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

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