Outlook for the Henkel Group 2012
We expect the Henkel Group to generate organic sales growth of between 3 and 5 percent in fiscal 2012.
We are confident of continuing the positive growth trend posted by our consumer goods businesses, with revenues expanding in the low single-digit percentage range.
For the Adhesive Technologies business sector, we expect sales to grow in the mid-single-digit percentage range.
We base this prediction on our strong competitive position. This we have consolidated and fur- ther extended in recent years through our innovative strength, our strong brands, our leading market presence and the quality of our portfolio.
In recent years we have introduced a number of measures that have had a positive impact on our cost structure. And in this year too, we intend to further adapt our structures to the constantly changing market conditions as a continuation of our commitment to strict cost discipline. We also intend to counteract the burden on earnings caused by high raw material costs.
These factors, together with the expected increase in sales, will positively influence our earnings development. Based on our 2011 results, we anticipate achieving an increase in adjusted1 return on sales (EBIT) to 14 percent (2011: 13.0 percent) and an increase in adjusted earnings per preferred share of at least 10 percent.
We also expect the following development in 2012:
- Increase in the prices for raw materials, packaging, contract manufacturing and traded goods in the mid-single-digit percentage range.
- Restructuring charges of around 100 million euros.
- Investments in property, plant and equipment of around 410 million euros.
Further specific expectations are discussed in the individual business sector reports in our annual report 2011.
Financial targets for 2012
| Annual organic sales growth (average) |
3-5 % |
| Adjusted return on sales (EBIT) |
14 % |
| Annual growth in adjusted earnings per preferred share (average) |
> 10 % |
Dividends
In keeping with our financial strategy, the dividend payout should be around 25 percent of net income attributable to shareholders of Henkel AG & Co. KGaA. Based on the anticipated increase in earnings, we therefore expect to further increase dividends paid for 2012.
Capital expenditures
We are planning to increase our investments in property, plant and equipment to around 410 million euros in 2012. In so doing, we will be increasing our focus on investment in our emerging markets. For structural reasons, the majority of our capital expenditures will be in Europe and North America.
Major investments in production facilities for the manufacture of innovative products are planned for the business sectors Laundry & Home Care and Cosmetics/Toiletries. Another major area lies in production plant optimization and capacity expansion. The focus of our Adhesive Technologies business sector in 2012 will be on consolidating and rationalizing our production footprint. As part of this process, in 2011 we laid the foundations in China for the construction of our largest industrial adhesives production facility worldwide. In the emerging markets of Eastern Europe and South America, our investment activities will concentrate on expanding production capacity.
Acquisitions, financing and liquidity
We plan to further reduce our net debt in fiscal 2012. We intend to maintain a sufficient balance of liquid funds in order to enhance our financial flexibility. We are further aiming at renewing the credit line, which expires in 2012, safeguarding our commercial paper program.
Thanks to continuing good business performance and our improved financial profile, we regained our target ratings of “A flat” (Standard & Poor’s) and “A2” (Moody’s) in the second quarter of 2011. Looking forward we intend not to jeopardize our target ratings in the long term when assessing possible acquisitions.
Post-2012 outlook
Diligent pursuit of our strategic priorities formulated in 2008 has led to a significant improvement in our key financials, with the trend remaining upward. We will again be aiming to achieve profitable growth in 2013. We will be presenting specific financial targets for the years after 2012 at the end of fiscal 2012.
