· Increase in operating profit (EBIT)1: +1.0% to 3,496 million euros
· Further EBIT margin1 improvement: +30 basis points to 17.6%
· Earnings per preferred share (EPS)1: +2.7% to 6.01 euros,
at constant exchange rates +7%
· Strong expansion of free cash flow: +12.7% to 1,917 million euros
· Record dividend2 payout: +3.4% to 1.85 euros per preferred share
· Very good progress in implementation of strategic priorities
· Growth initiatives underline commitment to profitable growth
Mumbai – Henkel, in 2018, continued to deliver profitable growth with new highs in earnings and profitability. Henkel also significantly increased free cash flow. Its profitable growth was complemented by the contributions from acquisitions in industrial and consumer goods businesses coupled with strong cost discipline and continuously improved efficiency.
Commenting on the results, Henkel CEO, Hans Van Bylen said “Our mid- to long-term financial ambition underlines our commitment to delivering sustainable profitable growth and attractive returns. We have made substantial progress in the execution of our strategic priorities through to 2020 and beyond. We successfully implemented key strategic initiatives and further improved our competitiveness. To capture additional growth opportunities, mainly in our consumer goods businesses, and to further accelerate the digital transformation of our company, we announced in January to step up investments by around 300 million euros annually from 2019 onwards.”
Sales and earnings performance 2018
Nominally, sales in the fiscal year 2018 decreased slightly by 0.6 percent to 19,899 million euros. Currency developments had an overall negative effect of around
1.1 billion euros or -5.4 percent on sales. Adjusted for foreign exchange effects, sales grew by 4.8 percent. Acquisitions and divestments accounted for 2.4 percent of sales growth. Organic sales, which exclude the impact of foreign exchange effects and acquisitions/divestments, showed a good increase of 2.4 percent.
The Adhesive Technologies business unit delivered strong organic sales growth of 4.0 percent. Organically, sales in the Beauty Carebusiness unit were 0.7 percent below prior year. The Laundry & Home Care business unit reported a good increase in organic sales of 1.9 percent.
The emerging markets again posted a very strong increase in organic sales of 6.3 percent. The mature markets registered a slightly negative organic sales performance of -0.4 percent.
Adjusted operating profit (EBIT) improved by 1.0 percent to 3,496 million euros, a new high for Henkel.
Adjusted return on sales (EBIT) rose by 0.3 percentage points to 17.6 percent. This is also a new high for the company.
The financial result amounted to –65 million euros after –67 million euros3 in fiscal 2017.
Adjusted net income for the year after non-controlling interests increased by 2.8 percent to 2,604 million euros (2017: 2,534 million euros).
Adjusted earnings per preferred share (EPS) grew by 2.7 percent from 5.85 euros to 6.01 euros. At constant exchange rates, EPS growth reached 7 percent.
Reflecting the increased growth investments from 2019 onwards, Henkel expects an organic sales growth of between 2 and 4 percent in the current fiscal year. For the adjusted EBIT margin, Henkel expects a range of 16 to 17 percent and an adjusted EPS development in the mid-single percentage range below prior year at constant exchange rates.