Henkel Reports Outstanding Third Quarter Results


o Sales increase by 13.7 percent to 3,961 million euros

o Organic sales growth of 6.5 percent

o Share of sales of emerging markets: plus 3 percentage points to 42 percent

o Adjusted operating profit: plus 27.0 percent to 517 million euros

o Adjusted EBIT margin: plus 1.3 percentage points to 13.0 percent

o Adjusted earnings per preferred share (EPS): plus 35.6 percent to 0.80 euros

"In the third quarter, we further extended our recent successes with results
even better than the good performance we have shown in recent quarters. This
is the first quarter that we have ever achieved an adjusted EBIT margin of 13
percent," said Kasper Rorsted, Chairman of the Henkel Management Board.
"I would particularly like to emphasize the fact that all our regions and business
sectors made a positive contribution to this success in a persistently
challenging environment. Growth was once again given major impetus by our
strong brands and successful innovations. However, the adaptation of our cost
structures and further progress in the pursuit of our strategic priorities were
also important contributory factors."

Looking at the current fiscal year as a whole, Rorsted said: "We expect to
achieve an adjusted EBIT margin of well above 12.0 percent for 2010, accompanied
by an improvement in adjusted earnings per preferred share of more
than 45 percent. 2010 is likely to be the most successful fiscal year in our corporate
history, taking us an important step closer to our 2012 financial targets."

In the third quarter of 2010, Henkel posted sales of 3,961 million euros. In an overall
positive market environment, this represents an increase of 13.7 percent above the
level of the prior-year quarter. After adjusting for foreign exchange, sales improved
by 6.4 percent. Organically, i.e. after adjusting for foreign exchange, acquisitions
and divestments, the increase was 6.5 percent, representing another significant rise
versus the prior-year period. This positive development was supported by all the
company's business sectors. Following a slight decline in organic sales development
in the second quarter of 2010, Laundry & Home Care recorded growth of 3.4 percent.
Cosmetics/Toiletries once again substantially outperformed market growth with an
increase of 4.6 percent. With growth of 9.7 percent driven by both price and volumes,
Adhesive Technologies achieved an almost double-digit improvement versus the
prior-year quarter.

Operating profit (EBIT) rose by 73.0 percent, from 290 million euros to 501 million
euros. This is primarily due to the substantial improvement attained by Adhesive
Technologies, which was able to maintain a significant rate of increase in earnings.
After allowing for one-time gains (10 million euros) and restructuring charges (26 million
euros), adjusted operating profit improved by 27.0 percent, from 407 million euros
to 517 million euros.

Return on sales (EBIT margin) increased significantly, from 8.3 percent to 12.7 percent.
Adjusted return on sales rose from 11.7 percent to 13.0 percent.

The company's financial result improved from -40 million euros to -37 million euros
due to lower net debt. The tax rate was 26.1 percent.

Thanks to the increase in EBIT, net income for the quarter rose by 90.6 percent,
from 180 million euros to 343 million euros. After deducting non-controlling interests
totaling 6 million euros, net income for the quarter came in at 337 million euros (prioryear
quarter: 172 million euros). Adjusted quarterly net income after non-controlling
interests amounted to 349 million euros compared to 256 million euros in the third
quarter of 2009. Earnings per preferred share (EPS) doubled from 0.39 euros to
0.78 euros. The adjusted figure was 0.80 euros compared to 0.59 euros in the prioryear
quarter.

Good progress was also made in the management of net working capital. Compared
to the prior-year period, the ratio of net working capital to sales improved by 2.5
percentage points, decreasing to 7.8 percent. Due in particular to the substantial rise
in net income, our debt coverage ratio increased in the period under review to close
to 56 percent.

Business performance January through September 2010

In the first nine months of fiscal 2010, Henkel increased sales versus the prior-year
period by 11.1 percent to 11,363 million euros within an expanding market environment.
After adjusting for foreign exchange, sales improved by 6.6 percent. At 7.3
percent, organic sales growth also came in appreciably above the level of the prioryear
period. Operating profit (EBIT) increased by 70.9 percent, from 787 million euros
to 1,344 million euros. This was primarily due to the substantial improvement
shown by the Adhesive Technologies business sector following the heavy impact it
suffered from the crisis in the first half-year 2009. After allowing for restructuring
charges (104 million euros) and one-time charges (9 million euros) and gains (43 million
euros), adjusted operating profit improved by 48.8 percent, from 950 million euros
to 1,414 million euros. Return on sales (EBIT margin) increased significantly,
from 7.7 percent to 11.8 percent. Adjusted return on sales rose from 9.3 percent to
12.4 percent,

Due to the increased EBIT, net income for the nine months almost doubled, from
451 million euros to 889 million euros. After deducting non-controlling minority interests
of 20 million euros, net income for the period totaled 869 million euros (previous year: 432 million euros). Earnings per preferred share (EPS) more than doubled
from 1.00 euros to 2.01 euros, while the adjusted figure rose from 1.27 euros to 2.13
euros.

Business sector performance in the third quarter

The Laundry & Home Care business sector increased sales by 8.4 percent to 1,123
million euros. The foreign exchange impact amounted to a positive 5.4 percent.
Strong price and promotional competition continued in all relevant markets, leading to
a decline in prices of 5.6 percent compared to the previous year. However, thanks to
very strong volume growth of 9.0 percent, organic sales rose by 3.4 percent compared
to the prior-year quarter. One of the main drivers of the organic sales growth
achieved was again the Africa/Middle East region which registered a double-digit
percentage increase. Western Europe also recorded a substantial rise in sales,
driven in particular by strong business developments in Germany. Sales in North
America declined slightly in the face of strong competitive pressures. In the other regions,
the business sector succeeded in maintaining the sales levels of the prior-year
quarter, with market share gains ensuing as a result. Operating profit rose by 1.4
percent to 139 million euros. At 13.6 percent, adjusted return on sales was slightly
below the high level of the prior-year quarter which was positively influenced by both
a high selling price level and lower material prices. However, compared to the second
quarter, adjusted return on sales improved by more than one percentage point,
despite continuous pressure on gross margin due to further increases in material
prices and still declining selling price levels. In the Laundry business segment, the
strongest growth momentum was generated by the heavy-duty detergents, with Persil
doing especially well. Products of the Weisser Riese brand also performed very
well, particularly the Intensive Color powder and gel variants with their active color
power. The positive trend with respect to fabric softeners continued, supported by
further innovations. In Western Europe, for example, a fabric softener with innovative
fresh pearls was launched under the Vernel brand, combining wash-protective properties
with long-lasting and drier-resistant fragrances. The continuing positive developments
in organic sales registered by the Home Care business were further
boosted in particular by the results generated by the company's dish-washing products.
In the machine dish-washing segment, the products Somat 9 and Somat Perfect Gel made an especially strong contribution to the gratifying performance
achieved. Henkel's hand dish-washing products experienced similarly encouraging
growth rates. Positive sales momentum was also generated by the WC products
business with the launch of the first WC rim block with four active pearls.

The Cosmetics/Toiletries business sector continued the excellent sales and profit
performance of previous quarters. With organic growth of 4.6 percent to 845 million
euros, it significantly exceeded the sales levels achieved in an already strong prioryear
period. The rate of growth posted by Cosmetics/Toiletries was once again
above that of the relevant markets and resulted from strong performance in both the
mature markets and the emerging economies. The business sector continued to
generate steady growth momentum in Western Europe, while developments in North
America were stable. Performance in the growth regions of Asia (excluding Japan),
Africa/Middle East, Latin America and Eastern Europe was somewhat aboveaverage,
with organic sales growth in the double-digit percentage range right across
the board. Operating profit rose by 13.4 percent to 113 million euros, and by 7.3 percent
after adjusting for foreign exchange. As a result, there was also an improvement
in return on sales for this quarter. At 13.4 percent, it was 0.4 percentage points above
the level for the prior-year quarter. Adjusted for restructuring charges and one-time
gains, return on sales rose by an even better 0.6 percentage points to 13.6 percent,
representing a new high for the Cosmetics/Toiletries business sector. The Hair Cosmetics
segment continued to perform very well, expanding its market share and posting
record results in all categories. In addition to the launch of the Schauma Silk
Comb range, the Hair Care business also pursued the relaunch of Gliss Kur Oil Nutritive
as one of its headline activities. In the Colorants business, the focus was on continuing
the successful roll-out of the Syoss Color line and the introduction of the first
permanent foam colorant in the form of Perfect Mousse. In the Styling category, the
relaunch of Taft and the new sub-line Taft Ultra with Argon Oil likewise contributed to
the good results achieved. In the third quarter, the Body Care business was characterized
by the expansion of the innovation offensives at its core brands. In Western
and Eastern Europe, the high-performance deodorant brand for men, Right Guard,
was able to establish a position for itself in a challenging and competitive environment.
Meanwhile, the focus with respect to Fa was on the introduction of the innovative
Mystic Moments range. Market share in North America was substantially increased with the successful launch of Right Guard Total Defense 5. The chief activities
pursued in the Skin Care segment related to the launch of the new sub-line Novagen
under the Diadermine brand. The priority in the Oral Care segment was on
expanding the successful Theramed 2in1 series through the inclusion of the innovative
Power Clean & White line. The positive growth trend in the Hair Salon subsegment
continued in the third quarter, supported by the relaunch of the cross-segment
brand Essensity. In a persistently difficult market environment, the business was
therefore able to further consolidate its good market position and gain additional
market share.

The Adhesive Technologies business sector succeeded in generating further profitable
growth in the third quarter. Sales exceeded the level of the still crisis-affected
prior-year quarter by a substantial 19.3 percent, reaching 1,945 million euros and
outpacing market growth in all regions. Organic sales rose by 9.7 percent. With price
levels only slightly higher, the growth performance and the market share gains that
came with it were largely driven by volume increases. All the businesses and regions
contributed to this essentially positive development. The emerging economies of Asia
(excluding Japan), Africa/Middle East, Latin America and Eastern Europe continued
to exhibit above-average increases in sales, with overall organic growth in the double-
digit percentage range. There were also substantial increases in sales in the mature
markets of Western Europe and North America. Operating profit tripled compared
to the prior-year quarter, reaching a record mark of 268 million euros. Return
on sales likewise increased significantly by 8.3 percentage points to a new high of
13.8 percent. And this development is all the more notable, as rising raw material and
packaging prices in this quarter had a considerably greater adverse effect than in the
previous quarters. The Adhesives for Craftsmen, Consumers and Building segment
continued to develop well in all regions. Both our business serving craftsmen and
consumers and our activities involving the construction industry contributed to the
growth achieved. Substantial increases compared to the prior-year quarter were registered
in Latin America and Eastern Europe. The significant improvements seen in
the Transport and Metal business continued unabated. Particularly in Asia-Pacific,
Latin America and Eastern Europe, the sales figures posted were substantially higher
than in the prior-year quarter. Double-digit growth rates were also generated in the
regions of North America and Europe/Africa/Middle East. The General Industry segment also continued to perform very encouragingly. Indeed, it was here that the
strongest sales growth was achieved from within the business sector in the period
under review, with all regions contributing to, in some cases, substantial double-digit
percentage revenue growth rates. There was also a further increase in sales in the
Packaging, Consumer Goods and Construction Adhesives business, the highest
growth rates being achieved in Asia-Pacific, Latin America and Western Europe. The
Electronics business continued to benefit from the continuing strong recovery taking
place in the semiconductor industry. All Henkel's regions contributed to the appreciable
growth achieved, with Europe and North America performing particularly well.

Regional performance

In the Europe/Africa/Middle East region, sales improved organically by 5.3 percent
compared to the third quarter of 2009, coming in at 2,342 million euros, with all three
business sectors contributing. In Africa/Middle East and Eastern Europe, organic
growth was in the high single-digit percentage range. Western Europe including
Germany posted an organic growth rate in the mid single-digits, as it had done in the
first two quarters of 2010. At 733 million euros, sales of the North America region
grew organically by 4.2 percent compared to the prior-year quarter. Sales of the Adhesive
Technologies business sector developed particularly well, while sales at
Laundry & Home Care declined slightly and those of the Cosmetics/ Toiletries business
sector remained flat. Meanwhile, the successful development of the Latin
America region continued unabated. Here, organic sales increased by 10.8 percent
to 259 million euros, with all business sectors contributing. In the Asia-Pacific region,
growth remained double-digit at 14.9 percent, with organic sales coming in at
579 million euros in the wake of gratifying increases in sales posted by Adhesive
Technologies and Cosmetics/Toiletries. In the growth regions of Eastern Europe,
Africa/Middle East, Latin America and Asia (excluding Japan), sales rose by 20.7
percent to 1,656 million euros. Compared to the prior-year quarter, organic growth
amounted to 10.1 percent, keeping it in the double-digit range. The increase was
supported in particular by higher sales generated by Adhesive Technologies and
Cosmetics/Toiletries. The share of sales attributable to the growth regions increased
from 39 to 42 percent.

Sales and profits forecast 2010

In view of the economic forecasts for the current year, Henkel anticipates that the
world economy will grow by around 3.5 percent.

Henkel is confident of again outperforming its relevant markets in terms of organic
sales growth. A number of measures have been introduced and implemented on the
operational side, from which Henkel expects additional positive momentum to develop.
For example, it anticipates further contributions to profit arising both from the
synergies created through the integration of the National Starch businesses and from
the company's strictly disciplined cost management approach. These factors will, together
with the expected increase in sales, positively influence our results. Compared
to the levels in 2009, Henkel expects the adjusted EBIT margin to gratifyingly increase
to a figure well above 12.0 percent and an improvement in adjusted earnings
per preferred share of more than 45 percent.

Contact
Lars Witteck
Tel. +49 211 797 - 2606
Fax +49 211 798 -4040

Wulf Klüppelholz
Tel. +49 211 797 -1875
Fax +49 211 798-4040

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