Henkel Reports 11% Sales Gain

Propelled by gains in emerging markets, Henkel reported an 11.2% increase in sales to nearly 15.1 billion euros. Organic sales increased 7% and share of sales of emerging markets added three percentage points to 41%. Net income imprved 82% to 1.14 million euros.


“2010 was an excellent year for Henkel. For the first time, we closed a financial year with an adjusted EBIT margin above 12%,” said Henkel CEO Kasper Rorsted. “We have improved the market positions of all our business sectors and have further strengthened our top brands. We have also been able to further expand our positions in the emerging markets. With these strong results, we are well on track to achieving our 2012 financial targets.”


Looking forward to fiscal 2011, Rorsted said: “The economic conditions remain challenging, especially in view of the highly competitive environment in which we operate, and rising raw material costs. We will continue to respond quickly and decisively to changes in our markets and continue the transformation process in our company. We are confident that we will once again outperform our markets in 2011 and expect to achieve organic growth of between 3 and 5%. We anticipate realizing an increase in our adjusted EBIT margin to around 13% and a rise in adjusted earnings per preferred share of around 10%.”


The Laundry & Home Care business sector increased sales 4.6% to 4.319 billion euros. Organically, sales rose 1.5%, with strong volume growth of 5.7%. Price and promotional competition in all relevant markets led to a decline in prices of 4.2% compared to the previous year. However, Henkel was able to more than compensate for this development through high volume growth.


From a regional perspective, the main sales growth was achieved in Europe and Africa/Middle East, the latter posting double-digit increases. Significant sales increases were also achieved in Western Europe, in particular in Germany, France and Spain. Growth was also generated in Eastern Europe, however, due to substantial price reductions this region was unable to achieve the expansion rates of previous years. In North America, the combination of aggressive pricing and consumer reluctance resulted in a decline in sales.


In the laundry business segment, the strongest growth momentum was generated by heavy-duty detergents and fabric softeners. In Western Europe, Henkel increased its market share with respect to heavy-duty detergents despite the difficult trading conditions and intense competition prevailing in the region. The primary contributor to this expansion was the Persil brand, and especially the liquid detergents. Also successful were the brands Spee and Weisser Riese, both of which generated above-average growth as a result of new powder and gel variants. In Western Europe, Eastern Europe and Israel, the positive development of Henkel’s fabric softener brands Vernel, Silan and Soad was supported by the introduction of new products with innovative freshness pearls.


Sales of cosmetics and toiletries increased 8.6% to 3.269 billion euros, while organic sales grew 4.8%. Good growth was achieved especially in Western Europe, with a strong increase in sales particularly in Germany. Sales in the emerging markets also expanded, with double-digit growth rates being achieved in Africa/Middle East, Latin America and Eastern Europe. By contrast, sales in North America declined.

Operating profit rose 6.1% to 411 million euros, and by 12.4% after adjusting for one-time gains and restructuring charges, to a new record of 436 million euros.

Sales of hair cosmetics surged, due to the launch of a series of successful products. In addition to the global expansion of the Syoss brand in new markets and categories, particularly the innovation Perfect Mousse drove growth in the colorants segment.

In body care, Fa added Active Pearls series. In North America, one of the region’s most successful body care innovations of 2010 was launched in the form of the Dial NutriSkin series. In order to further develop the global market for men’s products, Henkel also launched its U.S. brand Right Guard in Germany and Eastern Europe.


In skin care, the focus remained on the development of innovative anti-aging products. The introduction of the new sub-line Novagen under the Diadermine umbrella brand contributed to the enhancement of the brand’s position in the anti-aging segment. In oral care, good results were achieved with the new Theramed variants. The hair salon business likewise contributed to the growth dynamics of the business sector and further extended its position as the global number three in a persistently difficult market environment. Following the successful relaunch of the ammonia-free colorant, the Essensity brand saw the introduction of a completely new line of hair care and styling products. With innovative products, such as the styling powder launched under the top styling brand Osis, the hair salon segment was able to both attract new customers and strengthen business with existing clients.