By: ICN Bureau
Last updated : March 06, 2021 10:32 am
Henkel achieved this performance due its balanced portfolio, successful innovations, and financial strength as well as the outstanding commitment of its employees around the world.
Despite the sharp decline of the global economy as a result of the COVID-19 pandemic in 2020, Henkel delivered an overall robust performance across all business units.
“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,” Carsten Knobel, CEO, Henkel, said.
Henkel achieved this performance due its balanced portfolio, successful innovations, and financial strength as well as the outstanding commitment of its employees around the world.
“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 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.”
“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 Knobel.