Henkel AG & Co. KGaA

Henkel Informs On Business Performance January Through March 2000

Düsseldorf (ots) - Very Good Start In The New Year Sales And Profits Show Strong Growth All Business Sectors Performed Successfully Market Share Gains From Innovative Products Sales, Profits and Cash Flow From January through March 2000, the Henkel Group realized sales of 3.0 billion euro. This represents a 12.9 percent increase over the same period last year. Organic growth amounted to 8.4 percent. Foreign exchange influences contributed 5.0 percentage points to sales growth, while divestments accounted for a negative influence of 0.5 percentage points. Sales of the German companies rose by 3.3 percent. The foreign Group companies achieved an increase in sales of 16.5 percent. In North America, sales rose by 18.6 percent, while in Latin America the increase was 28.9 percent. In the Asia Pacific region, sales growth amounted to 36.6 percent. Operating profit (EBIT) was at 207 million euro and thus 17.3 percent up on the level of 176 million euro for the previous year. All business sectors except Cosmetics/Toiletries achieved double digit growth. Return on investment improved to 12.5 percent (previous year: 10.9 percent). With 275 million euro, the cash flow of the Henkel Group was slightly below the level of the previous year. The 31 million euro increase in EBIT was offset by higher corporate income taxes which rose by 38 million euro. Net earnings for the quarter increased by 61.8 percent to 110 million euro. In the first quarter of 1999, net earnings were impacted by 16 million euro of restructuring charges from Clorox due to the acquisition of First Brands. Henkel Group Cash Flow Statement January-March 1999 January-March, 2000 Euro million Euro million Operating profit (EBIT) 176 207 Income taxes paid -39 -77 Depreciation/Write-ups of fixed assets (excl. financial assets) 142 149 Net gains from disposals of fixed assets (excl. financial assets) -2 -4 Cash Flow 277 275 Change in working capital -24 14 Net cash flow from operating activities 253 289 Net cash flow from investing activities -99 -233 Net cash flow from financing activities -165 -35 Effect of exchange rate changes on cash and cash equivalents -11 20 Change in liquid funds and marketable securities 0 41 Liquid funds and marketable securities at March 31, 2000 127 182 Major Events In January, Multicore Industries located in Great Britain was acquired for 43 million GBP. With this takeover, the Adhesives business sector has further expanded its position as world market leader for engineering adhesives in the rapidly growing electronic components sector. A joint research center has been established with the Kinki University in Osaka, Japan. A research partnership was founded with the Technical University of Darmstadt, Germany, as a new, progressive approach of combining research activities and competencies in the field of science and business. The objective is to convert research results more quickly into economically viable products and processes. In view of the ongoing trend towards internationalization in the detergents business, Henkel and The Dial Corporation (USA) have jointly acquired a majority (80 percent of the shares) in the Mexican detergents company Fabrica de Jabon Mariano Salgado S.A. de C.V. To create a sustainable incentive for the management of the Henkel Group, Henkel has introduced a new Stock Incentive Program. In order to finance this program, the buy-back of up to max. 10 percent of the subscribed capital was approved by the Annual General Meeting. A procurement marketplace on the internet will be founded for the industrial businesses jointly with SAP, Degussa-Hüls and BASF. A similar project is being pursued with Danone, Nestlé and SAP for the consumer goods businesses. Development of Business Sectors The Adhesives business sector increased sales by 16.6 percent to 695 million euro. Operating profit increased by 28.7 percent to 68 million euro. This is attributable to the very positive business development in Germany, North America and Asia. Consumer and Craftsmen Adhesives started the year 2000 successfully, achieving a sales growth of 12 percent. In particular, home improvement and decoration products registered an outstanding first quarter in the specialist trade sector. Developments in the do-it-yourself business were also very encouraging. The introduction of Metylan Tabs and the further international roll-out of the "No More Nails" concept showed good results. Innovative roller products for adhesive-bonding and correction likewise contributed to the growth of the European business. In the USA, business activities involving adhesive tape continued to develop positively. Industrial and Packaging Adhesives increased sales by 16 percent. In North America, market positions were expanded, particularly in relation to labeling and bookbinding adhesives and wood glues. The market leadership in Liofol laminating adhesives was strengthened. Engineering Adhesives (Loctite) achieved a sales increase of 25 percent. The positive development was essentially the result of business growth in North America and Asia Pacific. Business in the highly profitable reactive adhesives segment developed particularly well. The Cosmetics/Toiletries business sector succeeded in increasing sales by 10.2 percent to 456 million euro, with the Hair Salon business making a particularly large contribution. As a result of increased advertising spending supporting the further international roll-out of new products, operating profit rose by 2 percent to 26 million euro. Sales of Hair Cosmetics rose by 7 percent during the first quarter. In Germany, the market leadership in hair colorants was extended. Market shares were significantly increased in France, Italy and Benelux. Schauma and Taft consolidated their market leadership in hair care and styling products in Germany. Business with bodycare products increased by 10 percent. The Fa Classic line was extended through the introduction of two new fragrances (Green Tea and Spring Flower). The introduction of the Fa Men series in Germany and Eastern Europe brought market share gains. In the case of skincare products, the anti-aging line Diadermine Force Retinol registered market share increases in Spain and France. The Diadermine line was introduced in Germany and exceptionally well received by the trade. The Hair Salon business performed very successfully, increasing sales by 28 percent. The Detergents/Household Cleaners business sector increased sales by 6.3 percent to 677 million euro. Operating profit increased by 14.3 percent to 53 million euro. The 8 percent increase in sales in Heavy-Duty Detergents was very satisfactory. Specialty Detergents also performed very well with an increase in sales of 13 percent. Innovative product concepts, introduced at the end of 1999 and the beginning of 2000, mainly contributed to this growth. Noteworthy are "Svit", launched in the new market for dry cleaning in the tumble dryer, and also "Vernel Soft & Easy", which facilitates ironing. Sales in Household Cleaners were slightly up on the level of the same period last year. Market leadership in Germany was regained with the machine dishwashing detergent "Somat 2 in 1". This innovative product is also currently being launched in other European countries. The Industrial and Institutional Hygiene/Surface Technologies business sector achieved an increase in sales of 13.5 percent to 455 million euro. Operating profit improved by 34.2 percent to 34 million euro due to the strong performance of Surface Technologies and favorable exchange rate effects. In the Industrial and Institutional Hygiene business, sales rose by 9 percent to 213 million euro. The Hospital Hygiene unit achieved a sales increase of 8 percent. Sales of the Institutional Hygiene business likewise increased by 8 percent. Benefitting from successful product introductions, sales of the Textile Hygiene and the Food & Beverage/P3 business rose by 7 percent. The sustained upswing in business development at Surface Technologies resulted in a sales increase of 18 percent to 242 million euro. All regions contributed to this encouraging development. The automotive and the industrial businesses succeeded in expanding their leading positions worldwide. The continuing expansion of activities involving new technologies and innovative products was successful; examples are Terocore (polymer foam for car body reinforcement) and Granocoat (organic coating of sheet steel components). During the first quarter, the Chemical Products business sector, now a legally independent company operating under the name Cognis, achieved an increase in sales of 18.3 percent to 707 million euro. Operating profit rose by 62.4 percent to 51 million euro compared to a relatively weak first quarter 1999. The revival at the Oleochemicals division, which already began towards the end of 1999, accelerated through the first quarter of 2000. The increase in sales of 18 percent was mainly attributable to the performance of oleochemical base materials, especially fatty acids, and to Nutrition & Health. Care Chemicals continued its positive sales development with an increase of 14 percent. The businesses in Europe and Asia Pacific contributed strongly to this development. In spite of the sale of the paper auxiliaries business, sales of Organic Specialty Chemicals rose by 14 percent. Sales in paints and coatings increased significantly thanks to the introduction of new products offering improved customer benefits and ecologically compatible solutions. Business in textile auxiliary products and synthetic lubricants developed very positively. Henkel Group Sales January - March 2000 Sales by Jan.-March 1999 Jan.-March 2000 Change product sector EUR million EUR million in percent Adhesives 596 695 16.6 Cosmetics/Toiletries 414 456 10.2 Detergents/ Household Cleaners 637 677 6.3 Industrial and Institutional Hygiene/ Surface Technologies 401 455 13.5 Chemical Products (Cognis) 598 707 18.3 Other 24 23 - Total 2,670 3,013 12.9 Sales by region Germany 740 764 3.3 Europe (without Germany) 1,184 1,316 11.1 North America 430 510 18.6 Latin America 97 124 28.9 Africa 28 38 33.4 Asia/Pacific 191 261 36.6 Total 2,670 3,013 12.9 Major Participations Ecolab Inc., St. Paul, Minnesota, USA, in which Henkel holds a 25 percent interest, achieved a sales increase of 8 percent to 526 million US$ in the first quarter of 2000. The introduction of new products in the USA particularly contributed to this development. Net earnings for the period rose by 22 percent to 43 million US$. The Clorox Company, Oakland, California, USA, in which Henkel has a 26.6 percent interest, achieved an increase in sales of 1 percent to 2,930 million US$ during the first three quarters of fiscal 1999/2000. In the third quarter, Household Products performed particularly well thanks to new product launches and sound international business growth. Net earnings for the period under review amounted to 269 million US$, representing an increase of 37 percent. Capital Expenditures Additions to fixed assets during the first quarter of 2000 amounted to 87 million euro. These were essentially attributable to projects in the Brand-Name Products, Adhesives and Chemical Products sectors. Employees As of March 31, 2000, the number of employees at the Henkel Group was 56,663. The proportion of Henkel personnel working outside Germany was 73 percent. Employees Employees (as of) Dec. 31, 99 March 31, 00 Change in percent Germany 15,412 15,460 0.3 Abroad 40,984 41,203 0.5 Total 56,396 56,663 0.5 Outlook This year we target stronger organic growth combined with higher profitability. In view of the good business performance achieved in the first quarter, the positive worldwide economic outlook and the ongoing success coming from the introduction of innovative products and technologies, we are confident of achieving a consolidated sales figure in excess of 12 billion euro and a double-digit increase in earnings per share for fiscal 2000. Henkel KGaA The Management Board Henkel Group Consolidated Balance Sheet December 31, 1999 March 31, 2000 Euro million % Euro million % Tangible and intangible assets 4,717 47.8% 4,871 47.0% Financial assets 787 8.0% 856 8.3% Fixed assets 5,504 55.8% 5,727 55.3% Deferred tax Assets 237 2.4% 244 2.3% Inventories 1,505 15.3% 1,568 15.1% Accounts receivable And miscellaneous Assets 2,469 25.0% 2,643 25.5% Liquid funds/ marketable securities 141 1.5% 182 1.8% Current assets 4,115 41.8% 4,393 42.4% Total assets 9,856 100.0% 10,364 100.0% Equity excluding minority interests 2,948 29.9% 3,024 29.2% Minority interests 290 3.0% 299 2.9% Equity including minority interests 3,238 32.9% 3,323 32.1% Provisions for pensions and similar obligations 1,871 19.0% 1,897 18.3% Other provisions 1,159 11.7% 1,220 11.8% Provisions 3,030 30.7% 3,117 30.1% Provisions for deferred tax liabilities 184 1.9% 189 1.8% Borrowings 1,915 19.4% 2,009 19.3% Trade accounts Payable 1,029 10.4% 1,036 10.0% Other liabilities 460 4.7% 690 6.7% Liabilities 3,404 34.5% 3,735 36.0% Total equity and liabilities 9,856 100.0% 10,364 100.0% Henkel Group Consolidated Statement of Income January-March 1999 January-March, 2000 Euro million % Euro million % Sales 2,670 100.0% 3,013 100.0% Cost of sales 1,451 54.3% 1,628 54.0% Gross profit 1,219 45.7% 1,385 46.0% Marketing, selling and distribution costs, administrative expenses incl. operating income and charges 992 37.2% 1,114 37.0% Amortization of goodwill 36 1.3% 39 1.3% Restructuring Costs 15 0.6% 25 0.8% Operating profit (EBIT) 176 6.6% 207 6.9% Financial items -49 -1.9% -21 -0.7% Earnings before Tax 127 4.7% 186 6.2% Taxes on income -59 -2.2% -76 -2.5% Net earnings 68 2.5% 110 3.7% Next important dates: Publication of Interim Report on January through June 2000 Monday, August 14, 2000 Publication of Quarterly Report on January through September 2000 Monday, November 13, 2000 Fall Press Conference and Analysts' Meeting Monday, November 13, 2000 Press Conference on Fiscal 2000 and DVFA Analysts' Meeting: Monday, March 19, 2001 Annual General Meeting of Henkel KGaA: Monday, April 30, 2001 Contact: Investor Relations Magdalena Moll Waltraud Müller Tel: +49-2 11-7 97-16 31 Tel: +49-2 11-7 97-72 78 Fax: +49-2 11-7 98-28 63 Fax: +49-2 11-7 98-28 63 Original-Content von: Henkel AG & Co. 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