Results Are In For Henkel

“For Henkel—and the world economy as a whole—2009 will go down as a challenging year. Nevertheless, we have made good progress towards achieving our 2012 financial targets as proven by our outstanding results in the fourth quarter of 2009,” said Kasper Rorsted, chairman of the Henkel management board, upon release of the company full year results.

All told, Henkel’s group sales fell 3.9% compared to the prior year, however Rorsted noted that laundry and home care and cosmetics/toiletries businesses “expanded their market positions and further increased their profitability.

Henkel said its Laundry & Home Care and Cosmetics/Toiletries units continued to perform very well with organic growth rates of 2.9% and 3.5%, respectively. Group operating profit (EBIT) rose 38.6% to approximately $1.5 billion. Return on sales (EBIT margin) was 8%, while adjusted return on sales decreased slightly from 10.3% to 10.0% due to the margin decline at Henkel’s third main business, adhesive technologies. By contrast, adjusted return on sales for laundry and home care and cosmetics/toiletries improved to 12.8% and 12.9% respectively, the company said.

Henkel’s Laundry & Home Care business sector increased sales organically by 2.9% in fiscal 2009 while in nominal terms, sales fell by 1.0% to $5.7 billion. The rise in organic sales was attributed to double-digit improvements in the growth regions of Eastern Europe and Africa/Middle East, the company said. Sales performance in Asia was influenced by the exit from the Chinese market at the end of 2008. Adjusted operating profit increased substantially by 17.8%, to $736 million.

Within laundry, the strongest growth momentum was generated by heavy-duty detergents and fabric softeners. Henkel also benefited from successful innovations such as Persil ActicPower and Vernel Crystals in Europe and the roll out of Purex Complete 3-in-1 in North America. Organic sales growth in home stemmed from improved sales of dishwashing detergents and bathroom products. While sales in machine dishwashing products increased particularly in Eastern Europe, hand dishwashing product sales experienced their highest growth rates in the Africa/Middle East subregion, the company said. The strongest growth in the case of the bathroom products was in Eastern Europe. With new products having been launched onto the market here, the company also succeeded in increasing its overall market share.

On the beauty side of its business,Henkel recorded organic sales growth of 3.5%; in nominal terms, sales were stable at $4.18 billion due to foreign exchange effects and divestments in North America. Organic growth was boosted by the performance of the branded consumer goods business in Eastern Europe as well as in Africa/Middle East, Latin America and Asia-Pacific. Adjusted operating profit was $537.9 million, 2.1% above the level for the previous year. Systematic cost reduction measures and the further elimination of complexity resulted in an improvement in the business sector’s cost structures. Adjusted return on sales rose slightly over versus prior year, reaching a record high of 12.9%.

In hair care, sales experienced substantial organic growth while market shares rose to new heights. The primary growth drivers were the hair care and colorants businesses, due particularly to the highly successful international launches of the Syoss brand and Schwarzkopf Essential Color, a permanent colorant without ammonia. In the styling segment, significant share gains in a declining market were made with new launches under Taft and Got2b. The Body Care business also continued to perform well, with Fa and Dial successfully continuing their innovation offensive, gaining market share with a number of new launches.

Within skin care, the introduction of Diadermine’s Dr. Caspari Method Dermo-Ident treatment contributed to further consolidation of the position enjoyed by the Diadermine brand in the anti-aging segment.

In the oral care business, good results were achieved with the new freshness variant Theramed 2-in-1 Arctic White.

And despite the difficulties of the market environment, the Hair Salon segment was able to further expand its position as the world’s number three, the company said.