"We recorded sales of 19.3 billion euros, slightly below the prior-year level in organic terms, and maintained a profitable business with an adjusted EBIT margin of 13.4 percent. We also generated a very strong free cash flow in excess of 2.3 billion euros, almost at the record level of the prior year.," Knobel added.
For the full year, the Adhesive Technologies business unit reported sales below the prior-year level, reflecting a significant decline in demand from key industries. However, thanks to the breadth of its portfolio and successful innovative solutions the business has proven its robustness in a global economic downturn.
The organic sales development in Beauty Care was below prior-year level, strongly impacted by the Hair Salon business due to enforced closures, while the Retail business recorded good growth. This was driven by the successful development of top brands as well as new product launches addressing key consumer trends.
The Laundry & Home Care business unit achieved very strong organic sales growth, fueled by both, the surge in demand for hygiene-related products and by successful innovations, also addressing the increased demand for more sustainable products.
At Group level, adjusted EBIT decreased by -19.9 percent to 2.6 billion euros. Adjusted return on sales (EBIT margin) was at 13.4 percent, -2.6 percentage points lower than in 2019. Adjusted earnings per preferred share were at 4.26 euros, a decline of -17.9 percent at constant exchange rates.
To further strengthen its competitive edge, Henkel is accelerating impactful innovations, boosting sustainability as a differentiating factor, and driving the digital transformation of the company.
In 2020, Henkel increased investments by around 200 million euros compared to 2019 (350 million euros compared to 2018) to strengthen its brands, technologies, and innovations, as well as to accelerate the digital transformation of the company. The investments are showing first tangible results: Henkel was able to increase market shares in many key markets and categories. The company also further accelerated its innovation processes and the launches of new products. This helped, for example, to respond quickly to the strong surge in demand for hygiene, disinfecting and cleaning products with "fast-track innovations". The focus was on key trends such as hygiene, more natural and sustainable products, and higher convenience.
Outlook 2021
"As we enter 2021, we still face a high level of uncertainty how the pandemic will continue to evolve, how quickly the vaccination efforts will progress and how this will impact the widespread restrictions in many countries. We expect that the industrial demand as well as consumer segments which are relevant for our company, in particular the Hair Salon business, will recover. At the same time, we believe consumer demand will return to normal levels in those categories which saw higher demand due to the pandemic. In addition, we assume that current restrictions in many key markets will be lifted in the course of the first quarter and that there will be no widespread shutdowns of retail and industrial businesses as well as production facilities in the remainder of the year," said Carsten Knobel.
Based on these assumptions, Henkel expects to generate sales and earnings growth in fiscal 2021. The company anticipates organic sales growth of 2.0 to 5.0 percent and adjusted return on sales (EBIT margin) in the range of 13.5 to 14.5 percent. For adjusted earnings per preferred share (EPS) at constant exchange rates, Henkel expects an increase in the range of 5.0 to 15.0 percent.
About Henkel
Henkel operates globally with a well-balanced and diversified portfolio. The company holds leading positions with its three business units in both industrial and consumer businesses thanks to strong brands, innovations and technologies. Henkel Adhesive Technologies is the global leader in the adhesives market - across all industry segments worldwide. In its Laundry & Home Care and Beauty Care businesses, Henkel holds leading positions in many markets and categories around the world. Founded in 1876, Henkel looks back on more than 140 years of success. In 2020, Henkel reported sales of more than 19 billion euros and adjusted operating profit of about 2.6 billion euros. Henkel employs about 53,000 people globally - a passionate and highly diverse team, united by a strong company culture, a common purpose to create sustainable value, and shared values. As a recognized leader in sustainability, Henkel holds top positions in many international indices and rankings. Henkel's preferred shares are listed in the German stock index DAX. For more information, please visit www.henkel.com.
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 or 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.
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Source: 124 Communications Consulting