Henkel Delivers Overall Robust Performance in Fiscal 2020 Despite Substantial Impact From Covid-19 Pandemic
Balanced portfolio, strong innovations, financial strength, and dedicated team as key enablers for robust business performance in a global crisis
2020 results at upper end of full-year guidance:
- Group sales reach 19.3 billion euros, organic: -0.7 percent
- EBIT margin* at 13.4 percent, -260 basis points, corresponding to an operating profit* of 2.6 billion euros
- Earnings per preferred share (EPS)*: 4.26 euros, -17.9 percent at constant exchange rates
Very strong free cash flow of 2.3 billion euros, net financial position significantly improved
Proposed dividend on prior-year level: 1.85 euros per preferred share
Implementation of agenda for purposeful growth on track, clear roadmap for further execution in 2021 and beyond
Outlook for 2021:
- Organic sales growth: 2.0 to 5.0 percent
- EBIT margin*: 13.5 to 14.5 percent
- Earnings per preferred share (EPS)*: an increase between 5.0 to 15.0 percent at constant exchange rates
March 07, 2021: “Despite the sharp decline of the global economy as a result of the COVID-19 pandemic in 2020, we delivered an overall robust performance across all business units. For the full year, our results were at the upper end of our guidance. We achieved this thanks to our balanced portfolio, successful innovations, and financial strength as well as the outstanding commitment of our employees around the world. I would like to thank all of them for their excellent contributions in this truly challenging year,” said Henkel CEO Carsten Knobel.
“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. Based on these robust results and given our strong financial base, we will propose a stable dividend to our shareholders at the upcoming Annual General Meeting. Over the past 35 years, since going public, Henkel has always paid out a dividend above or at the prior-year level,” Knobel added.
“During the COVID-19 crisis, we adapted flexibly and quickly to changes in our markets, putting the safety of employees at the top of our agenda. At the same time, we were able to successfully launch and drive the implementation of our strategic agenda across all pillars: shaping a winning portfolio, creating competitive edge by accelerating impactful innovations, by even further integrating sustainability firmly in everything we do, and by driving the digital transformation, and ensuring future-ready operating models. But most important for me, we strengthened our collaborative culture and created a strong momentum for change that will enable us to deliver superior performance and purposeful growth – for our customers and consumers, our company, employees and shareholders, and for society and the planet.”
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.
After a strong negative impact on sales due to the pandemic and related shutdowns in the second quarter for Adhesive Technologies and Beauty Care, all three business units reported in the second half of 2020 good organic growth compared to the prior year. The development of the consumer goods businesses, Beauty Care and Laundry & Home Care, was also supported by increased investments in brands, innovations and digitalization.
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.
“The development of our earnings reflects our increased investments which we stepped up as announced in the beginning of 2020 – despite the crisis. Declining demand in key business segments during the COVID-19 crisis also negatively affected our profitability. However, thanks to our successful cost management and the implementation of improved operating models we were able to partially mitigate the impact from the crisis on our earnings,” explained Carsten Knobel.
“As we are managing the current crisis, we remain fully dedicated to our ambitious growth agenda for the coming years. Looking ahead, we are more confident than ever to execute our Purposeful Growth agenda with our global team and successfully shape our future.”
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