Henkel Roadshow Presentation 2019 - Seeking Alpha
Transcript of Henkel Roadshow Presentation 2019 - Seeking Alpha
Henkel Roadshow Presentation
May 2019
2May 2019
This information contains forward-looking statements which are based on current estimates and assumptions made by the corporatemanagement of Henkel AG & Co. KGaA. 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 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 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 any forward-looking statements.
This document includes – in the applicable financial reporting framework not clearly defined – supplemental financial measures that are or
may be alternative performance measures (non-GAAP-measures). These supplemental financial measures should not be viewed in
isolation or as alternatives to measures of Henkel’s net assets and financial positions 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.
Disclaimer
Henkel Roadshow Presentation
3
1. Strong foundation and consistent financial performance
2. Compelling ambition and strategy 2020+, outlook 2019
3. Consistent capital allocation supporting our ambition
4. Strong portfolio of three business units
5. Henkel – a compelling investment
Agenda
May 2019Henkel Roadshow Presentation
4May 2019
Henkel: Three areas of competenceA global leader in brands and technologies
Consumer BusinessIndustrial Business
Adhesive Technologies
Globally leading positions
#1 Global
Laundry & Home Care
#3 Global
#1 Europe, #2 North America
Beauty Care
#3 Hair Coloration
#3 Hair Professional
Henkel Roadshow Presentation
5May 2019
Well diversified and balanced portfolioThree business units operating across all regions
Sales by business unit 1 Sales by region 1
Beauty Care20%
Laundry &Home Care
32%
AdhesiveTechnologies
47%2018 2018
1 Corporate sales not included (account for 1% of sales)
Emerging
Markets 40%
Asia/Pacific 17%
Africa/Middle East 6%
Eastern Europe 14%
Western Europe 31%
Latin America 6%
North America 25%
Henkel Roadshow Presentation
6May 2019
Strong and consistent performanceKey financial developments
Key developments Sustainable and profitable growth path
▪ Sales reaching € 19.9 bn with an average organic
sales growth of 3.2%1
▪ Good organic sales growth complemented by
compelling acquisitions in all business units
▪ Continued improvement of Adj. EBIT Margin and
new high in Adj. EBIT of € 3.5 bn
▪ Adjusted EPS (preferred share) up by 2.7% to
€ 6.01 in 2018 (+7% ex. FX), strong CAGR of 8.4%1
16.5 16.4 16.4
18.118.7
20.0 19.9
14.1%
15.4%15.8%
16.2%16.9%
17.3% 17.6%
2012 2013 2014 2015 2016 2017 2018
Sales
€ bn
OSG %
Adj.
EBIT %
+3.1%+3.1%+3.0%+3.4%+3.5%+3.8%
1 2012-2018
+2.4%
Henkel Roadshow Presentation
7
Challenging macroeconomic environment
Henkel Roadshow Presentation May 2019
Mixed market dynamics in Q1 2019
Stronger USD, but pressure from key Emerging Market currencies persists
Slight currency tailwind
Continued direct material price pressure in uncertain and volatile markets
Commodity inflation
IPX weakening with some industry segments negative
Slower industrial production growth
Competitive environment remains intense, especially in Western Europe
HPC markets mixed
8
Key developments in Q1 2019
May 2019Henkel Roadshow Presentation
€ 5.0 bn +0.7%Sales Organic Growth
€ 795 m 16.0%Adjusted EBIT Adjusted EBIT %
-6.3%Adjusted EPS Growth1
1 At constant currencies
▪ Nominal sales up 2.8% to € 5 bn, supported by positive currency and M&A effects
▪ Good performance of Laundry & Home Care
▪ Beauty Care with weak start into the year
▪ Adhesive Technologies affected by slow-down of some industry segments
▪ Adj. EBIT Margin impacted by direct material price pressure, transactional currency effects and investments
▪ Adj. EPS below previous year, down mid-single-digit % at constant currencies
9
Western Europe
€ 1,569 m (32%)
Eastern Europe
€ 693 m (14%)
North America
€ 1,266 m (25%)
Latin America Asia-PacificAfrica/Middle East
+1.1% -1.3% +6.5%
+8.0% +13.5% -8.8%
OSG in %
€ 320 m (6%) € 754 m (15%)€ 335 m (7%)
Emerging Markets: +2.2% to € 1,968 m, 40% of Group Sales
Mature Markets: -0.4% to € 2,969 m
Henkel Roadshow Presentation May 2019
Organic sales development by regionQ1 2019
abs. in € m (share of total)
10
EBIT Margin Adj. in %
-130bps
18.116.8
Q1/18 Q1/19
May 2019
Adhesive TechnologiesKey Financials Q1 2019
Sales in € m, OSG1 in % Drivers of Performance
-0.8%
2,270 2,309
Q1/18 Q1/19
1 Volume: -3.7% Price: 2.9% Henkel Roadshow Presentation
Organic sales development
impacted by weak Automotive and
Electronics in Asia Pacific and North
America, supported by strong pricing
EBIT margin below prior year
due to negative volume / mix effects;
direct material headwinds
compensated by pricing and
cost efficiency initiatives
11May 2019
Beauty CareKey Financials Q1 2019
1 Volume: -2.0% Price: -0.2% Henkel Roadshow Presentation
EBIT Margin Adj. in %
-170bps
16.715.0
Q1/18 Q1/19
Sales in € m, OSG1 in % Drivers of Performance
-2.2%
965 960
Q1/18 Q1/19
Organic sales development
impacted by Western Europe and
destocking in China, North America
recovering, Professional strong
Profitability impacted
by continued direct material price
pressure and negative volume
effects, partially compensated by
cost efficiency initiatives
12May 2019
Laundry & Home CareKey Financials Q1 2019
Henkel Roadshow Presentation1 Volume: 1.4% Price: 3.3%
EBIT Margin Adj. in %
-140bps
18.517.1
Q1/18 Q1/19
Sales in € m, OSG1 in % Drivers of Performance
+4.7%
1,5691,667
Q1/18 Q1/19
Very strong organic sales growth
driven by significant Emerging
Markets growth and very strong
North America growth
EBIT margin below previous year
adversely impacted by continued
direct material and EM currency
headwinds, support from cost
efficiency initiatives
13Henkel Roadshow Presentation May 2019
Adjusted Gross Profit to Adjusted EBIT
-23.8% -0.2pp
46.2%-1.3pp
-2.4% +/-0.0pp
-4.4% +0.1pp +0.4%
+/-0.0pp16.0%-1.4pp
in % of sales
Impact on Adjusted EBIT Margin in pp vs. PY
Adjusted Gross Profit
Marketing, selling & distribution
R&D Admin OOI/OOE Adjusted EBIT
14
Sales Volume Price M&A FX SalesSales Q1/18 Volume Price M&A FX Sales Q1/19
Henkel Roadshow Presentation May 2019
Positive top line supported by FX and M&A
Organic & inorganic
-1.7% +2.4% +0.6%+1.5%
+2.8%
Sales in € m, changes in %
+1.3%
4,835
4,969
15
Adjusted EPS development 1
Q1 2019
Adj. EPS Organic / anorganic FX Sales
€ 1.43€ 1.34+/-0.0%
-6.3%
-6.3%
Q1/2018 FX Q1/2019at constant currencies
Adjusted EPS in Q1 mid-single-digit % below prior year both nominally and at constant currencies
May 2019Henkel Roadshow Presentation1 per preferred share
16
Net Working Capital above prior year
+190bpsAdhesive Technologies
Beauty Care
Laundry & Home Care
Henkel Group
+100bps
-190bps
+40bps
13.8
11.9
6.8
5.8
-3.1
-1.2
6.6
6.2
in % of sales
Q1 2018 Q1 2019
May 2019Henkel Roadshow Presentation
▪ Effects from weaker demand in key customer
segments and M&A in Adhesive Technologies
▪ Increase in Beauty Care driven by higher inventories
from lower volumes and mix
▪ Strong improvement in Laundry & Home Care thanks
to positive trend in inventories and receivables
17
Strong Free Cash Flow generation
Net Financial Position in €m
-3,247
-2,478-2,895
Investments Other Sales
624+233
Operating CF CapEx Other
Free Cash Flow in €m, ∆ PY in €m
FCF
-155+190 +54
+78523
+501
Strongly improved Free Cash Flow driven by higher Operating Cash Flow and lower CapEx
Continuously strong balance sheet and further improvement of Net Financial Position
31.12.18 31.03.1931.03.18
May 2019Henkel Roadshow Presentation
18
1. Strong foundation and consistent financial performance
2. Compelling ambition and strategy 2020+, outlook 2019
3. Consistent capital allocation supporting our ambition
4. Strong portfolio of three business units
5. Henkel – a compelling investment
Agenda
May 2019Henkel Roadshow Presentation
19May 2019
▪ Generate profitable growth and attractive returns
▪ Become more customer-focused, innovative and agile
▪ Lead digital transformation in all business activities
▪ Promote sustainability across the entire value chain
▪ Advance our portfolio with value-adding acquisitions
We pursue a compelling ambition
Henkel Roadshow Presentation
20May 2019
Mid- to long-term financial ambitionCommitted to sustainable profitable growth
▪ Achieve organic sales growth of 2-4%
▪ Deliver mid to high single-digit % adjusted EPS growth at constant currencies
▪ Continued focus on Free Cash Flow expansion
▪ Pursue compelling growth opportunities with superior execution
▪ Maintain rigorous cost discipline and focus on margin
Henkel Roadshow Presentation
21
Henkel 2020+ Strategic Priorities
May 2019Henkel Roadshow Presentation
22May 2019
Drive growth, accelerate digitalization
▪ Outperform by leveraging scale and breadth
of the Adhesive Technologies portfolio
▪ Accelerate growth in Beauty Care Retail,
continue momentum in Professional
▪ Leverage strong innovation program in
Laundry & Home Care
▪ Advance to next level of digitalization
Henkel Roadshow Presentation
23May 2019
Drive growth in Adhesive TechnologiesFocus on future growth trends
▪ Mobility: Enabler of industry transformation Alternative Drives – Autonomous Driving – Lightweight
▪ Connectivity: New functions & designs requiredMobile Devices – Internet of Things – Digital Infrastructure
▪ Sustainability: Drive change along the value chainRenewable Feedstock – Efficient Production – Circular Economy
Henkel Roadshow Presentation
24May 2019
▪ Drive superior growth in HairHolistic innovation plan across all Hair segments addressing key trends and target groups
▪ Back to growth in North AmericaTargeted growth plan with strong initiatives in Body Care and Hair Coloration
▪ Continue to outperform in ProfessionalSustain very strong growth momentum
Drive growth in Beauty Care
Henkel Roadshow Presentation
25
Drive superior growth in HairSelection of innovations with launch in H1 2019
May 2019
Schauma – relaunch of
biggest family brand
Nature Box – rollout in
new markets
OnlyLove – launch of
new brand
100% natural cold pressed oils,
‘free-from’ formulas
Eco-certified formula –
no ammonia, silicone and alcohol
Vegan formulas with micronutrients,
no silicones and parabens
Henkel Roadshow Presentation
26
Back to growth in North AmericaSelection of innovations with launch in H1 2019
May 2019
Dial – strong line
extensions
Keratin Color –
strong new subline
got2b – expansion into
new categories
Launch new Keratin Color variants
for multi-ethnic target groups
New trend color offerings and
extension of male line in hair care
Strong new lines in moisturizing body
wash and antibacterial handwash
Henkel Roadshow Presentation
27
Continue to outperform in ProfessionalSelection of innovations with launch in H1 2019
May 2019
Authentic Beauty Concept –
launch of premium brand
IGORA Vibrance –
global relaunch
Launch new
B2B eShop
Leveraging technology leadership in
Hair Coloration
Driving sales via convenience
and end-to-end customer
experiences
Creation of new premium
vegan OTC brand with pure
recognizable ingredients
Henkel Roadshow Presentation
28May 2019
Drive growth in Laundry & Home Care
▪ Innovation offensive for leading megabrand PersilAccelerate market share gains with cutting-edge and exclusive technologies
▪ Turn around North AmericaStrong innovations, caps initiatives and brand relaunches for new growth momentum
▪ Expand Home Care to strengthen profitable growthLeveraging blockbuster brands and key trends
Henkel Roadshow Presentation
29
Relaunch of leading megabrand PersilSelection of innovations with launch in H1 2019
May 2019
Persil Deep Clean –
global relaunch
Persil DISCS – launch of
4-chamber caps
eCommerce
offensive
Patented technology and
unique enzyme blend for
superior performance
Formula and packaging innovations
with up to 2x concentrated formulas,
SIOCs1 for optimized logistics
New cutting-edge Deep Clean
Technology with exclusive
advanced enzyme mix
1 Ship in own container Henkel Roadshow Presentation
30
Turn around North AmericaSelection of innovations with launch in H1 2019
May 2019
Caps offensive – win in fast
growing segment
‘all relaunch – boost growth
of largest US brand
Snuggle Scent Shakes –
US market launch
New advanced formulas leveraging
global technology expertise for
#1 sensitive skin brand
Entry in premium fragrance
segment with leading fabric
finisher brand
Strong caps initiatives across all
price tiers: premium, mid-tier and
value-for-money
Henkel Roadshow Presentation
31
Expand Home Care to strengthen profitable growthSelection of innovations with launch in H1 2019
May 2019
Somat All-in-1 Gel –
launch of next generation
Bref DeLuxe –
line extension
Pro Nature –
new product lines
New premium line with new
premium DeLuxe scents
Eco-certified formulas and
sustainable plastic strategy
Strengthen leadership in the
fast growing gel segment
Henkel Roadshow Presentation
32May 2019
▪ Driving digital sales and new business modelsStrong development of eFormats and specific offers to boost digital sales
Develop new digital services and products, implement IoT strategy
▪ Advance digital customer & consumer interactionRapid expansion of digital analytics, eCRM and eShopper category mgmtDedicated in-house social media team & content factory
▪ Leveraging Industry 4.0Real-time leverage of automation and robotics, sensorics and analytics
▪ Digital infrastructureSet-up of new digital workspaces and investments in cyber security,
upgrade of network capacity and site infrastructure
Advance to next level of digitalizationSignificant expansion of investments in digital businesses, analytics & infrastructure
Henkel Roadshow Presentation
33
▪ Sustainably higher growth investments
▪ Accelerating top-line growth with focus on consumer goods business
▪ Step-up of investments in digitalization
May 2019
€ 300 million higher investmentsin brands & technologies, innovation and digitalization
Henkel Roadshow Presentation
34Henkel Roadshow Presentation May 2019
Drive growth, accelerate digitalizationStatus of Growth Initiatives, Q1 2019
Beauty Care Laundry & Home Care Digitalization
▪ Core brands with first product activities
addressing key consumer needs
▪ Innovations dedicated to growth areas
North America, Hair and Professional
▪ Start of growth initiatives with
major relaunches & format innovations
▪ Clear focus on top priorities
North America, Persil and Home Care
▪ Investments in data analytics, digital-
ready infrastructure and cyber security
▪ Increasing activities in customer &
consumer interaction and e-commerce
35
▪ Return to growth in Adhesive Technologies
▪ Build on good start of Laundry & Home Care executing strong innovation strategy
▪ Reinforce growth in Beauty Care Retail, continue outperformance in Professional
▪ Continue to drive digitalization in all aspects
▪ Strong focus on cost discipline, driving efficiency and adapting structures
▪ Implement extra measures to improve Working Capital; expand Free Cash Flow
▪ Enhance value proposition of portfolio organically and via acquisitions
May 2019
Business Priorities 2019
Henkel Roadshow Presentation
36May 2019
Henkel Group
Organic Sales Growth
Adjusted EBIT Margin
Adjusted EPS (constant currencies) Mid single digit % below PY
Henkel Group 16 - 17%
Adhesive Technologies 18 - 19%
Beauty Care 15 - 16%
Laundry & Home Care 16.5 - 17.5%
2 - 4%All Business Units within Group range
Guidance 2019
Henkel Roadshow Presentation
37
1. Strong foundation and consistent financial performance
2. Compelling ambition and strategy 2020+, outlook 2019
3. Consistent capital allocation supporting our ambition
4. Strong portfolio of three business units
5. Henkel – a compelling investment
Agenda
May 2019Henkel Roadshow Presentation
38
Consistent capital allocation
May 2019
Strong sources of cash
Excellent Free Cash Flow Balance sheet optionality
Investments Acquisitions Dividends
Henkel Roadshow Presentation
39May 2019
▪ Strong Free Cash Flow of € 1.9 bn in 2018, up
from average of € 1.7 bn p.a. in 2013-17 period
▪ Continued focus on FCF expansion in mid- to long-
term financial ambition, driven by operating
performance, efficient capital management and
disciplined CapEx
▪ Very robust balance sheet with equity ratio of
58% and net financial position of € -2.9 bn as per
FY 2018
Strong FCF generation and balance sheet
in € bn
2018Ø 2013-17
1.7
1.9
Henkel Roadshow Presentation
40
CapEx: Asset-light business model
May 2019
▪ Asset-light business model with low CapEx
requirements, especially in Adhesive Technologies
▪ CapEx of around € 3 bn planned in strategic cycle
2017-20, ~40% up on previous cycle
▪ Significant investments to support growth
initiatives, innovation, infrastructure and IT
2012 2013 2014 2015 2016 2017 2018
422 436517
625
543
663
853
2013-16: € 2.1 bn
CapEx for existing operations in € million
2017-20: € 3 bn~
Henkel Roadshow Presentation
41May 2019
Focused CapEx investments
▪ Adhesive Technologies Europe – Spain New production facility for aerospace
▪ Beauty Care Eastern Europe – Russia Capacity expansion
▪ Laundry & Home Care North America – USA Expansion of detergent capsule production
~€ 850 m spent in 2018
Henkel Roadshow Presentation
42
Strong track record in value accretive M&A
May 2019
▪ > € 8 bn invested since 2012 with projects
evenly spread across business units
▪ > € 3 bn in annual sales1 added across business units
with substantial synergy potential
▪ Adhesive Technologies focuses on complementary
technologies, consumer businesses target leading
country/category positions and white spots
▪ M&A remains integral part of strategy,
complemented by selective VC investments
Acquisitions in € million
1 Sum of annualized sales contributions
2012 2013 2014 2015 2016 2017 2018
94 29
1,697
354
3,866
1,818
428
Henkel Roadshow Presentation
43May 2019
Acquisitions remain integral part of strategy~€ 400 m invested in 2018
▪ Adhesive TechnologiesExpanded footprint in Emerging Markets
▪ Beauty CareSuccessfully integrated Hair Professional acquisitions
▪ Laundry & Home CarePosition in North America further strengthened
▪ Venture CapitalStrengthening digital and technological expertise by investments in start-ups and VC funds
Henkel Roadshow Presentation
44
Continuously increasing dividend
May 2019
▪ Consistent dividend policy based on strong earnings and cash flow profile
▪ More than € 4 bn paid out since 2012 via dividends
▪ Continuous increase of payout with 2018 dividend almost twice as high as 2012
▪ Increase of target dividend payout range from 25 - 35% to 30 - 40% from fiscal 2019
2012 2013 2014 2015 2016 2017 2018
0.95
1.22 1.311.47
1.621.79
Dividend per preferred share in €, payout ratio in %
CAGR 2012-201811.7%
1.85
25.6%
30.0% 30.0% 30.2% 30.3% 30.7% 30.9%
Henkel Roadshow Presentation
45
Consistent capital allocation
May 2019
Investments
▪ Asset-light business model with
2/3 of investments in growth
▪ CapEx ~40% up to around € 3 bn in
strategic cycle 2017-20
Acquisitions
▪ Strong track record in value
accretive M&A and integration
▪ M&A remains integral part of
Henkel’s strategy
Dividends
▪ Consistent dividend policy based
on strong earnings and FCF profile
▪ Continuous increase of dividend
pay-out in past years
Henkel Roadshow Presentation
46May 2019
▪ Adj. Economic Value Added (EVA) increased
to ~ € 2 bn in 2018
▪ Expansion of Capital Employed mainly driven by
accelerated M&A activity
▪ Strong focus on sustainable profitable growth and
M&A integration with full realization of synergies
Strong value creationEVA expansion driven by value-accretive M&A and strong operating performance
Adj. ROCE in %Capital employed in € bn Adj. EVA1 in € bn
1 Calculated based on Henkel Group WACC
2013 2014 2015 2016 2017 2018
22.6% 22.0% 20.1% 20.0% 18.3% 17.4%
11.1 11.8
14.515.9
18.9
1.6 1.6 1.71.9
2.0 1.9
20.1
Henkel Roadshow Presentation
47
1. Strong foundation and consistent financial performance
2. Compelling ambition and strategy 2020+, outlook 2019
3. Consistent capital allocation supporting our ambition
4. Strong portfolio of three business units
5. Henkel – a compelling investment
Agenda
May 2019Henkel Roadshow Presentation
Adhesive Technologies
49May 2019
Packaging & Consumer
Goods (31%)
Transport & Metal
(24%)
General Industry
(15%)
Electronics
(11%)
Industrial
Electronic devices,
consumer and industrial
#1
Industrial manufacturing,
maintenance & repair
#1
Automotive, aerospace,
metal industries
#1
Consumer goods,
packaging, furniture
#1
Consumer, Craftsmen
and Building (19%)
#3
Building & construction,
DIY, stationery, repair
Consumer
Note: % share in 2018 business unit sales
Adhesive TechnologiesGlobal leader in high-impact solutions in Adhesives, Sealants & Functional Coatings
Henkel Roadshow Presentation
50May 2019
Adhesive TechnologiesProven track record of sustainable profitable growth
Key developments Profitable growth path
▪ Strong organic sales growth driven by all
business areas
▪ Superior customer value and economies of scale
▪ Active portfolio management and disciplined
capital allocation
▪ Continuous and sustainable margin improvement
8.1 8.19.0 9.0
9.4 9.4
16.9% 17.2% 17.1%
18.2%18.5% 18.7%
2013 2014 2015 2016 2017 2018
Sales
€ bn
OSG %
Adj.
EBIT %
+5.0%+2.8%+2.4%+3.7%+2.7% +4.0%
Henkel Roadshow Presentation
51
Market and competitionLeading position through broad technology & product portfolio
May 2019
Global market leadership
▪ Highly specialized and fragmented
market with ~50 segments
▪ Henkel with ~14% global market
share the only player present across all segments
Strong performance
▪ Industrial Production Index (IPX)
as key market indicator
▪ Strong business performance with
consistently good OSG over the past years
Competitive advantage
▪ Global delivery of highest quality
and performance
▪ Technology and application
know-how
~€65 bnmarket
OSG (%)
IPX (%)
2012 2013 2014 2015 2016 2017 2018
Henkel Roadshow Presentation
52
Key success factors for profitable growthHigh-impact solution provider
May 2019
▪ >130,000 customers across
broad range of industries
▪ Create value for our customers
and establish partnerships
▪ Digitalize customer touch-points
▪ Develop innovations and customized
solutions
▪ Broadest portfolio of 40 technologies
& manufacturing network of 141 sites
▪ Bringing know-how to our customers
with >6,500 experts
▪ Truly global footprint, active in
more than 150 countries
▪ Winning combination of best-in-
class service & leading technologies
▪ Global R&D and manufacturing
capabilities on all continents
Through customer proximity,… …broadest expertise and… …global scale…
Henkel Roadshow Presentation
53
Key success factors for profitable growthHigh-impact solution provider
May 2019
▪ 5 business areas with 26 market
focused steering units
▪ Ongoing optimization towards
solution-oriented business model
▪ Broad geographical & industry
coverage
▪ Flexible cost structures (e.g.
Shared Service Centers) according
to market requirements
▪ High-impact solutions drive
customers’ product performance
but represent low share of cost
▪ Material cost increases are passed
on to customers over time
…to resilient structures and……viaactiveportfoliomanagement1… …superior pricing1
1 Illustrative Henkel Roadshow Presentation
54
Global coverage through state-of-
the-art innovation centersIndustry insights through strong and
unique customer base
Driving GrowthCreating value through transformative solutions
May 2019
Foundation
Industry trends
Customized solutions
People Technologies Applications Footprint Digitalization
Mobility Connectivity Sustainability Conscious lifestyle Mass personalization
Henkel Roadshow Presentation
55
Adhesive TechnologiesWell positioned to deliver sustainable profitable growth
▪ Strong portfolio with leading positions across industries,
regions and technologies
▪ Proven track record to adapt resource allocation to capture
best opportunities
▪ Superior value to our customers through high-impact
solutions
▪ High-touch business model, driven by customer insights and
deep technology/ application expertise
▪ Capture growth by leveraging megatrends such as
connectivity, e-mobility or sustainability
▪ Unique, scalable platform to expand into new segmentsMay 2019Henkel Roadshow Presentation
Beauty Care
57May 2019
Beauty CareLeading market positions in active markets
Hair Professional 26% Hair Retail 47% Body Care 23% Skin / Oral 4%
Professional Retail
Note: % share in 2018 business unit sales
#3 globally
#2 North America
Salon, Color, Care, Styling Hair Color, Care, Styling Soaps, Shower, Deo Face, Mouthwash
#1 Styling Europe
#2 Coloration Europe#3 Personal Cleansing US
Henkel Roadshow Presentation
58May 2019
Beauty CareSteady topline improvement and strong profitability
Key developments Profitable growth path
▪ Sales growth through strong innovations and
successful integration of acquisitions
▪ Ongoing growth momentum of Professional
▪ 2018 adj. EBIT impacted by direct material prices
and promotional intensity – partly offset by fund
growth initiatives
▪ Strategic growth priorities focus on strong
innovations and targeted investments into core
portfolio
3.5 3.53.8 3.8 3.9 4.0
15.0% 15.3%15.9%
16.9%17.2% 17.1%
2013 2014 2015 2016 2017 2018
Sales
€ bn
OSG %
Adj.
EBIT %
+0.5%+2.1%+2.1%+2.0%+3.0% -0.7%
Henkel Roadshow Presentation
59
Market and competitionAttractive, dynamic and challenging markets
May 2019
Attractive market
▪ Largest non-food FMCG market
with more than € 400 bn
▪ Structurally high gross margins and
premiumization opportunities
▪ Long-term growth dynamics,
low cyclicality and seasonality
Consolidation &intense competition
▪ Consolidation of retailers and
manufacturers
▪ Increased price & promo pressure
especially in mature markets
▪ Small challenger brands competing
for shelf space and market share
Channel shifts
▪ Growing share of digital
investment and sales
▪ New online players
(retailers and brands)
▪ eCommerce reducing ‘offline’
basket & traffic
Henkel Roadshow Presentation
60
Key success factors for profitable growthStrong brands and innovations since over 120 years
May 2019
Key competence in Hair…
▪ Schwarzkopf Hair mega-brand
with > € 2 bn annual sales
▪ Global #3 in Hair Professional
thanks to strong base and
successful M&A
▪ Top Retail positions in Europe
…and strong customer focus…
▪ Leveraging category leadership
positions in brick & mortar and
eCommerce
▪ Deepening partnerships through
unique interactive customer
experience center
…leveraging innovation power
▪ In-depth consumer insights &
early identification of latest trends
▪ Leading, consumer-centric
innovations
▪ Agile organizational setup with
fast-track innovation process
Henkel Roadshow Presentation
61
Driving growthAcceleration of performance with strong innovation focus
May 2019
Strengthen core InnovationsExpand core
▪ Rejuvenate brand equities and
innovate on top trends
▪ Insight-driven innovation process &
multi-channel communication
▪ Clear channel focus, best-in-class
insights & strong customer proximity
▪ Disruptive new brands, technologies
and business models
▪ Enhance portfolio focusing on
key trends
▪ Leverage synergies in Retail &
Professional
▪ Top brands in new categories
(e.g. got2b Color) and countries
▪ Further leverage Professional
portfolio globally
▪ Step-change eCommerce in
Retail and Professional
Henkel Roadshow Presentation
62
Beauty CareStrong brands and innovations
▪ Strong long-term profitable growth and
leading positions in attractive markets worldwide
▪ Core competence in Hair Professional and Retail, Body Care
as second pillar focusing on Europe and North America
▪ Comprehensive innovation plan addressing key trends and
targeting new consumers
▪ Fast integration of value-adding acquisitions
May 2019Henkel Roadshow Presentation
Laundry & Home Care
64
#1 Europe #2 North America #3 Global
Home Care SpecialtiesDishwashingLaundry Specialties
May 2019
Heavy Duty Detergents
Laundry Care (73%) Home Care (27%)
Premium, Mid-Tier,
Value for Money
Special Detergents, Fabric
Finishers, Laundry Additives
Hand Dishwashing
Automatic Dishwashing
Surface Cleaners, Toilet Care,
Air Care & Insect Control
Laundry & Home CareLeading market positions in active markets
Note: % share in 2018 business unit sales Henkel Roadshow Presentation
65May 2019
Laundry & Home CareProven track record of sustainable profitable growth
Key developments Profitable growth path
▪ Good organic sales growth in 2018
▪ Growth driven by Middle East / Africa and
Eastern Europe as well as successful innovations
▪ Adj. EBIT margin significantly improved
▪ Substantial efficiency measures implemented
4.6 4.65.1
5.8
6.7 6.4
15.6%16.2%
17.1% 17.3%17.6%
18.1%
2013 2014 2015 2016 2017 2018
Sales
€ bn
OSG %
Adj.
EBIT %
+2.0%+4.7%+4.9%+4.6%+5.7% +1.9%
Henkel Roadshow Presentation
66
Market and competitionDynamic market environment with intense competition
May 2019
Attractive market
▪ Huge market of ~€ 131 bn, growing
but at a lower pace
▪ Potential to grow via penetration
and consumption in EM and MM
▪ Innovations as strong lever to fuel
growth
Competitive / pricing pressures
▪ Intense competition between global
players; growing local players in EM
▪ High trade and promotion pressure
in many countries
▪ Increase of discounters, smaller
store formats and drugstores
Emerging digital channels
▪ Online channels growing fast but still
small in our markets
▪ Convergence of online and offline
channels
▪ Industry transformation e.g. through
services and advanced machines
Henkel Roadshow Presentation
67
Key success factors for profitable growthMoving ahead of competition
May 2019
Unique coverage…
▪ Present in 11 out of 12 categories
of LHC market
▪ Leading positions in active markets
with >70 #1 positions globally
…with strong brands and…
▪ Well-known brands with strong
equity (Top 10: 65% of sales in 2018)
▪ Unique position in growing retailer
brands business in North America
…agile & “Glocal” model
▪ Platform innovations regionally
adapted and locally implemented
▪ Strong shopper insights to
strengthen innovation power and
customer relationships
Global
Local
Regional
Henkel Roadshow Presentation
68
Driving growthStrengthen leading positions and expand into new businesses
May 2019
Drive penetration and loyalty
▪ Educate, generate trial and initiate
re-purchase
▪ Strengthen core and drive
complementary categories via
strong innovations
Strengthen footprint
▪ Reinforce leadership in MM and
strengthen positions in EM
▪ ‘Smart’ entry into new geographies
and white spots
Innovations
▪ Enhance portfolio focusing on
key trends
▪ Grow via expansion of laundry
services as well as in digital / IoT
Henkel Roadshow Presentation
69
Laundry & Home CareLeading brands around the world
▪ Strong financial track record and clear initiatives for
profitable growth going forward
▪ Challenging market environment, but major
opportunities due to significant transformation
▪ Unique category / country coverage, strong brands and
agile “Glocal” approach as key success factors
▪ Targeted innovations addressing strategic search fields
to drive future growth
▪ Clear action plan to leverage digital opportunities
May 2019Henkel Roadshow Presentation
70
1. Strong foundation and consistent financial performance
2. Compelling ambition and strategy 2020+, outlook 2019
3. Consistent capital allocation supporting our ambition
4. Strong portfolio of three business units
5. Henkel – a compelling investment
Agenda
May 2019Henkel Roadshow Presentation
71
Henkel – a compelling investment
May 2019
▪ Strong foundation based on a well-balanced portfolio with distinct competitive advantages
▪ Global leader in brands and technologies, leveraging growth opportunities in attractive markets
▪ Strong and consistent financial performance
▪ Strong progress in the implementation of our strategic priorities 2020+
▪ Committed to long-term sustainable value creation and attractive returns
Henkel Roadshow Presentation
Back-up
73
Adaptation of our structures to the market
May 2019Henkel Roadshow Presentation
0 +2+57736
-0.4%
795-5.6%
Reported EBIT Q1/2019
Adjusted EBIT Q1/2019
One-time gains One-time charges Restructuring expenses
in € m, change in %
Focus of restructuring measures in Q1 2019 on adapting go-to-market approach and optimizing structures
Restructuring expenses of € 200 – 250 m expected in FY 2019
74May 2019
FY 2019: Additional input for selected KPIs
1 versus the prior year
Currency Impact on Sales Low single digit % negative1
Prices for Direct Materials Low single digit % increase1
Restructuring Charges € 200 - 250 m
CapEx € 750 - 850 m
Henkel Roadshow Presentation
75Henkel Roadshow Presentation May 2019
New IFRS 16 Leases StandardP&L impact from first-time application
Impact on Q1/19 results Estimated Full Year 2019 impact
Sales No impact No impact
Operating expense +€37 m Low triple-digit €m decrease
EBITDA +€37 m Low triple-digit €m increase
D&A -€33 m Low triple-digit €m increase
Operating profit (EBIT) +€4 m High single-digit to low double-digit €m increase
EBIT Margin No material impact No material impact
Financial result -€4 m High single-digit to low double-digit €m decrease
Net income No material impact No material impact
76May 2019
Adhesive TechnologiesTop Brands, Sales 2018
~€ 0.9 bn~€ 1.6 bn~€ 3.1 bn
Top 10 brands: >80% of total Adhesive Technologies sales
Henkel Roadshow Presentation
77May 2019
Adhesive TechnologiesKey Competitors
Henkel Roadshow Presentation
78May 2019
Beauty CareTop Brands, Sales 2018
Top 10 brands: 90% of total Beauty Care sales
~€ 0.3 bn~€ 0.3 bn~€ 2.0 bn
Henkel Roadshow Presentation
79May 2019
Beauty CareLarge Customers
Henkel Roadshow Presentation
80May 2019
Beauty CareMain Competitors
Henkel Roadshow Presentation
81May 2019
Laundry & Home CareTop Brands, Sales 2018
Top 10 brand clusters: ~65% of total Laundry & Home Care sales
~€ 0.3 bn~€ 0.4 bn~€ 1.3 bn
Henkel Roadshow Presentation
82May 2019
Laundry & Home CareLarge Customers
Henkel Roadshow Presentation
83May 2019
Laundry & Home CareMain Competitors
Henkel Roadshow Presentation
84May 2019
Management StructureHenkel AG & Co. KGaA
Henkel
Management AG
▪ AG as sole personally liable partner
▪ Management of the businesses of Henkel AG & Co. KGaA
Shareholders’
Committee (KGaA)
▪ Approval of significant corporate actions, strategy
▪ Appointment of Management Board (indirect via Supervisory Board AG)
Supervisory Board
(KGaA)
▪ Supervision of management
▪ Appointing the statutory auditor
Annual General
Meeting (KGaA)
▪ Approval of the financial statements
▪ Decision about the dividendHenkel Roadshow Presentation
85May 2019
Management BoardHans Van Bylen
Chief Executive Officer (CEO)
Jan-Dirk Auris Adhesive Technologies
Carsten Knobel Finance (CFO), Purchasing & IBS
Jens-Martin SchwärzlerBeauty Care
Sylvie NicolHR & Infrastructure Services
Bruno PiacenzaLaundry & Home Care
Born 1961,
with Henkel
since 1984,
Member of
Board since
2005
Born 1968,
with Henkel
since 1984,
Member of
Board since
2011
Born 1969,
with Henkel
since 1995,
Member of
Board since
2012
Born 1973,
with Henkel
since 1996,
Member of
Board since
2019
Born 1963,
with Henkel
since 1992,
Member of
Board since
2017
Born 1965,
with Henkel
since 1990,
Member of
Board since
2011
Henkel Roadshow Presentation
86
Bonus (key financials )
Henkel Roadshow Presentation May 2019
Long-term incentive (LTI)Proportion of target remuneration: around 23%Cap: max. 150% of the target amount
Variable annual cash remuneration (STI)Proportion of target remuneration: around 56%Cap: max. 150% of the target amount
Fixed remunerationProportion of target remuneration: around 21%
Long-term variable
cash remuneration
Short-term variable
cash remuneration
(65% STI)
Share deferral
(35% STI)
Non-performance-related componentsPerformance-related components, short-termPerformance-related components, long-term
Management Board RemunerationComponents and calculation
50% target achievement
Organic Sales Growth
50% target achievementIncrease in adj. EPS
(preferred)
Multiplier forindividual
performance0.8 - 1.2
+ x Functional Factor1
0.9 - 1.75x
LTI calculation based on ROCEThree-year average return on capital employed (ROCE)
Target achievement
Year 2
Target achievement
Year 3+ : Functional Factor1
0.9 - 1.75x
STI calculation based on OSG and adj. EPS
Target achievement
Year 13+
1 The functional factor differs according to area of responsibility
87
▪ July 02, 2019 Investor & Analyst Day Adhesive Technologies
▪ August 13, 2019 Q2 2019 Earnings Release
▪ November 14, 2019 Q3 2019 Earnings Release &
Investor & Analyst Day Consumer Businesses
▪ March 05, 2020 FY 2019 Earnings Release
▪ April 20, 2020 Annual General Meeting
Upcoming Events
May 2019Henkel Roadshow Presentation
88May 2019
Contact Investor RelationsHenkel AG & Co. KGaA
Investor Relations
Henkelstrasse 67
40589 Düsseldorf
Germany
www.henkel.com/ir
Phone: +49-211-797-3937
Fax: +49-211-798-2863
E-mail: [email protected]
From left to right: Lars Korinth,
Andrea Haschke, Ines Göldner,
Dorothee Brinkmann, Mona Niermann,
Steffen Nix
Henkel Roadshow Presentation