The Management Board, Supervisory Board and Shareholders’ Committee will propose an increase of 7.4 percent to 1.31 euros (previous year: 1.22 euros) in dividend per preferred share and an increase of 7.5 percent to 1.29 euros (previous year: 1.20 euros) in dividend per ordinary share at the Annual General Meeting. As in the previous year, the payout ratio would then be 30.0 percent.
Net working capital as a percentage of sales once again reached a low level of 4.2 percent. However, mainly due to the negative effects of foreign exchange and acquisitions, it was 1.9 percentage points higher than in the previous year.
The net financial position closed the year at -153 million euros (2013: 959 million euros) and was mainly impacted by payments for acquisitions and dividends. Additionally, capital expenditures rose by around 19 percent to 517 million euros from 436 million euros in the previous year. In the emerging markets, capital expenditures increased by 30 percent over the previous year, resulting in an overall balanced investment allocation between mature and emerging markets in 2014.
In the fiscal year 2014, Henkel made very good progress in the implementation of its strategy 2016. Read more in the CEO's letter from the annual report.
Outlook for the Henkel Group 2015
Henkel expects to generate organic sales growth of 3 to 5 percent in the fiscal year 2015. Henkel expects that the Adhesive Technologies and Laundry & Home Care business units will each generate organic sales growth within this range. In the Beauty Care business unit, Henkel expects growth of approximately 2 percent. Henkel furthermore expects a stable development in the share of sales from emerging markets. Compared to the 2014 figures, Henkel expects adjusted return on sales (EBIT) to rise to around 16 percent and an increase in adjusted earnings per preferred share of approximately 10 percent.
* Adjusted for one-time charges/gains and restructuring charges
This document contains forward-looking statements which are based on the current estimates and assumptions made by the corporate management of Henkel AG & Co. KGaA. Forward-looking statements are characterized by the use of words such as expect, intend, plan, predict, assume, believe, estimate, anticipate, forecast and similar formulations. Such statements are not to be understood as in any way guaranteeing that those expectations will turn out to be accurate. Future performance and the results actually achieved by Henkel AG & Co. KGaA and its affiliated companies depend on a number of risks and uncertainties and may therefore differ materially from the forward-looking statements. Many of these factors are outside Henkel’s control and cannot be accurately estimated in advance, such as the future economic environment and the actions of competitors and others involved in the marketplace. Henkel neither plans nor undertakes to update forward-looking statements.