Henkel Annual Results Press Conference FY 2018 Hans Van Bylen, - - PowerPoint PPT Presentation

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Henkel Annual Results Press Conference FY 2018 Hans Van Bylen, - - PowerPoint PPT Presentation

Henkel Annual Results Press Conference FY 2018 Hans Van Bylen, Carsten Knobel, Kathrin Menges Dsseldorf, February 21, 2019 Disclaimer This information contains forward-looking statements which are based on current estimates and assumptions


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Hans Van Bylen, Carsten Knobel, Kathrin Menges Düsseldorf, February 21, 2019

Henkel Annual Results Press Conference FY 2018

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This information contains forward-looking statements which are based on current estimates and assumptions made by the corporate management of Henkel AG & Co. KGaA. Statements with respect to the future are characterized by the use of words such as “expect”, “intend”, “plan”, “anticipate”, “believe”, “estimate”, and similar terms. Such statements are not to be understood as in any way guaranteeing that those expectations will turn out to be accurate. Future performance and results actually achieved by Henkel AG & Co. KGaA and its affiliated companies depend on a number of risks and uncertainties and may therefore differ materially from the forward- looking statements. Many of these factors are outside Henkel’s control and cannot be accurately estimated in advance, such as the future economic environment and the actions of competitors and others involved in the marketplace. Henkel neither plans nor undertakes to update any forward-looking statements. This document includes – in the applicable financial reporting framework not clearly defined – supplemental financial measures that are or may be alternative performance measures (non-GAAP-measures). These supplemental financial measures should not be viewed in isolation

  • r as alternatives to measures of Henkel’s net assets and financial positions or results of operations as presented in accordance with the

applicable financial reporting framework in its Consolidated Financial Statements. Other companies that report or describe similarly titled alternative performance measures may calculate them differently. This document has been issued for information purposes only and is not intended to constitute an investment advice or an offer to sell, or a solicitation of an offer to buy, any securities.

Disclaimer

February 21, 2019 Henkel Annual Results Press Conference

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3

  • 1. Introduction
  • 2. Financials FY 2018
  • 3. Progress in Sustainability
  • 4. Update Henkel 2020+ and Financial Ambition

Agenda

Henkel Annual Results Press Conference February 21, 2019

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  • 2018 was a successful year – despite challenging environment
  • Good progress in implementation of strategic priorities 2020+
  • Higher investments in brands, technologies, innovations and digitalization
  • We pursue very ambitious targets
  • Well-positioned to deliver sustainable profitable growth and attractive returns
  • Leading position in sustainability

Key points today

February 21, 2019 Henkel Annual Results Press Conference

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5

Good development in 2018

€ 19.9 bn

Sales es

2.4 %

Orga ganic Gr Growth

€ 3.5 bn

Adjusted* E EBIT

17.6 %

Adjuste ted* E EBIT Ma Margin gin

€ 1.9 bn

Fr Free Ca Cash Fl Flow

* Adjusted for one-time charges/gains and restructuring charges ** At constant currencies

+2.7 % (+7 %**)

Adjusted* E EPS

€ 6.01

February 21, 2019 Henkel Annual Results Press Conference

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6

Strong and consistent long-term performance

Step-change in sales and profitability

Attractiv ive p portfolio lio o

  • f three b

busin iness unit its Sustain inable le a and p profit itable le gr growth

  • Adhesive Technologies – global market

leader with comprehensive portfolio

  • Beauty Care – focused portfolio with core

competence in Hair Retail and Professional

  • Laundry & Home Care – leading positions

with strong global and local brands

15. 15.1 15. 15.6 16. 16.5 16. 16.4 16. 16.4 18. 18.1 18. 18.7 20. 20.0 12. 12.3% 13. 13.0% 14. 14.1% 15. 15.4% 15. 15.8% 16. 16.2% 16. 16.9% 17. 17.3% 17. 17.6%

20 2010 10 20 2011 11 20 2012 12 20 2013 13 20 2014 14 20 2015 15 20 2016 16 20 2017 17 20 2018 18 Sale les € b € bn Adj. j. EBIT IT % %

Henkel Annual Results Press Conference February 21, 2019 19. 19.9

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7 Henkel Annual Results Press Conference February 21, 2019

  • Generate profitable growth and attractive returns
  • Become more customer-focused, innovative and agile
  • Foster digital transformation
  • Promote sustainability across the entire value chain
  • Advance our portfolio with value-adding acquisitions

We pursue ambitious strategic targets

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  • CapEx investments and R&D expenditures on constant high level
  • Increased additional growth investments
  • 2019: important step for sustainable profitable growth
  • Sustainable profitable growth and attractive returns

We invest in the future

Henkel Annual Results Press Conference February 21, 2019

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Leading in sustainability

  • Focus on resource efficiency
  • Active contribution to climate protection

through reduced CO2 footprint

  • Ambitious targets for plastic and packaging
  • International alliances and partnerships
  • Leading positions in sustainability ratings

February 21, 2019 Henkel Annual Results Press Conference

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10

  • 1. Introduction
  • 2. Financials FY 2018
  • 3. Progress in Sustainability
  • 4. Update Henkel 2020+ and Financial Ambition

Agenda

Henkel Annual Results Press Conference February 21, 2019

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11 Henkel Annual Results Press Conference February 21, 2019

Strong top line adversely impacted by FX

20,029 19,899

Organic & & inorganic

+0.5% +1.9% +2.4%

  • 5.4%
  • 0.

0.6% 6%

Sales 2017 Volume Price M&A FX Sales 2018 Sales in € m, changes in %

+4. 4.8% 8% (€ € 1. 1.1 b 1 bn)

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12

Wester ern E Europe

€ 6,107 m (31%)

Easter ern Europe

€ 2,843 m (14%)

North A h Amer eric ica

€ 5,040 m (25%)

Latin A in Amer eric ica Asi sia-Pacif ific ic Afric ica/Mid iddle dle E East

  • 1.

1.0% 0% +0. 0.3% 3% +7. 7.6% 6% +9. 9.3% 3% +11. 11.3% +0. 0.9% 9%

OSG in in %

€ 1,181 m (6%) € 3,314 m (17%) € 1,286 m (6%)

Emer erging Ma ing Markets: +6. 6.3% 3% t to € € 8, 8,071 071 m m, 40% 40% of Gr Group S Sales Ma Matur ure Ma Markets:

  • 0.

0.4% 4% t to € € 11, 11,70 700 m m

Henkel Annual Results Press Conference February 21, 2019

Organic growth driven by emerging markets

FY 2018

  • abs. in € m

(share of total)

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€ 9.4 bn +4.0%

Sales Organic Growth

€ 1.8 bn 18.7%

Adjusted EBIT Adjusted EBIT Margin

February 21, 2019 Henkel Annual Results Press Conference

Adhesive Technologies

Strong profitable growth across all business areas

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€ 4.0 bn

  • 0.7%

Sales Organic Growth

€ 0.7 bn 17.1%

Adjusted EBIT Adjusted EBIT Margin

February 21, 2019 Henkel Annual Results Press Conference

Beauty Care

Challenges in Retail in Mature Markets, very strong performance in Professional

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€ 6.4 bn +1.9%

Sales Organic Growth

€ 1.2 bn 18.1%

Adjusted EBIT Adjusted EBIT Margin

February 21, 2019 Henkel Annual Results Press Conference

Laundry & Home Care

Good organic growth, Emerging Markets compensating for challenges in North America

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16 Henkel Annual Results Press Conference February 21, 2019

Sustainable profitable growth

Key Financials FY 2018

Gross ss Ma Margin A gin Adj. i in % % EBIT Ma Margin A gin Adj. i in % % EPS Pref. A

  • Adj. i

in € €

  • 60bps

+30b 30bps +2. 2.7% 7%

x1 x2 47.1 46.5 17.3 17.6 5.85 6.01 2017 2018 2017 2018 2017 2018

(7%* %*)

* At constant currencies

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17 Henkel Annual Results Press Conference February 21, 2019

  • Good progress in Net Working Capital management towards year-end
  • Free Cash Flow improved to strong € 1.9 bn in full year 2018
  • Very strong balance sheet providing substantial investment optionality
  • Focused CapEx investments in all business units, particularly focusing on growth
  • M&A remaining integral part of strategy, complemented by Venture Capital activities
  • Continued focus on shareholder value creation – record dividend proposal of € 1.851

Continuously strong cash management focus

Disciplined approach to capital allocation

1 Proposal per preferred share to shareholders for the AGM on April 8, 2019

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18 Henkel Annual Results Press Conference February 21, 2019

NWC management

Improvement throughout the year

Adhesive Technologies

11.8 10.7

2017 Q2 2018 2018

Beauty Care Henkel G Group Laundry & Home Care

in % of sales

4.8 .8

+110bps +80bps

  • 150bps

+30 30bps

4.7 3.9 5.1 .1 6.1 11.9 6.3 .3

  • 3.9
  • 2.4
  • 1.4

Net W Workin ing C g Capit pital l of Adhe dhesiv ive T Techno nolo logie ies m mainly inly d driv iven b by h highe gher i inv nvent ntorie ies Strong i g impr provement nt in Laun undr dry & & Home e Care, B Beaut uty C Care d e driv iven b by portfolio lio e effec ects f from a acquis quisit itio ions

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19 February 21, 2019

Strong Free Cash Flow further improved

2, 2,69 698 +230 Operating CF 2018 CapEx1 Other FCF 2018

  • 837

837

  • 137

+5 +56 +123 1, 1,91 917 +216

Free C Cash Fl Flow a above p prior-yea ear l level d l despit pite t e tec echn hnolo logy i inv nves estment i in Q Q1 2018 Cont ntin inued ed f focus us o

  • n F

Free ee Cash h Flow e w expa pans nsio ion a as integral e l elem ement o

  • f mid- to l
  • lon
  • ng-term f

financ ncia ial l ambit bitio ion

1. 1.9

in € bn in € m, ∆ PY in € m

2018 Ø 2013-17 1. 1.7

Henkel Annual Results Press Conference

1 Including payments on account

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20 Henkel Annual Results Press Conference February 21, 2019

Focused CapEx investments in all business units

  • Adhesiv

ive T Technologie gies Europe – Spain New production facility for aerospace

  • Beauty

ty Care Eastern Europe – Russia Capacity expansion

  • Laundry &

& Home Ca Care North America – USA Expansion of detergent capsule production

Around € 850 m spent in 2018

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21 Henkel Annual Results Press Conference February 21, 2019

Acquisitions remain integral part of strategy

Around € 400 m invested in 2018

  • Adhesiv

ive T Technolo logie gies Expanded footprint in Emerging Markets

  • Beaut

uty Care re Successfully integrated Hair Professional acquisitions (end of 2017)

  • Laund

undry & Home Care re Position in North America further strengthened

  • Venture Capital

Strengthening digital and technological expertise by investments in start-ups and VC funds

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22 Henkel Annual Results Press Conference February 21, 2019

Strong track record of increasing dividend

1 Proposal to shareholders for the AGM on April 8, 2019

  • Record dividend proposal of € 1.851 per

preferred share

  • 30.9% payout ratio in line with target

range

  • More than € 4 bn paid out since 2012 via

dividends

  • Increase of target dividend payout range

from 25 - 35% to 30 - 40% from fiscal 2019

2012 2013 2014 2015 2016 2017 2018 0.95 1.22 1.31 1.47 1.62 1.79

Dividend per preferred share in €

1.851

CAGR 201 2012-2018 2018 11 11.7% 7%

Around € 800 m distributed in 2018

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Strong balance sheet

  • 3,222

€ € +327 m 327 m

in € m

At Dec 31, 2017

  • 2,895

At Dec 31, 2018

Net et financial posit itio ion Eq Equity ratio

in %

+2.5p 5pp

55.2 57.7 2017 2018

February 21, 2019 Henkel Annual Results Press Conference

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  • 1. Introduction
  • 2. Financials FY 2018
  • 3. Progress in Sustainability
  • 4. Update Henkel 2020+ and Financial Ambition

Agenda

Henkel Annual Results Press Conference February 21, 2019

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  • Total efficiency increased by 43% since 2010
  • CO2 emissions, waste and water consumption

significantly reduced

  • Further improvements in work place safety
  • Comprehensive progress through numerous initiatives

along the entire value chain

Our progress in sustainability

1 Base year 2010

More net sales per ton

  • f product

Ach chiev ieved ed 2 20181

Safer per million hours worked

+ 6 6 % + 17 % 17 %

Less CO2 emissions per ton

  • f product

Less waste per ton

  • f product

Less water per ton

  • f product

– 25 % 25 % – 29 % 29 % – 24 % 24 %

Tota tal l efficiency

+ 43 % 43 %

Henkel Annual Results Press Conference February 21, 2019

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Ambitious packaging strategy

  • Already 80% of our packaging is recyclable,

reusable or compostable

  • Cooperation with partners along the entire

value chain

  • Founding member of new global

“Alliance to End Plastic Waste”

  • Many initiatives at our sites around the

world

February 21, 2019 Henkel Annual Results Press Conference

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Active contribution to climate protection

  • CO2 footprint of production reduced by

25% since 2010

  • Already more than 10% of electricity

worldwide generated from renewable sources

  • Significant contribution to climate

protection through our products: savings of 9 million tons of CO2

February 21, 2019 Henkel Annual Results Press Conference

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Better chances through education

  • “Million Chances”: new perspectives for the

future of 115,000 girls and women

  • Sustainable palm oil production: around

30,000 smallholder farmers in seven projects supported

  • “Henkel-Forscherwelt” (Researchers’

World): more than 34,000 school children in 10 countries reached

February 21, 2019 Henkel Annual Results Press Conference

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  • 1. Introduction
  • 2. Financials FY 2018
  • 3. Progress in Sustainability
  • 4. Update Henkel 2020+ and Financial Ambition

Agenda

Henkel Annual Results Press Conference February 21, 2019

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Henkel 2020+

Continued strong progress in the implementation of our strategic priorities

Henkel Annual Results Press Conference February 21, 2019

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  • Continue momentum of Adhesive Technologies in a lower growth environment
  • Execute strong innovation strategy with higher investments in Consumer Goods businesses
  • Advance to next level of digitalization
  • Continue our strong focus on cost discipline, drive efficiency and adapt structures
  • Strong focus on Working Capital improvement and Free Cash Flow expansion
  • Enhance value proposition of portfolio organically and via acquisitions

Henkel Annual Results Press Conference February 21, 2019

Our priorities 2019

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32 February 21, 2019 Henkel Annual Results Press Conference

Current market environment

Mixed market dynamics with ongoing negative effects from currencies and commodities

Lower currency headwinds, though still negatively affecting top and bottom line Devalu luatin ing E g EM c M currencie ies High volatility and uncertainty on commodity markets with ongoing cost pressure Pres essure f from d direc ect m mat ater erial p prices Slowing growth momentum, but still good growth of IPX Industrial p production Persisting difficult conditions and

  • ngoing competitive/pricing pressures

Mixed xed H HPC m mar arke kets

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33 February 21, 2019 Henkel Annual Results Press Conference

Henkel Group Organic Sales Growth Adjusted* EBIT Margin Adjusted* EPS (at constant currencies)

Mid single d digit % % bel elow PY Henk enkel G el Group up 16 16 - 17% 17%

Adhesive Technologies 18 - 19% Beauty Care 15 - 16% Laundry & Home Care 16.5 - 17.5%

2 2 - 4% 4%

All Business Units within Group range

Guidance 2019

* Adjusted for one-time charges/gains and restructuring charges

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34 Henkel Annual Results Press Conference February 21, 2019

Drive growth, accelerate digitalization

  • Outperform by leveraging scale and breadth
  • f the Adhesiv

ive T Technologie gies portfolio

  • Accelerate growth in Beauty

ty C Care e Retail, continue momentum in Professional

  • Leverage strong innovation program in

Laundry & & Home C Care

  • Advance to next level of digit

gitaliz lization

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35 February 21, 2019 Henkel Annual Results Press Conference

Drive growth in Adhesive Technologies

Focus on future growth trends

  • Mobility

ty: En Enabler of r of i industry try tr transformati tion Alternative Drives – Autonomous Driving – Lightweight

  • Connecti

ctivity: ty: N New f funct ctions & & designs r required Mobile Devices – Internet of Things – Digital Infrastructure

  • Sustai

ainability: D : Drive c chan ange a along t the v value c chai ain Renewable Feedstock – Efficient Production – Circular Economy

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36 February 21, 2019 Henkel Annual Results Press Conference

Drive growth in Beauty Care

  • Driv

ive superio ior gr growth i in H Hair ir Holistic innovation plan across all Hair segments addressing key trends and target groups

  • Bac

ack t k to growth i in North A Amer erica Targeted growth plan with strong initiatives in Body Care and Hair Coloration

  • Contin

inue t to outperform i in Professional Sustain very strong growth momentum

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Drive superior growth in Hair

Selection of innovations with launch in H1 2019

Henkel Annual Results Press Conference February 21, 2019

Scha haum uma – relaunch o

  • f

biggest f family ily b brand nd Nature e Box x – rollo llout ut i in new w market ets OnlyLo Love – launc unch o h of new ew brand 100% natural cold pressed oils, ‘free from’ formulas No ammonia, no silicone, no alcohol Vegan formulas with micronutrients, no silicones, no parabens

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Back to growth in North America

Selection of innovations with launch in H1 2019

Henkel Annual Results Press Conference February 21, 2019

Dial l – strong l line ne exten ensions Ker eratin in Color

  • r – strong

new s subline blines got2b 2b – expa pansio ion i n into new c categ egorie ies Launch new Keratin Color variants for multi-ethnic target groups New trend color offerings and extension of male line in hair care Strong new lines in moisturizing body wash and antibacterial handwash

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Continue to outperform in Professional

Selection of innovations with launch in H1 2019

Henkel Annual Results Press Conference February 21, 2019

Aut uthe hentic ic Beauty C Concep ept – launch of new brand IGORA Vibrance – global relaunch Launch new B2B eShop

High potential hair color initiative under Schwarzkopf brand based on new formula platform Driving sales via convenience and end-to-end customer experiences Creation of new premium vegan OTC brand with pure recognizable ingredients

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40 February 21, 2019 Henkel Annual Results Press Conference

Drive growth in Laundry & Home Care

  • Innovation offensive f

for l lead ading me megab abran and P Persil Accelerate market share gains with cutting-edge and exclusive technologies

  • Turn a

arou

  • und Nor
  • rth

th A America Strong innovations, caps initiatives and brand relaunches for new growth momentum

  • Expan

and H Home C Care t to strengthen p profitab able grow rowth Leveraging blockbuster brands and key trends

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Relaunch of leading megabrand Persil

Selection of innovations with launch in H1 2019

Henkel Annual Results Press Conference February 21, 2019

Persil D il Deep C eep Clea lean n – globa bal r l rela launc nch Persil D il DISCS – launc unch o

  • f

4-ch chamber ca caps eComme merce

  • ffens

ensiv ive

Patented technology and unique enzyme blend for superior performance Formula and packaging innovations with up to 2x concentrated formulas, SIOCs1 for optimized logistics New cutting-edge Deep Clean technology with exclusive advanced enzyme mix

1 Ships in own container

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Turn around North America

Selection of innovations with launch in H1 2019

Henkel Annual Results Press Conference February 21, 2019

Caps ps o

  • ffens

ensiv ive e – win i in f fast growi wing s segmen ent all relaunch – boost g growth

  • f l
  • f largest US b

S brand Snug uggle gle S Scent ent S Shakes es – US market et l launc unch New advanced formulas leveraging global technology expertise for #1 sensitive skin brand Entry in premium fragrance segment with leading fabric finisher brand Strong caps initiatives across all price tiers: premium, mid-tier and value-for-money

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Expand Home Care to strengthen profitable growth

Selection of innovations with launch in H1 2019

Henkel Annual Results Press Conference February 21, 2019

Som Somat All All-in in-1 G 1 Gel – launc unch of next g gene neratio ion Bref ef DeLuxe – line ne exten ensio ion Pro N Nature re – new ew product lines

New premium line with new premium DeLuxe scents Eco-certified formulas and sustainable plastic strategy Strengthen leadership in the fast growing gel segment

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44 Henkel Annual Results Press Conference February 21, 2019

Drive growth, accelerate digitalization

  • Stepping up investments in brands, technologies, innovations and key markets
  • Accelerating top-line growth with focus on consumer goods businesses
  • Driving the digital transformation across the entire company
  • Full focus on rigorous execution
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45 Henkel Annual Results Press Conference February 21, 2019

Mid- to long-term financial ambition

Committed to sustainable profitable growth

  • Achieve organic sales growth of 2-4%
  • Deliver mid to high single-digit % adjusted* EPS growth at constant currencies
  • Continued focus on Free Cash Flow expansion
  • Pursue compelling growth opportunities with superior execution
  • Maintain rigorous cost discipline and focus on margin

* Adjusted for one-time charges/gains and restructuring charges

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46 February 21, 2019 Henkel Annual Results Press Conference

Key points you heard from us today

  • 2018 was a successful year – despite challenging

environment

  • Good progress in implementation of strategic priorities

2020+

  • Higher investments in brands, technologies,

innovations and digitalization

  • We pursue very ambitious targets
  • Well-positioned to deliver sustainable profitable growth

and attractive returns

  • Leading position in sustainability