Henkel con­tin­ues strong per­for­mance in Q3 2016 Ac­qui­si­tion of Sun Prod­ucts suc­cess­fully closed

Kuwait Times - - BUSINESS -

KUWAIT: “Henkel con­tin­ued to de­liver strong busi­ness per­for­mance in the third quar­ter. Sales, ad­justed EBIT and ad­justed earn­ings per pre­ferred share reached new highs. The suc­cess­ful de­vel­op­ment and the high qual­ity of earn­ings was driven by all three busi­ness units and the strong com­mit­ment of our global team,” said Henkel CEO Hans Van Bylen.

“In the third quar­ter, we were also able to suc­cess­fully close the ac­qui­si­tion of Sun Prod­ucts and se­cure its fi­nanc­ing at fa­vor­able con­di­tions. We ex­pect the over­all chal­leng­ing and un­cer­tain mar­ket en­vi­ron­ment to per­sist in 2016. We will con­tinue to fo­cus on lever­ag­ing our suc­cess­ful brands, lead­ing mar­ket po­si­tions and strong in­no­va­tion ca­pa­bil­i­ties to achieve our am­bi­tious tar­gets.”

Henkel con­firmed the out­look for the cur­rent fis­cal year: “For the full fis­cal year 2016, we ex­pect organic sales growth of 2 to 4 per­cent. We ex­pect our ad­justed EBIT mar­gin to rise to more than 16.5 per­cent and ad­justed earn­ings per pre­ferred share to grow be­tween 8 and 11 per­cent,” said Hans Van Bylen.

In the third quar­ter of 2016, Henkel’s sales reached a new high. Sales rose by 3.4 per­cent to 4,748 mil­lion euros. The sales per­for­mance was driven by the solid organic de­vel­op­ment as well as ac­qui­si­tions. Organic sales growth - i.e. ad­justed for for­eign ex­change and ac­qui­si­tions/di­vest­ments - was at 2.8 per­cent. Ad­justed for neg­a­tive for­eign ex­change im­pact of 3.3 per­cent, sales in­creased by 6.7 per­cent.

The Laun­dry & Home Care busi­ness unit recorded organic sales growth of 4.0 per­cent. The Beauty Care busi­ness unit posted an im­prove­ment in organic sales of 2.6 per­cent. The Ad­he­sive Tech­nolo­gies busi­ness unit re­ported an in­crease in organic sales of 2.5 per­cent.

Af­ter al­low­ing for one-time charges and gains and re­struc­tur­ing charges, ad­justed op­er­at­ing profit (EBIT) rose by 7.6 per­cent from 778 mil­lion Euros to 837 mil­lion Euros. Re­ported op­er­at­ing profit grew by 16.4 per­cent from 666 mil­lion Euros to 775 mil­lion Euros.

Ad­justed re­turn on sales (EBIT mar­gin) showed an in­crease of 0.7 per­cent­age points to 17.6 per­cent. Re­ported re­turn on sales rose from 14.5 per­cent to 16.3 per­cent. Henkel’s fi­nan­cial re­sult was at -15 mil­lion Euros and, due to ac­qui­si­tions, be­low the level of the pri­o­ryear quar­ter. The re­ported tax rate was at 23.2 per­cent; in the prior year quar­ter it was at 24.6 per­cent.

Ad­justed net in­come for the quar­ter af­ter de­duct­ing non-con­trol­ling in­ter­ests grew by 9.2 per­cent from 564 mil­lion Euros to 616 mil­lion Euros. Re­ported net in­come for the quar­ter in­creased by 18.2 per­cent from 494 mil­lion Euros to 584 mil­lion Euros.

Af­ter de­duct­ing 8 mil­lion Euros at­trib­ut­able to non-con­trol­ling in­ter­ests, quar­terly net in­come amounted to 576 mil­lion Euros (prior-year quar­ter: 484 mil­lion Euros). Ad­justed earn­ings per pre­ferred share (EPS) rose by 9.2 per­cent from 1.30 Euros to 1.42 Euros. Re­ported EPS in­creased from 1.12 Euros to 1.33 Euros. Net work­ing cap­i­tal re­lated to sales im­proved year on year by 0.8 per­cent­age points to 5.2 per­cent.

The third quar­ter of 2016 saw the Laun­dry & Home Care busi­ness unit suc­cess­fully con­tinue its prof­itable growth path by in­creas­ing both sales and EBIT. Sales grew or­gan­i­cally by 4.0 per­cent year on year. Nom­i­nally, sales in­creased by 12.6 per­cent to 1,479 mil­lion Euros, also driven by the ac­qui­si­tion of Sun Prod­ucts. In Africa/Mid­dle East, the busi­ness unit achieved dou­ble-digit growth.

The Beauty Care busi­ness unit also suc­cess­fully ex­tended its longestab­lished path of prof­itable growth in the third quar­ter of 2016. Or­gan­i­cally, sales rose by 2.6 per­cent. Nom­i­nally, sales in­creased by 0.4 per­cent to 968 mil­lion Euros. Sales in Africa/Mid­dle East showed very strong growth.

The Ad­he­sive Tech­nolo­gies busi­ness unit gen­er­ated solid organic sales growth of 2.5 per­cent in the third quar­ter. Nom­i­nally, sales amounted to 2,272 mil­lion Euros, af­ter 2,279 mil­lion euros in the pri­o­ryear quar­ter. Sales in Africa/Mid­dle East were be­low the level of the prior-year quar­ter.

Growth in the Africa/Mid­dle East re­gion con­tin­ued to be im­pacted by the geopo­lit­i­cal un­rest pre­vail­ing in some coun­tries. Nev­er­the­less, a strong organic sales growth of 6.9 per­cent was achieved. Nom­i­nal sales in­creased by 9.0 per­cent to 348 mil­lion Euros.

Out­look

Henkel ex­pects to gen­er­ate organic sales growth of 2 to 4 per­cent, with each busi­ness unit gen­er­at­ing growth within this range. Re­gard­ing the share of sales from emerg­ing markets, Henkel an­tic­i­pates a slight de­crease com­pared to the prior-year level due to for­eign ex­change ef­fects. For ad­justed re­turn on sales (EBIT), Henkel ex­pects an in­crease to more than 16.5 per­cent and the ad­justed re­turn on sales of each in­di­vid­ual busi­ness unit is ex­pected to be above the level of the pre­vi­ous year. Henkel ex­pects an in­crease in ad­justed earn­ings per pre­ferred share of be­tween 8 and 11 per­cent.

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