Henkel AG & Co. KGaA

Henkel with record high in sales and earnings

Düsseldorf (ots) - - Sales increased by 4.1 percent to 11.4 billion euro - Operating profit improved by 8.3 percent to 857 million euro - Net earnings at 404 million euro reached a new record high - Dividends again increased: 0.87 euro per ordinary share, 0.93 euro per preferred share - Strong start into the year 2000 Sales: 11.4 billion euro plus 4.1 percent Düsseldorf, Germany - Despite a difficult economic environment the Henkel Group has mastered the challenges in 1999 very well. Sales of the Henkel Group increased by 4.1 percent to 11.4 billion euro in 1999 (1998: 10.9 billion euro). The economic recovery in Europe where sales increased by 2.2 percent to 8.0 billion euro, played a major role in this development. Businesses in North America increased sales by 7.8 percent to 1.9 billion euro, mainly due to the rise in the exchange rate of the dollar against the euro. In Asia the economic recovery and positive exchange rate effects were markedly reflected in the sales figure which increased by 20.9 percent to 926 million euro. Operating profit: 857 million euro Operating profit (EBIT) rose to a new record of 857 million euro, an increase of 8.3 percent. All business sectors contributed to this good performance. Return on investment improved from 12.4 to 13.2 percent. Net earnings: 404 million euro With an increase of 8.6 percent, net earnings reached a new record high of 404 million euro. Cash flow: 1,247 million euro Cash flow of the Henkel Group increased by 17.1 percent in 1999 to 1,247 million euro. The ratio of cash flow to sales was 11.0 percent. Earnings per share: Based on calculation in accordance with IAS earnings per ordinary share were 2.46 euro (2.28 euro), per preferred share 2.54 euro (2.33 euro). Dividends: Henkel's recommendation to the Annual General Meeting on May 8, 2000 will be for a dividend of 0.87 euro (1998: 0.79 euro) per share to be paid on the ordinary shares and 0.93 euro (1998: 0.84 euro) per share on the preferred shares. For shareholders liable to tax at the full rate who are entitled to the tax credit, the gross distribution - i.e. the cash dividend plus tax credit - will total 1.24 euro (1998: 1.13 euro) on each ordinary share and 1.32 euro (1998: 1.20 euro) on each preferred share. Total dividends increase by 10.1 percent to 131 million euro. The payout ratio, i.e. the total dividends in percent of net earnings after minority interests, equals 36.0 percent (1998: 35.4 percent). Segment reporting: Henkel now reports on the following five sectors: Adhesives, Cosmetics/Toiletries, Detergents/Household Cleaners, Industrial and Institutional Hygiene/Surface Technologies and Chemical Products carved-out under the name of Cognis. This segment reporting is completely in conformity with IAS. The business sector Adhesives achieved a sales increase of 5.4 percent to 2.5 billion euro. Operating profit increased by 16.5 percent to 237 million euro. Sales of the business sector Cosmetics/Toiletries rose by 6.4 percent to 1.8 billion euro, while operating profit increased by 11.4 percent to 123 million euro. The business sector Detergents/Household Cleaners attained a sales increase of 2.3 percent to 2.6 billion euro. Operating profit improved by 7.6 percent to 177 million euro. The new business sector Industrial and Institutional Hygiene/ Surface Technologies increased sales by 4.2 percent to 1.8 billion euro. Operating profit rose by 12.2 percent to 148 million euro. Sales of the Chemical Products business sector (Cognis) increased by 4.4 percent to 2.6 billion euro. Operating profit improved by 12.0 percent to 182 million euro. This figure includes both extraordinary gains from the disposal of the paper auxiliaries business and carve-out costs. Capital expenditures: 746 million euro Capital expenditures on property, plant and equipment, intangible assets and financial fixed assets in 1999 amounted to 746 million euro. Property, plant and equipment accounted for 440 million euro, intangible assets for 133 million euro, and financial assets for 173 million euro. In the year 2000 investments in property, plant and equipment will be at a similar level as those in 1999. The focus will be on the business sectors Adhesives, Detergents/Household Cleaners and Chemical Products. Research and development: 279 million euro Expenditure on research and development in the Henkel Group in 1999 was at 270 million euro, up by 11.6 percent compared with the previous year. As an average for the year, around 3,800 employees were employed in research, development and application engineering worldwide. Employees: 56.400 The increasing globalization of the Henkel Group is reflected in the development of personnel. In the last five years, the number of employees outside Germany has increased by 14,274 to a total of 40,984. The proportion of total employees located outside Germany as per end of 1999 was at 72.7 percent. The total number of employees decreased in 1999 by 223 to 56,396. Outlook The prospects for Henkel's businesses in the year 2000 are positive. Sales and earnings registered double-digit growth over the first two months. Henkel's markets will benefit most of all from the continued cyclical upturn in the chemicals sector, the sustained high level of activity in the automotive industry, the gradual improvement in the construction sector and the continuing rise in consumer spending against the background of stronger economic growth in Europe. For the year 2000 Henkel has chosen the motto "Year of organic growth". Growth through innovation, international roll-out of successful brand-name products and systems concepts, and time-to-market are central elements of this strategy. The measures introduced in the "Year of ROI" will further be pursued. Henkel's targets for the year 2000 are again ambitious. Another marked improvement in sales and earnings shall be achieved this year. Ecological leadership is based on operating profitably Presentation of 9th Report on Environment, Safety, Health Henkel assigns a high priority to safety, health and the environment (SHE). In its SHE Report, presented in parallel with the 1999 Annual Report, Henkel documents that it is well on the way to achieving its objective of global implementation of the standards announced in its 1998 SHE Report. The process of continuous improvement is bearing fruit. A comparative study of 50 of the world's biggest chemical companies by an independent institute placed Henkel at the top of the list. Since the last such study in 1996, when it occupied second place, the Company has made above-average progress in all ten evaluated ecological fields. Henkel will remain committed to sustainable development in the future, placing equal emphasis on ecological, economic and social aspects. "A critical public judges us on our success in achieving a balanced relationship between these three aspects," emphasize Dr. Hans-Dietrich Winkhaus, President and Chief Executive Officer, and Dr. Wolfgang Gawrisch, Corporate Vice President Research/Technology. A stable equilibrium is essential if Henkel is to consolidate and improve its competitiveness in the now largely globalized markets. Ultimately, only commercial success and sufficient profits can secure the Company's future. The 1999 report on safety, health and the environment is concise. It concentrates on the SHE objectives and data for the Henkel Group worldwide and provides information about the achievement of the past years' objectives. The Company's SHE information can now be viewed online on the Internet (www.Henkel.de), where it is regularly updated. Henkel Unveils New Stock Incentive Plan - Worldwide 900 managers eligible to participate - Linked to the absolute and relative performance of the Henkel preferred share - To be financed by share buy-back program Stock Incentive Plan Proposal The Management Board, the Shareholders' Committee and the Supervisory Board of Henkel KGaA will propose a new Stock Incentive Plan at the AGM on May 8, 2000. Their objective is to let the Company's 900 top executives worldwide participate in the price appreciation of the Henkel stock, and thus in the value increase of the Company. Annually revolving options with a five year term on Henkel preferred shares will be granted to the participating managers. Purchase Price The purchase price for the first tranche of the stock options, which will be issued in 2000, will be equivalent to the average closing price of the Henkel preferred share over the first 60 days of XETRA trading following the AGM. Performance Goals Each participant will be able to purchase up to 8 shares per stock option, depending on the degree of attainment of two performance goals. Attainment of the goals will be measured over a three-year period. The performance goals are set in terms of the absolute appreciation of the Henkel preferred share on the stock market, and of the preferred share's relative performance as compared with the Dow Jones Stoxx Index. Absolute Performance Depending on the absolute price appreciation of the Henkel preferred share, participating managers will be able to purchase the following number of preferred shares per stock option: - One preferred share if the share price rises by more than 10 % - Two preferred shares if the share price rises by more than 15 % - Three preferred shares if the share price rises by more than 20 % - Four preferred shares if the share price rises by more than 25 % Five preferred shares if the share price rises by more than 30 % Relative Performance In addition, up to three preferred shares per stock option can be purchased if the Henkel preferred share achieves the following performance relative to the Dow Jones Stoxx Index: - One preferred share if the Dow Jones is outperformed by more than 1 % - Two preferred shares if the Dow Jones is outperformed by more than 4 % - Three preferred shares if the Dow Jones is outperformed by more than 7 % Blocking and Exercise Periods The stock options will be blocked for an initial period of three years. Thereafter they can be exercised, insofar as the performance goals have been achieved up to the end of the five-year period, within a time frame of 28 days after the scheduled regular public reporting dates. Number of stock options granted The number of stock options granted differs according to management levels. Personal Investment The 42 members of the two top management levels of the Henkel Group must make a personal investment in Henkel preferred shares in order to become entitled to participate in the Stock Incentive Plan. This personal investment amounts to one Henkel preferred share per stock option. The preferred shares purchased as part of this personal investment will be blocked for a period of three years. Volume of the Stock Incentive Plan The first tranche of the Stock Incentive Plan will comprise approximately 125,000 stock options, giving managers the right to acquire up to one million Henkel preferred shares. The subsequent tranches will have a similar volume. The total volume of the Stock Incentive Plan will comprise a maximum of one million stock options, giving participants the right to acquire up to eight million Henkel preferred shares. Share Buy-Back Proposal In addition, the Boards of Henkel KGaA will propose to the AGM a share buy-back program for up to 14.6 million ordinary and preferred shares. This is equivalent to the maximum legal limit of 10 % of the Company's subscribed capital. Stocks will be acquired on the stock exchange or by means of a bid made to all shareholders. Pupose for Share Buy-Back Program The Henkel shares acquired through the buy-back program can be used for: Stock Incentive Plan - Sale of preferred shares to participating managers as part of the new Stock Incentive Plan. Henkel intends to use the AGM's authorisation for the buy-back program to acquire stock for the Stock Incentive Plan in order to avoid equity dilution. Acquisition of Companies - Sale of shares to third parties for the purpose of acquiring companies or of carrying out mergers. At the moment there are no definite plans to utilize Henkel stock for this purpose. Redemption of Henkel Shares - Redemption of Henkel shares without the need for further resolutions by the AGM. At the moment Henkel has no definite plans to redeem shares for this purpose. The Management Board, the Shareholders' Committee and the Supervisory Board are convinced that the proposed Stock Incentive Plan provides a strong performance incentive for the executives of the Henkel Group. In addition, it will also lead to a significant value increase and to long-term commitment of the executives to the Company which is in the interest of Henkel and its shareholders. ots Originaltext: Henkel KGaA Im Internet recherchierbar: http://recherche.newsaktuell.de Contact: Corporate Communications Jakob Lux phone: +49-211-797-3533 Alexandra Boy phone: +49-211-797-2710 e-mail: Alexandra.Boy@Henkel.de Original-Content von: Henkel AG & Co. KGaA, übermittelt durch news aktuell

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