Henkel AG & Co. KGaA / Keyword(s): Corporate strategic decision/forecast
Henkel AG & Co. KGaA: Henkel announces strategic measures to strengthen competitiveness and growth momentum

28-Jan-2022 / 08:30 CET/CEST
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Düsseldorf, 2022-01-28T08:00+01:00 (CET)

Henkel announces strategic measures to strengthen competitiveness and growth momentum:

– Merger of Laundry & Home Care and Beauty Care into one business unit “Henkel Consumer Brands” planned

– New medium and long-term financial ambition announced:

– Organic sales growth of 3 to 4%, EBIT* margin of around 16%,
Earnings per preferred share (EPS)* growth in the mid- to high-single digit range (at constant currencies, including mergers and acquisitions)

– Share buyback program with a total volume of up to €1 billion

– Preliminary results for fiscal year 2021 disclosed:

– Organic sales growth +7.8%, EBIT margin* 13.4%, earnings per preferred share (EPS)* +9.2% at constant exchange rates

– Outlook for the 2022 financial year published:

– Organic sales growth of 2 to 4%, EBIT margin* of 11.5 to 13.5%, evolution of earnings per preferred share (EPS)* between -15 and +5% (at constant exchange rates), reflecting the high level of market uncertainty and volatility

At its meeting today, the Management Board of Henkel AG & Co. KGaA decided, with the necessary approval of the Shareholders’ Committee, on several strategic measures to further strengthen the competitiveness and future development of the company in the part of its long-term strategy. program for targeted growth:

Henkel intends to merge Laundry & Home Care and Beauty Care into a single business unit “Henkel Consumer Brands”, in order to sustainably strengthen the growth and margin profile of the consumer goods business. With revenue of around €10 billion, the new integrated business unit will provide a strong multi-category platform for future growth. Accordingly, the portfolio will be consistently focused on strategic core businesses and products with attractive growth and margin potential – beyond the active portfolio management measures completed by the end of 2021. The first portfolio measures Beauty Care will already be implemented during 2022. Significant synergies are also expected during the integration. These, as well as the expenses related to the restructuring measures, will be specified later.

Based on the proposed merger, Henkel has defined a new medium- and long-term financial ambition: Henkel is now pursuing organic sales growth of 3-4% and an adjusted EBIT margin of around 16%. In addition, Henkel is targeting adjusted earnings per preferred share (EPS) growth in the mid- to high-single digit range (at constant currencies and including M&As) and continues to focus on stream expansion. available cash.

For its Adhesive Technologies business unit, Henkel’s financial ambition is to achieve organic sales growth in the range of 3-5% and an adjusted EBIT margin in the range of 10%. For the new Consumer Brands business unit, Henkel is targeting organic sales growth of 3-4% and an adjusted EBIT margin in half of the years.

The Management Board has also decided to launch a share buyback program for a total amount of up to €1 billion. Henkel preferred shares (ISIN DE0006048432 // WKN 604843) with a total value up to 800 million euros and ordinary shares (ISIN DE0006048408 // WKN 604840) with a total value up to 200 million euros must be redeemed (for each additional cost). Based on current stock prices, this corresponds to a share of approximately 3% of the company’s share capital.

The program should start during the month of February 2022 and run until March 31, 2023 at the latest, with the intervention of a bank via the stock exchange. The Management Board thus makes use of the authorization given by the General Meeting of April 8, 2019 to acquire treasury shares within the limit of 10% of the share capital. Henkel intends to hold the repurchased shares initially as treasury shares, reserving the right to cancel them and reduce the share capital accordingly. Henkel will provide information on the start and progress of the share buyback program through appropriate publications and on its website and reserves the right to discontinue and resume or discontinue the share buyback program at any moment. In this context, Henkel reconfirms that acquisitions in the two future business units remain an integral part of its strategy.

Henkel also announced the key points of its evolution of sales and results during the 2021 financial year preliminary: Henkel Group sales in fiscal year 2021 were 20,066 million euros. Organic sales growth was 7.8 percent. As a preliminary, the Adhesive technologies The business unit achieved double-digit organic growth of 13.4% in 2021. The business unit’s revenue amounted to €9,641 million. Organic growth in the Beauty care business unit was 1.4 percent. Here, sales amounted to 3,678 million euros. Organic growth of Laundry and home care was 3.9%. The turnover of this business unit amounted to 6,605 million euros.

In fiscal year 2021, adjusted return on sales (EBIT margin) for Henkel on a preliminary basis was 13.4%. The Adhesive Technologies business unit achieved an adjusted sales return of 16.2%. The Beauty Care business unit closed fiscal 2021 with an adjusted sales return of 9.5%, while the Laundry & Home Care business unit’s adjusted sales return was 13.7% (in each case on a preliminary basis).

Preliminary adjustment earnings per preferred share (EPS) for the 2021 financial year were 4.56 euros (+9.2% at constant exchange rates).

At its meeting today, the Management Board also approved the planning and outlook for the 2022 financial year – in its current structure with three business units. In the context of the current assessment of the market environment, in particular the continuing tense situation on the commodity markets as well as in the supply chains and the resulting significant price increases have been taken into account.

– Henkel forecasts organic sales growth for the Group of around 2 to 4% in 2022.

– For the Adhesive technologies commercial division, Henkel expects organic sales growth of between 5% and 7%.

– For the Beauty care business unit, negative organic sales growth of between -5 and -3% is expected. The decrease is mainly due to the measures already decided and being implemented to improve the portfolio, including the discontinuation of activities that will not be part of the future core business, representing around 5% of the business unit’s sales in 2021.

– For Laundry and home careHenkel expects organic growth between 2 and 4%.

– Henkel expects direct material prices to grow in a double-digit percentage range in 2022 compared to the 2021 annual average.

– Adjusted return on sales (EBIT margin) for the Group should be between 11.5 and 13.5%.

– For Adhesive technologies Henkel expects an adjusted return on sales between 15 and 17%, for Beauty care between 7.5 and 10%, and for Laundry and home care between 10.5 and 13%.

– Adjusted earnings per preferred share (EPS) are expected to evolve between -15 and +5% at constant exchange rates, reflecting the high level of uncertainty and volatility in the markets

In this regard, the outlook for FY2022 differs from the current outlook. consensus for 2022 for the Group (Vara Research, January 19, 2022): Organic sales growth of 4.0%; adjusted return on sales 13.6%; adjusted earnings per preferred share at 4.79 euros, corresponding to a nominal increase of +5.0% compared to the preliminary result 2021.

Further details on business development over the past year, the implementation and future design of the company’s growth program, as well as the outlook for fiscal 2022 will be presented during the analysts and press conference of February 23, 2022.

Further information on the integration process of the two business units as well as the planned portfolio measures, including expected synergies and restructuring expenses, will – looking ahead to today – be released together with the figures for the first quarter on May 5, 2022.

* Adjusted for one-time expenses and revenues and restructuring

Henkel AG & Co. KGaA

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Warning
This information contains forward-looking statements based on current estimates and assumptions made by the 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, etc. These statements should not be construed as guaranteeing that these expectations will be realized. be precise. Future performance and actual results achieved by Henkel AG Co. KGaA and its affiliates are subject to a number of risks and uncertainties and therefore may differ materially from forward-looking statements. Many of these factors are beyond Henkel’s control and cannot be accurately estimated in advance, such as the future economic environment and the actions of competitors and other market participants. Henkel neither intends nor undertakes to update any forward-looking statements.

This document includes additional financial indicators which are not clearly defined in the applicable financial reporting framework and which are or may be alternative performance measures explained in more detail at https://www.henkel.com/investors-and -analysts/financial-glossary . These supplemental financial measures should not be considered in isolation or as alternatives to measures of net assets and financial condition or results of operations of Henkel as presented in accordance with the applicable financial reporting framework in its reports or statements. respective financiers. Other companies that state or describe alternative measures of performance with the same name may calculate them differently.

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