Henkel Reports Strong Performance in Third Quarter

Strong nominal sales growth achieved: Sales increased 4.9% to EUR 4.981 billion. Meanwhile, strong organic sales growth (OSG) of 3.0% was recorded. Operating profit (EBIT) margin* reached highest level: 18% with an increase of 40 basis points. Earnings per share (EPS)* showed strong growth: 1.54 Euro with an increase of 8.5%. Full-year target: Organic sales growth (OSG) confirmed in the range of 2%-4%, operating profit (EBIT) margin confirmed to be realized at above 17% level. Earnings per share (EPS)* target was raised to around 9%. Henkel Chief Executive Officer Hans Van Bylen said, "As Henkel, we demonstrated strong performance in the third quarter. In an increasingly challenging market, we further increased our sales and earnings. All three business units contributed to this positive development. While achieving strong organic sales growth of 3%, we increased nominal sales by 5%." Van Bylen continued his remarks: "We achieved a significant increase in operating profit (EBIT) margin and our EBIT margin reached its highest level at 18%. We realized considerable growth in earnings per share on preferred stock. Moreover, we successfully completed three acquisition projects that will significantly strengthen our business portfolio." Hans Van Bylen stated, "We expect unstable and uncertain market conditions to continue. Negative currency effects will also continue to increase. Challenging conditions in consumer products markets are expected to persist. However, we are determined to continue our successful development and implement our strategic priorities." he said. Henkel confirmed its sales target for the 2017 financial year. Despite the increasingly negative impact of currency effects, Henkel also raised its earnings per share (EPS) target. Van Bylen stated, "We maintain our expectations that organic sales growth on a group basis will be in the range of 2%-4% and our EBIT margin will be realized above 17%. For earnings per share on preferred stock, we expect growth of around 9%."

Sales and Profit Performance in Third Quarter 2017

In the third quarter of 2017, sales reached EUR 4.981 billion with nominal growth of 4.9%. Currency movements had a negative impact of 4.2% on sales. Acquisitions and divestitures accounted for 6.1% of sales growth. Organic sales, adjusted for currency, acquisitions and divestitures impacts, showed strong growth of 3%. Adhesive Technologies business unit reported very strong organic sales growth of 4.9%. Beauty Care business unit realized organic sales growth of 0.5%. Laundry and Home Care business unit reported organic sales growth of 1.8%. Emerging markets made an above-average contribution to the group's organic growth, showing very strong development of 5.0%. Developed markets recorded positive organic sales growth of 1.5%. Western Europe region sales remained at the same level as the same quarter of the previous year. Organic sales growth was recorded in all other regions: Sales in Eastern Europe increased 4.8%. Africa/Middle East reported sales growth of 3.2%. North America sales increased 3.2%. Latin America achieved sales growth of 2.8% and Asia-Pacific region sales increased 6.4%. Adjusted operating profit (EBIT) increased 7.1% to EUR 897 million. All three business units contributed to this increase. Adjusted operating profit margin (EBIT) increased 0.4 percentage points to 18.0%. Earnings per share on preferred stock (EPS) increased from EUR 1.42 to EUR 1.54 with growth of 8.5%. Net working capital as a percentage of sales increased 0.4 percentage points to 5.6% compared to the same period of the previous year.

Business Unit Performance

Adhesive Technologies business unit achieved very strong organic sales growth of 4.9% in the third quarter. In nominal terms, sales increased 4.5% to EUR 2.373 billion. Adjusted operating profit increased 5.5% to EUR 454 million. Adjusted operating profit margin increased strongly to 19.1%. Beauty Care business unit realized organic sales growth of 0.5%. In nominal terms, sales fell below the same quarter of the previous year and reached EUR 941 million. Adjusted operating profit showed positive growth of 0.5% to EUR 171 million. Adjusted operating profit margin reached 18.1% with very strong development. Laundry and Home Care business unit realized organic sales growth of 1.8% in the third quarter. In nominal terms, sales increased 10.6% to EUR 1.636 billion when compared to the same period of the previous year. Adjusted operating profit grew 10.9% to EUR 294 million. Adjusted operating profit margin remained at the same level as the same period of the previous year, reaching 17.9%.

Strategic Acquisitions Strengthen Portfolio

Henkel successfully completed acquisitions of global Darex Packaging Technologies, Sonderhoff Group and Nattura Laboratorios, further strengthening its business portfolio.

Strong Business Performance in First Nine Months of 2017

Sales exceeded EUR 15 billion for the first time, reaching EUR 15.143 billion with growth of 9.3%. Organic sales, adjusted for currency, acquisitions and divestitures impacts, showed growth of 3.1%. All three business units contributed to this performance. Adjusted operating profit (EBIT) increased 10.5% from EUR 2.407 billion to EUR 2.660 billion. Adjusted operating profit margin increased from 17.4% to 17.6%. Earnings per share on preferred stock grew 10% from EUR 4.09 to EUR 4.50. In the first nine months of 2017, Adhesive Technologies business unit realized very strong organic sales growth of 4.6%. Adjusted operating profit margin recorded strong growth to 18.8%. Beauty Care business unit showed organic sales growth of 0.9%. Adjusted operating profit margin increased strongly to 17.6%. Laundry and Home Care business unit reported strong organic sales growth of 2.2%. Adjusted operating profit margin reached 17.6% level. As of 30 September 2017, Henkel's net financial position was stated as EUR -3.336 billion (31 December 2016: EUR -2.301 billion). When compared to 2016 results, the main reason for this outcome was identified as payments made for acquired companies.

Updated Outlook for 2017

Henkel updated its outlook for the 2017 financial year. The Henkel Group's expectation for organic sales growth was reported in the range of 2%-4%. Henkel's current organic growth rate expectations are reported at 4%-5% for Adhesive Technologies business unit, 0%-1% for Beauty Care business unit, and around 2% for Laundry and Home Care business unit. For adjusted operating profit margin (EBIT), Henkel maintains its expectation to achieve a level above 17% when recording an increase over the previous year. Henkel, taking into account strong business performance, renewed its earnings per share target on preferred stock and projects growth of approximately 9%.