Henkel delivers very strong organic sales growth and significant earnings
improvement in 2023

EQS-News: Henkel AG & Co. KGaA / Key word(s): Annual Results/Annual Report
Henkel delivers very strong organic sales growth and significant earnings
improvement in 2023

04.03.2024 / 07:30 CET/CEST
The issuer is solely responsible for the content of this announcement.

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March 4, 2024

Accelerated implementation of strategic growth agenda in a challenging
environment

Henkel delivers very strong organic sales growth and significant earnings
improvement in 2023

* Strong business performance in 2023

* Sales: 21.5 billion euros, very strong organic growth of 4.2 percent

      * Operating profit (EBIT)*: 2.6 billion euros, significant increase of
        10.2 percent

* EBIT margin*: 11.9 percent, strong improvement by 150 basis points

      * Earnings per preferred share (EPS)* significantly higher: 4.35
        euros,
        +20.0 percent at constant exchange rates

* Free cash flow at a new high of 2.6 billion euros

* Stable dividend proposed: 1.85 euros per preferred share

* Implementation of Purposeful Growth Agenda further accelerated

* Consumer Brands: Merger progressing faster than planned

* Adhesive Technologies: New organization even more customer-focused

* Both business units strengthened with targeted acquisitions

* Sustainability driven forward in key areas

* Outlook for fiscal 2024 - focus on profitable growth

* Organic sales growth: 2.0 to 4.0 percent

* EBIT margin*: 12.0 to 13.5 percent

      * Earnings per preferred share (EPS)*: Increase of +5 to +20 percent
        (at constant exchange rates)

Düsseldorf - 'Despite a persistently challenging market environment, we
consistently drove our growth strategy forward in 2023 and even accelerated
its implementation. We delivered very strong organic sales growth and
significantly improved profitability. By that, we exceeded the outlook made
at the beginning of the year. This successful development was driven by both
Adhesive Technologies and Consumer Brands,' said Henkel CEO Carsten Knobel.

'We have also made faster progress than initially planned with the merger of
the two former consumer businesses, Laundry & Home Care and Beauty Care, to
form the new Consumer Brands business unit. The savings from the integration
and the continued portfolio measures also contributed to the strong business
performance of the business unit. In the Adhesive Technologies business, we
have aligned our organization even more closely to our customers under a new
management. We have increased sales organically and significantly improved
earnings in a generally volatile industrial environment. In addition, we
have further strengthened both business units through targeted acquisitions.
Based on this performance and in line with our dividend policy, we will
propose a stable dividend to our shareholders at the Annual General
Meeting.'

'I would like to sincerely thank all Henkel employees for their teamwork and
dedication which enabled us to navigate our company through these
challenging times. Together as a strong global team we managed to
successfully drive our Purposeful Growth Agenda forward, delivered tangible
progress across all our strategic priorities, and developed our businesses.
This makes me proud and very confident for our future.'

Group sales and earnings performance in fiscal 2023

Henkel Group sales reached 21,514 million euros in fiscal 2023, a nominal
decrease of -3.9 percent compared to the prior year. Foreign exchange
effects negatively impacted the sales development by -4.3 percent. At -3.9
percent, acquisitions/divestments had a negative impact on sales, which was
mainly due to the divestment of the business activities in Russia. Organic
sales growth was very strong at 4.2 percent. This development was driven by
a price increase in the high single-digit percentage range, while volumes
declined. In the second half of the year, however, there was a clear
sequential improvement in the volume development.

The Adhesive Technologies business unit generated strong organic sales
growth of 3.2 percent, which was driven by the business areas Mobility &
Electronics, as well as Craftsmen, Construction & Professional. The Consumer
Brands business unit achieved very strong organic sales growth of 6.1
percent, driven particularly by the Laundry & Home Care and Hair business
areas.

Adjusted operating profit (adjusted EBIT) significantly increased by 10.2
percent to 2,556 million euros (previous year: 2,319 million euros).
Positive selling price developments, ongoing measures to reduce costs and
enhance production and supply chain efficiency, and portfolio optimization
measures more than offset negative impacts on Group profitability from
continued high prices for direct materials and logistics.

Adjusted return on sales (adjusted EBIT margin) in fiscal 2023 was
significantly higher year on year at 11.9 percent (2022: 10.4 percent).

Adjusted earnings per preferred share also increased significantly by 11.5
percent to 4.35 euros (previous year: 3.90 euros). At constant exchange
rates, adjusted earnings per preferred share increased by 20.0 percent.

Net working capital as a percentage of sales amounted to 2.6 percent, thus
coming in substantially lower than the prior-year level (2022: 4.5 percent)
particularly due to lower inventories.

Free cash flow reached a new high of 2,603 million euros, representing a
significant increase compared to the previous year (2022: 653 million
euros). This was due to much higher cash flow from operating activities
resulting from higher operating profit and lower net working capital.

As a result, the net financial position improved significantly to 12 million
euros (December 31, 2022: -1,267 million euros).

The Management Board, Supervisory Board and Shareholders' Committee will
propose to the Annual General Meeting on April 22, 2024, an unchanged
dividend compared to the previous year of 1.85 euros per preferred share and
1.83 euros per ordinary share. This equates to a payout ratio of 42.4
percent, slightly above the target bandwidth of 30 to 40 percent. This
payout is possible thanks to the strong financial base and the positive
development of the net financial position of the Henkel Group. This ensures
dividend continuity for shareholders.

Business unit performance in fiscal 2023

In fiscal 2023, sales of the Adhesive Technologies business unit reached
10,790 million euros and was thus - due to negative foreign exchange effects
- nominally -4.0 percent below the previous year's level. Organically, sales
increased by 3.2 percent. This sales growth was driven by a very strong
price development compared to prior year. Volumes declined overall, mainly
due to demand remaining muted in some key end markets. As the year
progressed, volume development showed a sequential recovery, recording a
stable level in the fourth quarter. At 1,584 million euros, the adjusted
operating profit was slightly above the previous year's level. The adjusted
return on sales increased by 110 basis points compared to the previous year
and reached 14.7 percent. The significant increase in margin was driven
mainly by higher prices combined with measures to reduce costs and increase
efficiency in order to continue offsetting persistently elevated material
prices.

Sales in the Consumer Brands business unit totaled 10,565 million euros in
fiscal 2023 and was thus -3.3 percent below the prior year in nominal terms.
Foreign exchange effects reduced sales by -4.4 percent.
Acquisitions/divestments also had a negative impact of -5.1 percent on
sales, mainly due to the sale of the business activities in Russia.
Organically, sales increased by 6.1 percent. This sales growth was driven by
double-digit price increases, while volumes declined partially due to
continued portfolio optimization measures. However, volume development did
show a significant sequential improvement in the second half of the year.
Adjusted operating profit reached 1,115 million euros, a significant
increase versus the prior year (910 million euros). This increase was driven
by higher selling prices to offset persistently high prices for direct
materials, by ongoing measures to reduce costs and enhance production and
supply chain efficiency, by savings generated from the integrated Consumer
Brands business unit and by portfolio optimization measures. At the same
time, marketing and advertising investments were increased versus prior year
to strengthen brands and businesses. Adjusted return on sales reached 10.6
percent, representing an increase of 220 basis points compared to the
previous year - despite lacking the positive contribution to earnings from
the business activities in Russia, which were divested in April 2023.

Outlook 2024

Moderate growth in global economic output is expected for 2024. This assumes
a moderate increase in both industrial demand and consumer demand in key
areas of the consumer goods business for Henkel. According to current
estimates, global inflation is forecasted to be lower in fiscal 2024 than in
the previous year, although it will remain at a high level overall. In
addition, interest rates are expected to remain higher than in previous
years.

Henkel expects the translation of sales in foreign currencies to have a
negative impact in the mid-single-digit percentage range. Prices for direct
materials are expected to remain flat versus the annual average for 2023.

Considering these assumptions, Henkel expects to generate organic sales
growth of between 2.0 and 4.0 percent in fiscal 2024, with both business
units anticipated within this range. Adjusted return on sales (adjusted EBIT
margin) is expected in the range of 12.0 to 13.5 percent. Adjusted return on
sales is expected to be between 15.0 and 16.5 percent for Adhesive
Technologies and between 11.0 and 12.5 percent for Consumer Brands. For
adjusted earnings per preferred share (EPS) at constant exchange rates,
Henkel expects an increase in the range of +5.0 to +20.0 percent.

Significant progress across all strategic priorities

In a challenging macroeconomic and geopolitical environment, the company was
consistently developed further in the past financial year. The strategic
framework for purposeful growth was implemented at an even faster pace. Over
the last four years, Henkel has changed fundamentally in many dimensions:
structure, team, and culture. And these changes show tangible results. Three
major projects in particular had a significant impact on the past year and
were successfully executed - and have substantially advanced the
transformation of Henkel.

Sale of the business in Russia

In April 2022, just a few weeks after Russia's attack on Ukraine, Henkel
took the decision to exit its activities in Russia. This was followed by a
highly complex divestment process. In April 2023, Henkel was finally able to
sell its business in Russia to a consortium of local financial investors.
The agreed purchase price amounted to around 600 million euros.

Consumer Brands: Merger progressing faster than planned

With the merger of the two former consumer businesses, Laundry & Home Care
and Beauty Care, creating the new Consumer Brands business unit, Henkel has
brought all consumer brands across all categories under a single roof,
including iconic brands such as Persil or Schwarzkopf, as well as the
successful hair salon business. By that Henkel has established a
multi-category platform to enable dynamic growth. In January 2023, the new
business unit went 'live'.

And the new organization shows successes: Since then, Henkel has delivered
on or exceeded key metrics and financial targets in the Consumer Brands
business, for example achieving very strong organic growth and returning to
a double-digit adjusted EBIT margin. At the same time, the integration
process progressed much faster than originally planned. This is reflected in
the savings that have been realized in 2023. More than 200 million euros of
the targeted savings of around 250 million euros by the end of 2024 had
already been achieved by the end of 2023. The targeted total savings from
phase 1 were also increased to 275 million euros.

The second integration phase, which focuses on optimizing the supply chain
network in the Consumer Brands business, has also been launched. In
addition, the so-called '1-1-1 principle' has already been introduced in
first countries. This means: one order, one delivery, one invoice. In 2023,
savings of about 80 million euros were already achieved from phase 2 of the
integration. The expected total savings from phase 2 were also increased
from at least 150 million euros to around 250 million euros. The expected
total savings from both phases of the integration, which are to be realized
in full swing by the end of 2026, will therefore increase from 400 million
euros to 525 million euros.

At the same time, Henkel has invested in its businesses to further
strengthen its brands and innovation, for example by significantly
increasing marketing and sales investments to fuel future growth and further
improve profitability of the business.

Further development of the Adhesive Technologies business unit

To further leverage the globally leading market position and to take this
business to the next level, Henkel made several changes at the top
management level of Adhesive Technologies, promoting a more diverse and
international team in fiscal 2023. At the same time, the organizational
set-up was optimized to further enhance the customer and market proximity.
The new structure comprises three business areas: Mobility & Electronics,
Packaging & Consumer Goods, and Consumer, Craftsmen & Professional. It was
established in the course of 2023 and is fully reflected in the financial
reporting.

Further progress across all strategic priorities

Henkel continued to systematically implement its growth strategy in the past
fiscal year and made important progress in all areas. The company further
developed its business and brand portfolio, strengthened its competitive
edge in the areas of innovation, sustainability, and digitalization,
optimized its operating models and strengthened its corporate culture.

As part of its active portfolio management and in addition to discontinuing
or divesting activities, Henkel has further developed its portfolio through
acquisitions. In its Consumer Brands business, Henkel divested or
discontinued brands and activities representing total sales of around 650
million euros following the announcement to merge the two consumer
businesses in early 2022. For example, the North American air freshener
business was divested in 2023. At the same time, the portfolio was
strengthened with the acquisition of the sustainable laundry and home care
brand Earthwise in New Zealand. In the Adhesive Technologies business unit,
Henkel expanded its portfolio in the area of maintenance, repair and
overhaul with the acquisition of Critica Infrastructure, a specialized
provider of innovative fiber-composite solutions for repairs in a wide range
of industrial applications. With this transaction, Henkel has added an
attractive adjacent business to its adhesives portfolio and created a
platform for further growth. The strengthening of both business units
through targeted acquisitions continued at the beginning of 2024 with the
acquisitions of the hair care brand Vidal Sassoon in China and Seal for Life
in the area of industrial maintenance.

In 2023, Henkel launched numerous innovations onto the market, addressing
important trends and creating value for customers and consumers. In the
Adhesive Technologies business, Henkel introduced a new solution for bonding
camera lenses in driver assistance systems. This enables fast and robust
camera production in the automotive industry while ensuring greater safety
in the next generation of autonomous vehicles. In the Consumer Brands
business, Persil Deep Clean was launched in over 30 countries, introducing a
new formula with an innovative enzyme technology. It provides excellent
stain removal, while at the same time preventing unpleasant odors in the
washing machine. Henkel also relaunched its entire Got2b styling portfolio
with a new packaging design and improved sustainability with vegan formulas,
natural ingredients and more sustainable packaging.

In addition, Henkel further anchored sustainability in the business. In this
context, climate protection is one important pillar of Henkel's '2030+
Sustainability Ambition Framework', which has been continued to be
strengthened across the entire value chain in the business. A particular
focus is on expanding the use of renewable energies and driving progress
toward the ambition of achieving climate-positive operations by 2030. Here,
Henkel made significant progress. The company converted 14 sites to
CO2-neutral production in 2023. By the end of 2023, Henkel achieved a
reduction in CO2 emissions of 61 percent per ton of product (compared to the
base year 2010). As part of the company's sustainability efforts, Henkel
also put an emphasis on a more sustainable product portfolio, for example
through the increased use of renewable and recycled materials and is
tracking its progress in this area more systematically.

Henkel has also made further progress in the area of digitalization. In its
digital unit 'Henkel dx', the company continued to optimize internal
structures, strengthened the development of digital expertise and further
promoted a culture of innovation. Henkel has also deepened its strategic
partnerships with globally leading digital companies such as SAP, Microsoft
and Adobe. These enable Henkel to integrate cutting-edge technology into its
digital platforms and projects. By accelerating digital innovations, a
consistent platform strategy and by close collaboration between all business
units and functions, the company was able to further improve IT efficiency
last year and create new business opportunities for the company, for example
in the area of business-to-business marketplaces.

In addition, Henkel further strengthened its company culture in the past
year, based on the corporate purpose 'Pioneers at heart for the good of
generations' and the established 'Leadership Commitments'. Another focus
area was the implementation of the holistic 'Smart Work' concept, which
forms the global framework for topics such as mobile working, the digital
workplace and employee health, as well as new global 'Diversity, Equity &
Inclusion (DEI)' initiatives.

'We delivered a strong business performance in 2023, consistently
implemented our agenda for purposeful growth in all strategic dimensions and
drove forward the transformation of our company. I am firmly convinced that
we are well on track and pursuing the right strategy. We can look toward
2024 and the following years with great confidence and are fully committed
to delivering on our ambitions,' Carsten Knobel summarized.


* Adjusted for one-time expenses and income, and for restructuring expenses.

About Henkel

With its brands, innovations and technologies, Henkel holds leading market
positions worldwide in the industrial and consumer businesses. The business
unit Adhesive Technologies is the global leader in the market for adhesives,
sealants and functional coatings. With Consumer Brands, the company holds
leading positions especially in laundry & home care and hair in many markets
and categories around the world. The company's three strongest brands are
Loctite, Persil and Schwarzkopf. In fiscal 2023, Henkel reported sales of
more than 21.5 billion euros and adjusted operating profit of around 2.6
billion euros. Henkel's preferred shares are listed in the German stock
index DAX. Sustainability has a long tradition at Henkel, and the company
has a clear sustainability strategy with specific targets. Henkel was
founded in 1876 and today employs a diverse team of about 48,000 people
worldwide - united by a strong corporate culture, shared values and a common
purpose: 'Pioneers at heart for the good of generations.' More information
at www.henkel.com

This document contains statements referring to future business development,
financial performance and other events or developments of future relevance
for Henkel that may constitute forward-looking statements. 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 based on current estimates and assumptions made by the
corporate management of Henkel AG & Co. KGaA. These 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 (both positively and
negatively) 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
forward-looking statements.

This document includes supplemental financial indicators that are not
clearly defined in the applicable financial reporting framework and that are
or may be alternative performance measures. These supplemental financial
indicators should not be viewed in isolation or as alternatives to measures
of Henkel's net assets and financial position 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.

Contact

Investors & Analysts


Leslie Iltgen
Phone: +49 211 797 - 1631
Email: leslie.iltgen@henkel.com


Jennifer Ott
Phone: +49 211 797 - 2756
Email: jennifer.ott@henkel.com


Dr. Dennis Starke
Phone: +49 211 797 - 5601
Email: dennis.starke@henkel.com


Contact


Press & Media


Lars Witteck
Phone: +49 211 797 - 2606
Email: lars.witteck@henkel.com


Wulf Klüppelholz
Phone: +49 211 797 - 1875
Email: wulf.klueppelholz@henkel.com


Hanna Philipps
Phone: +49 211 797 - 3626
Email: hanna.philipps@henkel.com

www.henkel.com/press

www.henkel.com/ir


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   Language:       English
   Company:        Henkel AG & Co. KGaA
                   Henkel Str. 67
                   40191 Düsseldorf
                   Germany
   Phone:          +49 (0)211 797-0
   Fax:            +49 (0)211 798-4008
   E-mail:         press@henkel.com
   Internet:       www.henkel.de
   ISIN:           DE0006048432, DE0006048408
   WKN:            604843, 604840
   Indices:        DAX
   Listed:         Regulated Market in Berlin, Dusseldorf, Frankfurt
                   (Prime Standard), Hamburg, Hanover, Munich, Stuttgart;
                   Regulated Unofficial Market in Tradegate Exchange
   EQS News ID:    1850013

End of News EQS News Service
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1850013 04.03.2024 CET/CEST