Henkel Releases First Quarter Results (5/7/09)

May 7, 2009
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In its first quarter of 2009, Henkel increased sales compared to the prior-year quarter by 3.1% to 3,258 million euros. The rise is attributable to Henkel’s acquisition of the National Starch businesses in April 2008. In organic terms, or adjusted for foreign exchange and acquisitions/divestments, sales decreased by 7.0% in a difficult overall market environment. After adjusting for foreign exchange, the increase in sales amounted to 3.8%. Business development at the company’s three business sectors was very mixed. While the consumer goods business sectors Laundry & Home Care and Cosmetics/Toiletries continued to perform very well, with organic growth rates of 0.4% and 3.5%, respectively, the Adhesive Technologies business sector suffered from the challenges encountered in major customer industries worldwide. This was reflected in an organic decline in sales of 18.2%.

Due primarily to the significant decrease in earnings at the Adhesive Technologies business sector, operating profit (EBIT) fell by 31.7% from 320 million euros in the first quarter of 2008 to 218 million euros. After adjusting for one-time gains/charges and restructuring charges, adjusted operating profit (“adjusted EBIT”) decreased by 26.1% from 318 million euros in the prior-year quarter to 235 million euros.

The EBIT margin amounted to 6.7%, while the adjusted EBIT margin declined from 10.1% to 7.2%. Both results are largely attributable to the significant decrease in profits at the Adhesive Technologies business sector.

As a result of the sale of Henkel’s stake in Ecolab in November 2008, the investment result fell from 19 million euros to 0 euros. Net interest expense increased by 14 million euros from -38 million euros to -52 million euros. This is primarily due to higher net debt arising from the financing of the purchase price for the acquisition of the National Starch businesses. The financial result consequently decreased further, from -19 million euros to -52 million euros. The tax rate amounted to 27.1%.

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