Henkel AG & Co. KGaA

Henkel reports on business performance January through September 2000
Upward trend continues
Sales and profits showed sustained growth - Henkel appointed investment bank to find partner for Cognis - Favourable outlook for the year

Düsseldorf/Dublin (ots-PRNewswire) - From January through September 2000, the Henkel Group realised worldwide sales of EUR 9.4 billion. This represents a 12.1 percent increase over the same period last year. Organic growth was 6.4 percent, and foreign exchange factors contributed 4.9 percent to the rise in sales. Acquisitions/divestments also made a positive contribution amounting to 0.8 percent. Sales of the companies in Germany rose by 5.0 percent while the companies abroad achieved an increase of 14.7 percent. Overall, the businesses in Europe (excluding Germany) registered a sales increase of 8.3 percent. Sales in North America rose by 15.1 percent and in Latin America by 28.8 percent. An increase in sales of 37.3 percent was achieved in Asia/Australia. Operating profit (EBIT) increased by 11.3 percent to EUR 704 million. The business sector Industrial and Institutional Hygiene/Surface Technologies and Cognis both performed particularly well, with each registering double-digit growth rates. The return on investment improved to 13.6 percent (previous year: 13.0 percent). The cash flow of the Henkel Group decreased by 7.6 percent to EUR 813 million in the course of the first nine months of this year. The reduction is due to tax payments for prior years following a tax audit. Net earnings for the first nine months amounted to EUR 359 million. This represents an increase of 28.7 percent over last year. Cognis Henkel has appointed an investment bank to support Henkel and Cognis in a structured process in order to find a suitable partner for Cognis. This could be an industrial partner as well as a private equity investor. All options will be evaluated, including the sale of a majority stake in Cognis or the company as a whole. The decision on Cognis will take into consideration that the future partner will guarantee the best possible development of Cognis and thus open up challenging growth perspectives for its employees. Major events In August, following regulatory and anti-trust clearances, the American subsidiary Loctite Corporation assumed control of a significant share of the speciality polymers business of Dexter Corporation, U.S. This substantially strengthens the position of the Adhesives business sector in the growth industries electronics, automotive and aerospace. The newly acquired businesses achieved sales of EUR 220 million in 1999. The Dexter businesses were incorporated as financial assets in the Henkel balance sheet as of September 30, 2000. Consolidation in the Henkel Group will be implemented at the end of 2000 retrospectively. The Dexter businesses will be consolidated from mid-August until year-end 2000. Surface Technologies has established a joint venture with OAO Plastik in Russia. The company will manufacture plastisols and polyurethane adhesives for the Russian automotive industry. Henkel is thus responding to the growing importance of the Russian automotive industry. Management responsibility for this joint venture lies with Henkel. While OAO Plastik will be providing the infrastructure, buildings and the sales organisation, Henkel will be contributing machinery and know-how to the joint venture. Development of business sectors The Adhesives business sector increased sales by 14.4 percent to EUR 2.1 billion. Operating profit grew by 4.5 percent to EUR 193 million. All three divisions - Consumer and Craftsmen Adhesives, Industrial and Packaging Adhesives, and Engineering Adhesives - contributed to this favourable development. Performance in North America and Asia/Australia was particularly encouraging. Business in Russia developed positively since the economic crisis, while in Germany further market share gains were achieved against the prevailing trend. The Cosmetics/Toiletries business sector increased sales by 10.7 percent to EUR 1.5 billion. Business performance was particularly positive in Germany, Europe, Latin America and Asia/Australia. In China, measures have been introduced to improve profitability. Business in Russia has developed well following the economic crisis. Operating profit increased by 9.0 percent to EUR 95 million. The Detergents/Household Cleaners business sector increased sales by 9.4 percent to EUR 2.1 billion. Operating profit improved by 2.2 percent to EUR 158 million. Throughout Europe, sales were increased and additional market share gains were achieved. Significant sales improvements were achieved in new markets, particularly Egypt, Lebanon, India, Israel and Russia. The emerging countries already account for more than 20 percent of the overall heavy-duty detergents business. In China, the trend is improving. In the U.S., business performance of the Dial-Henkel joint venture remained below expectations. The Industrial and Institutional Hygiene/Surface Technologies business sector achieved an increase in sales of 11.1 percent to EUR 1.4 billion. Operating profit improved by 13.7 percent to EUR 121 million due to the good market development and the launch of new products. Industrial and Institutional Hygiene (the Henkel-Ecolab joint venture) improved sales by 7.1 percent to EUR 692 million. The upturn at Surface Technologies continued through the third quarter. Compared with the first nine months of the previous year, sales rose by 15.0 percent to EUR 746 million. The businesses in Europe and all the countries of the Asia/Australia region are enjoying persistently good growth. North America experienced a slowdown in sales growth. Following the recession in the previous year, business in Latin America improved. Activities in Mexico developed particularly well. During the first nine months of 2000, the Chemical Products business sector, now an independent company operating under the name Cognis, achieved an increase in sales of 14.8 percent to EUR 2.2 billion.This improvement was mainly due to the good performance of the Oleochemicals, Care Chemicals and Specialty Chemicals businesses and partly also to favourable foreign exchange rate developments. Operating profit rose by 58.8 percent to EUR 165 million. Major participations Ecolab Inc., St. Paul, Minnesota, U.S., in which Henkel holds a participating interest of 25 percent, registered a growth in sales of 9 percent to US$ 1.7 billion in the first nine months of 2000. This continuing high level of performance was attributable to positive business developments in all regions coupled with the successful introduction of new products and services. Net earnings in the period under review rose by 13 percent to US$ 151 million. The Clorox Company, Oakland, California, U.S., in which Henkel has a shareholding of 26.7 percent, achieved a 5 percent increase in sales to US$ 985 million during the first quarter of the fiscal year 2000/2001. At US$ 98 million, net earnings exceeded the level of the previous year by 13 percent. This was mainly due to the successful introduction of new products and strong international growth. Employees As of September 30, 2000, the number of employees at the Henkel Group was 59,902. The proportion of Henkel personnel working outside Germany was 74 percent. Outlook With all business sectors continuing to perform well through the first nine months of this year, the Henkel Management Board remains confident of achieving record profits for the Henkel Group for the full year 2000 and expects to reach sales of at least EUR 12.5 billion, as well as a double-digit increase in operating profit and earnings per share. This firm prediction is based on sound organic growth in all business sectors. On November 13, 2000 at 9.00 AM Eastern Standard Time (3.00 PM German Time) you can follow the live webcast of the Analysts' and Investors' meeting on our website at www.ir.henkel.com. An archive of the webcast will also be available at www.ir.henkel.com beginning 3 hours after the completion of the live webcast. Henkel Group Key Data by Region January - September 2000 in EUR million Europe North Latin Africa Asia/ Group America America Australia Sales Jan.-Sept. 2000 6,365 1,598 413 154 910 9,440 Sales Jan.-Sept. 19991) 5,947 1,387 321 105 663 8,423 Change in %2) 7.0 15.1 28.8 46.6 37.3 12.1 EBIT Jan.-Sept. 2000 599 44 21 7 33 704 EBIT Jan.-Sept. 1999 522 79 18 7 6 632 Change in %2) 14.6 -44.1 18.3 4.2 394.6 11.3 EBIT Margin Jan.-Sept. 2000 in % 9.4 2.8 5.2 4.6 3.6 7.5 EBIT Margin Jan.-Sept. 1999 in % 8.8 5.7 5.6 6.5 1.0 7.5 1) adjusted due to Cognis carve-out 2) changes from previous year on the basis of figures in thousand euro Henkel Group Segment Information by Business Sectors January through September 2000 (in EUR million) EUR m AdhesivesCosmetics/Detergents/Hygiene/Cognis Other Henkel Toiletries Household Surface Group Cleaners Tech- nologies Sales Jan.-Sept. 2000 2,140 1,491 2,123 1,438 2,181 67 9,440 Sales Jan.-Sept 1999 1,871 1,347 1,941 1,294 1,900 70 8,423 Change in % 14.4 10.7 9.4 11.1 14.8 -5.6 12.1 EBITDA Jan.-Sept. 2000 331 170 238 187 268 -26 1,168 EBITDA Jan.-Sept. 1999 304 156 231 172 218 -3 1,078 Change in % 9.2 9.0 3.0 8.7 22.9 - 8.3 EBITDA Margin Jan.-Sept. 2000 in % 15.5 11.4 11.2 13.0 12.3 - 12.4 EBITDA Margin Jan.-Sept.1999 in % 16.2 11.6 11.9 13.3 11.5 - 12.8 EBIT Jan.-Sept. 2000 193 95 158 121 165 -28 704 EBIT Jan.-Sept. 1999 185 87 154 107 104 -5 632 Change in % 4.5 9.0 2.2 13.7 58.8 - 11.3 EBIT Margin Jan.-Sept. 2000 in % 9.0 6.4 7.4 8.4 7.6 - 7.5 EBIT Margin Jan.-Sept. 1999 in % 9.9 6.5 8.0 8.2 5.5 - 7.5 ROCE Jan.-Sept. 2000 in % 12.9 14.1 27.7 20.8 12.1 - 14.6 ROCE Jan.-Sept. 1999 in % 13.1 13.8 28.4 19.2 9.0 - 14.1 Return on Investment Jan.-Sept. 2000 in % 11.0 12.2 27.4 20.3 11.9 - 13.6 Return on Investment Jan.-Sept. 1999 in % 11.1 11.7 28.3 18.4 8.8 - 13.0 Depreciation/write-ups Jan.-Sept. 2000 138 75 80 66 103 2 464 incl. Amortization of goodwill 67 33 6 11 5 - 122 Depreciation/write-ups Jan.-Sept. 1999 119 69 77 65 114 2 446 incl. Amortization of goodwill 59 30 4 10 5 - 108 Capital expenditures (excl. financial assets) Jan.-Sept. 2000 84 30 60 53 77 3 307 Capital expenditures (excl. financial assets) Jan.-Sept. 1999 62 35 82 50 92 2 323 Research and development costs (R & D) Jan.-Sept. 2000 60 25 50 36 51 12 234 R & D as % of sales 2.8 1.7 2.4 2.5 2.3 - 2.5 Research and development costs (R & D) Jan.-Sept. 1999 54 22 44 34 45 8 207 R & D as % of sales 2.9 1.6 2.3 2.6 2.4 - 2.4 Henkel Group Consolidated Balance Sheet December 31, 1999 Sept. 30, 2000 MEUR (%) MEUR (%) Tangible and intangible assets 4,717 47.8 5,035 43.6 Financial assets 787 8.0 1,416 12.3 Fixed assets 5,504 55.8 6,451 55.9 Deferred tax assets 237 2.4 270 2.3 Inventories 1,505 15.3 1,703 14.8 Trade accounts receivable 2,022 20.5 2,412 20.9 Other receivables and miscellaneous assets 447 4.5 529 4.6 Liquid funds/marketable securities 141 1.5 177 1.5 Current assets 4,115 41.8 4,821 41.8 Total assets 9,856 100.0 11,542 100.0 Equity excl. minority interests 2,948 29.9 3,195 27.7 Minority interests 290 3.0 323 2.8 Equity incl. minority interests 3,238 32.9 3,518 30.5 Provisions for pensions and similar obligations 1,871 19.0 1,979 17.1 Other Provisions 1,159 11.7 1,189 10.3 Provisions 3,030 30.7 3,168 27.4 Provisions for deferred tax liabilities 184 1.9 185 1.6 Borrowings 1,915 19.4 2,934 25.5 Trade accounts payable 1,029 10.4 1,125 9.7 Other liabilities 460 4.7 612 5.3 Liabilities 3,404 34.5 4,671 40.5 Total equity and liabilities 9,856 100.0 11,542 100.0 Equity ratio in % 32.9 30.5 Henkel Group Consolidated Statement of Income Jan.-Sept. 1999 Jan.-Sept. 2000 MEUR (%) MEUR (%) Sales 8,423 100.0 9,440 100.0 Cost of sales 4,539 53.9 5,106 54.1 Gross profit 3,884 46.1 4,334 45.9 Marketing, selling and distribution costs 2,393 28.4 2,646 28.0 Research and development costs 207 2.4 234 2.5 Administrative expenses 494 5.9 561 5.9 Other operating income 49 0.6 70 0.7 Other operating charges 47 0.6 81 0.8 Restructuring costs 52 0.6 56 0.6 Amortization of goodwill 108 1.3 122 1.3 Operating profit (EBIT) 632 7.5 704 7.5 Net income from participations 59 0.7 130 1.4 Net interest expense -193 -2.2 -216 -2.3 Financial items -134 -1.5 -86 -0.9 Earnings before tax 498 6.0 618 6.6 Taxes on income -219 -2.7 -259 -2.7 Net earnings 279 3.3 359 3.9 Henkel Group Cash Flow Statement Jan.-Sept. 1999 Jan.-Sept. 2000 (EUR mill.) (EUR mill.) Operating profit 632 704 Income taxes paid -190 -346 Depreciation/write-ups of fixed assets (excl. financial assets) 446 464 Net gains from disposals of fixed assets (excl. financial assets) -8 -9 Cash Flow 880 813 Change in inventories 48 -97 Change in receivables and miscellaneous assets -292 -412 Changes in liabilities and short-term provisions 331 160 Net cash flow from operating activities 967 464 Capital expenditures on intangible assets -23 -12 Capital expenditures on property, plant and equipment -300 -295 Capital expenditures on financial assets -9 -502 Acquisitions -76 -241 Proceeds from disposal of fixed assets 100 58 Net cash flow from investing activities -308 -992 Henkel KGaA dividends -119 -131 Subsidiary company dividends (to other shareholders) -17 -15 Change in borrowings -423 826 Interest paid -157 -178 Interest and dividends received 64 83 Share buy-back - -63 Other financing transactions -8 15 Net cash flow from financing activities -660 537 Change in cash and cash equivalents -1 9 Effect of exchange rate changes on cash and cash equivalents 13 27 Change in liquid funds and marketable securities 12 36 Liquid funds and marketable securities on January 01, 2000 127 141 Liquid funds and marketable securities on September 30, 2000 139 177 Employees (as of) Dec. 31, 1999 Sept. 30, 2000 Change in % Germany 15,412 15,871 3.0 Abroad 40,984 44,031 7.4 Total 56,396 59,902 6.2 ots Originaltext: Henkel Group Internet: http://recherche.newsaktuell.de Contact: Investor Relations Magdalena Moll Phone: +49-2 11-7 97 16 31 Fax: +49-2 11-7 98 28 63 magdalena.moll@henkel.de Waltraud Müller Phone: +49-2 11-7 97 72 78 Fax: +49-2 11-7 98 28 63 waltraud.mueller@henkel.de Christoph Wallrafen Phone: +49-2 11-7 97 18 20 Fax: +49-2 11-7 98 28 63 Christoph.wallrafen@henkel.de Original-Content von: Henkel AG & Co. 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