Henkel Roadshow Presentation

Henkel Roadshow
Presentation
As of September 2016
Disclaimer
This information contains forward-looking statements which are based on current estimates
and assumptions made by the corporate management 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 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.
2
As of September 2016
Henkel Roadshow Presentation
Henkel: Three areas of competence
A global leader in brands and technologies
Laundry & Home Care
3
As of September 2016
Beauty Care
Henkel Roadshow Presentation
Adhesive Technologies
Agenda
4
1.
Key developments Q2 2016
2.
Topline & Business Unit highlights Q2 2016
3.
Acquisitions Q2 2016
4.
Financial highlights Q2 2016 & Outlook FY 2016
As of September 2016
Henkel Roadshow Presentation
Q2 2016 – Strong performance in a challenging environment
5
OSG
Adj. EBIT margin
Adj. EPS growth
+3.2%
17.6%
+8.5%
OSG in EM
NWC in % of sales
Net financial pos.
+6.1%
5.3%
€ -118 m
As of September 2016
Henkel Roadshow Presentation
Q2 2016 – Strong performance in a challenging environment
• Strong performance driven by all
economic volatility in some countries
business units
• Solid organic sales growth, volume• Strong organic sales growth in
Emerging Markets, positive in Mature
• Excellent improvement in adjusted EBIT
margin
• High single-digit adjusted EPS growth
• Step-change acquisition of Sun
Products Corporation in North America
As of September 2016
• Global GDP growth on a moderate level
with slowing growth dynamics
driven
6
• Geo-political instability and macro-
Henkel Roadshow Presentation
• Intensified FX headwinds in key
currencies
• Persisting macroeconomic headwind still
impacting Adhesive Technologies
demand in China
Agenda
7
1.
Key developments Q2 2016
2.
Topline & Business Unit highlights Q2 2016
3.
Acquisitions Q2 2016
4.
Financial highlights Q2 2016 & Outlook FY 2016
As of September 2016
Henkel Roadshow Presentation
Solid organic & inorganic sales growth, increased FX headwind
in m€, changes in %
-0.9%
4,695
+2.5%
+0.7%
+1.2%
-5.3%
4,654
Organic & inorganic: +4.4%
Sales Q2/15
8
Volume
As of September 2016
Price
Henkel Roadshow Presentation
A&D
FX
Sales Q2/16
Strong organic sales growth in EM, positive in MM
in m€, OSG in %
Emerging Markets
Mature Markets
+6.1%
+1.0%
2,047
1,964
Q2/15
Q2/16
2,617
2,659
Q2/15
Q2/16
• Emerging Markets sales share at 42%, impacted by FX headwind
9
As of September 2016
Henkel Roadshow Presentation
Broad based growth, all regions growing
in m€, OSG in %
Western Europe
Eastern Europe
Africa/Middle East
+1.1%
+9.7%
+4.4%
1,564
1,585
707
698
Q2/15
Q2/16
Q2/15
Q2/16
North America
Latin America
+1.8%
+11.0%
934
Q2/15
333
Q2/15
Q2/16
Asia-Pacific
+0.4%
932
Q2/16
342
292
266
Q2/15
Q2/16
826
808
Q2/15
Q2/16
• Mature Markets: positive, with uneven dynamics
• Emerging Markets: Russia, Mexico and India double-digit, China negative
10
As of September 2016
Henkel Roadshow Presentation
Laundry & Home Care
Delivering profitable growth
Sales in m€, OSG in %
EBIT Margin Adj. in %
NWC in % of Sales
+5.3%
+100bp
-80bp
1,314
18.1
1,345
17.1
-3.1
-3.9
Q2/15
Q2/16
Q2/15
Q2/16
• OSG driven by 4.3% in volume and 1.0% in price
11
As of September 2016
Henkel Roadshow Presentation
Q2/15
Q2/16
Laundry & Home Care
Highlights Q2 2016
Somat
Phosphate-free
100% performance in automatic
dishwashing – 0% phosphates
Excellent brand growth – launch in
30 countries
Mexico
Persil
Double-digit growth driven by
liquid detergents
Innovation offensive in WE, CEE
and MEA
Innovation offense with local
and international brands
Strong growth in NA with further
distribution
12
As of September 2016 Henkel Roadshow Presentation
Beauty Care
Delivering profitable growth
Sales in m€, OSG in %
EBIT Margin Adj. in %
NWC in % of Sales
+2.1%
+90bp
-80bp
1.006
17.4
988
16.5
Q2/15
Q2/16
Q2/15
3.9
Q2/16
• OSG driven by 1.3% in volume and 0.8% in price
13
As of September 2016
Henkel Roadshow Presentation
Q2/15
3.1
Q2/16
Beauty Care
Highlights Q2 2016
Growth Momentum NA
Successful expansion of
Schwarzkopf in hair retail
Body business growing share
with Dial Soothing Care innovation
Schwarzkopf Offensive
Hair Salon
Further enhancing leading
position of 2 bn € mega brand
No. 3 position worldwide,
continuing its growth momentum
Strong innovations across
all categories
Growth driven by innovations
under Schwarzkopf and
successfully integrated US brands
14
As of September 2016
Henkel Roadshow Presentation
Adhesive Technologies
Delivering profitable growth
Sales in m€, OSG in %
EBIT Margin Adj. in %
NWC in % of Sales
+2.6%
+160bp
-160bp
2,343
18.6
2,290
13.5
17.0
Q2/15
Q2/16
Q2/15
11.9
Q2/16
• OSG driven by 2.2% in volume and 0.4% in price
15
As of September 2016
Henkel Roadshow Presentation
Q2/15
Q2/16
Adhesive Technologies
Highlights Q2 2016
Packaging &
Consumer Goods
Strong growth in emerging
markets through innovations
in furniture, structural
building components and
flexible packaging
16
Surface Treatment
Construction Industry
Double-digit growth driven by
innovations in light metal pretreatment for the automotive
industry
Strong organic growth in
Eastern Europe supported by
successful product launch
As of September 2016
Henkel Roadshow Presentation
Agenda
1.
Key developments Q2 2016
2.
Topline & Business Unit highlights Q2 2016
3.
Acquisitions Q2 2016
4.
Financial highlights Q2 2016 & Outlook FY 2016
17
As of September 2016
Henkel Roadshow Presentation
Acquisition of Sun Products Corporation
Key facts of the transaction
18
Sales
Transaction value
Scope
~1.4 bn €
~3.2 bn €
100% of capital
Employees
Prod. / R&D Sites
Financing
~2,000
2/1
Debt
As of September 2016
Henkel Roadshow Presentation
Acquisition of Sun Products Corporation
Step-change in Laundry & Home Care North America
• Henkel to become the No. 2 in the US,
largest laundry care market in the world
• Attractive portfolio complements Henkel’s
core category laundry care
• Well-established & successful brands with
leading positions
• Offensive and defensive synergy potential
19
As of September 2016
Henkel Roadshow Presentation
Acquisition of Sun Products Corporation
Leading positions in North America laundry care
Attractive Market
• Focus on the US (96%), presence
• US: world’s largest laundry care
market, profitable and growing
As of September 2016
No. 3
Laundry Detergents
No. 2
Fabric Conditioner
• Leading in attractive core
categories
in Canada
20
Leading Positions
• Strong brand awareness based
on unique positioning
Henkel Roadshow Presentation
Strong Brands
• Focus on laundry care (90% of
sales), presence in home care
• Branded business (65%) and
retailer brands (35%)
Acquisition of Sun Products Corporation
Increasing the share of Laundry & Home Care and North America
Henkel 2015
Henkel 2015 pro forma
Laundry & Home Care
Laundry & Home Care
Corporate
1%
Corporate
28%
1%
18.1
Segments
Adhesive 50%
Technologies
bn €
19.5
21% Beauty Care
Adhesive
Technologies
46%
North America
Other
3%
Emerging
Markets
21
Other
20%
As of September 2016
43%
bn €
3%
34%
bn €
20%
Beauty Care
North America
18.1
Regions
33%
Western
Europe
Henkel Roadshow Presentation
26%
19.5
Emerging
Markets
40%
bn €
31%
Western
Europe
Acquisition of Sun Products Corporation
Financing of the transaction
• Acquisition valued at around 3.2 billion euros (3.6 billion USD) including debt
• Refinance the short-term bank credit through:
• 3-year bank loan of about 1.0 billion euros
• bond issues with a nominal value of 2.2 billion euros:
four fixed-rate tranches denominated in Euro, US-Dollar and British Pound
and maturities ranging from 2-6 years
Financing at attractive conditions
Favorable environment in the corporate bond market
22
As of September 2016
Henkel Roadshow Presentation
Acquisition of Sun Products Corporation
Details of the bond issues of 2.2 billion euros
1st tranche
2nd tranche
3rd tranche
4th tranche
EUR
EUR
USD
GBP
Volume
500 million
700 million
750 million
300 million
Coupon
0% p.a.
0% p.a.
1.5% p.a.
0.875% p.a.
Maturity
13.09.2018
13.09.2021
13.09.2019
13.09.2022
100.10%
100%
99.85%
99.59%
-0.05% p.a.
0% p.a.
1.55%
0.95%
Act/Act (ISMA)
Act/Act (ISMA)
30/360 (ISMA)
Act/Act (ISMA)
1,000 EUR
1,000 EUR
2,000 USD
1,000 GBP
WKN
A2BPAW
A2BPAX
A2BPAY
A2BPAZ
ISIN
XS1488370740
XS1488418960
XS1488419695
XS1488419935
4 fixed-rate tranches
Currency
Issuing Price
Initial yield
Day count convention
Denomination
Listing
Regulated Market of the Luxembourg Stock Exchange
Issuer
Henkel AG & Co KGaA
23
As of September 2016
Henkel Roadshow Presentation
Bolt-on acquisitions Q2 2016
Strengthen leading position in
laundry care Iran
• Acquisition of 100% of Behdad
Chemical Company PJSC
• Annual sales: ~ € 70 m
• Enterprise value: ~ € 158 m
24
As of September 2016
Enter into the growing
laundry care market in Nigeria
• Acquisition of 57.5 % of Expand
Global Industries UK Ltd
• Annual sales: ~ € 60 m
• Enterprise value: € 112 m
Henkel Roadshow Presentation
Enter into the ceramic tile
adhesives market in Colombia
• Acquisition of 100% of Alfagres S.A.,
tile adhesives
• Annual sales: ~ € 10 m
• Enterprise value: € 17 m
Agenda
1.
Key developments Q2 2016
2.
Topline & Business Unit highlights Q2 2016
3.
Acquisitions Q2 2016
4.
Financial highlights Q2 2016 & Outlook FY 2016
25
As of September 2016
Henkel Roadshow Presentation
High quality of earnings
Key financials – Q2 2016
Sales in m€, OSG in %
Gross Margin Adj. in %
EBIT Margin Adj. in %
EPS Pref. Adj. in €
+3.2%
+90bp
+120bp
+8.5%
4,695
4,654
48.2
49.1
17.6
1.40
16.4
1.29
Q2/15
26
Q2/16
As of September 2016
Q2/15
Q2/16
Henkel Roadshow Presentation
Q2/15
Q2/16
Q2/15
Q2/16
Disciplined NWC management and strong cash generation
Key financials – Q2 2016
NWC in % of Sales
Free Cash Flow in m€
Net Financial Position in m€
-130bp
+€ 450m
+€ 516m
476
6.6
5.3
-118
26
Q2/15
27
Q2/16
As of September 2016
Q2/15
Henkel Roadshow Presentation
-634
Q2/16
Q2/15
Q2/16
Q2 2016 – High quality of earnings driven by excellent team
performance
• Strong performance in all dimensions driven by all business units
• Both Emerging & Mature Markets contributing to organic sales growth
• Excellent increase in adjusted EBIT margin
• High single-digit adjusted EPS growth
• Step-change acquisition of Sun Products Corporation in North America,
small- and medium-sized bolt-on acquisitions
28
As of September 2016
Henkel Roadshow Presentation
H1 2016 – Strong performance
Sales
OSG
EM sales share
€ 9.1bn
+3.1%
42%
Adj. EBIT
Adj. EBIT margin
Adj. EPS growth
€ 1.6 bn
17.2%
+8.1%
29
As of September 2016
Henkel Roadshow Presentation
Increasingly challenging environment in 2016
• Persisting geo-political instability and macro-economic volatility
• Global GDP growth on a moderate level with slowing growth dynamics
• High volatility of some key currencies remain
• Focused and balanced investments to foster organic growth
• Strong innovation pipeline in all business units
• Cost focus and adaptation of our structures to the market
Continued focus on 2016 strategy execution
30
As of September 2016
Henkel Roadshow Presentation
Guidance FY 2016 – updated
Organic Sales Growth
EM Sales Share
Adjusted EBIT Margin
Adjusted EPS Growth
Guidance FY 2016 – previously
Guidance FY 2016 – updated
2 - 4%
2 - 4%
All Business Units within this range
All Business Units within this range
Slight increase
Slight decrease
~16.5%
>16.5%
All Business Units on or above PY level
All Business Units above PY level
8 - 11%
8 - 11%
Committed to achieve 10% adj. EPS CAGR in 2013-2016 strategy cycle
31
As of September 2016
Henkel Roadshow Presentation
Thank you
Sales split and profitable growth path
Henkel – FY 2015
Sales by Business Sector
Profitable Growth Path
15.4%
15.8%
16.2%
3.8%
3.5%
3.4%
3.0%
2012
2013
2014
2015
14.1%
12.3%
10.3%
13.0%
10.0%
7.0%
5.9%
3.0%
28 % Laundry & Home Care
21 % Beauty Care
50 % Adhesive Technologies
1 % Corporate
Corporate = sales and services not assignable to the individual business sectors.
* EBIT margin adjusted for one-time charges/gains and restructuring charges.
33
As of September 2016
Henkel Roadshow Presentation
2008
2009
-3.5%
2010
2011
Sales split and profitable growth path
Laundry & Home Care – FY 2015
Segment Split
Profitable Growth Path
15.6%
16.2%
17.1%
14.5%
12.8%
13.0%
13.2%
10.8%
5.7%
3.8%
4.7%
2.9%
68 % Laundry
32 % Home Care
34
As of September 2016
Henkel Roadshow Presentation
4.9%
2014
2015
2.9%
1.5%
2008
* EBIT margin adjusted for one-time charges/gains and restructuring charges.
4.6%
2009
2010
2011
2012
2013
Sales split and profitable growth path
Beauty Care – FY 2015
Segment Split
Profitable Growth Path
12.6%
12.9%
13.3%
4.8%
4.7%
14.2%
* EBIT margin adjusted for one-time charges/gains and restructuring charges.
35
As of September 2016
Henkel Roadshow Presentation
2008
2009
2010
15.0%
3.1%
3.0%
15.3%
15.9%
5.4%
3.5%
68 % Hair Care
27 % Body Care
5 % Skin/Oral
14.5%
2011
2012
2013
2.0%
2.1%
2014
2015
Sales split and profitable growth path
Adhesive Technologies – FY 2015
Profitable Growth Path
Segment Split
16.9%
17.2%
17.1%
15.1%
12.8%
13.9%
10.1%
8.1%
11.8%
8.3%
3.6%
2.7%
3.7%
2.4%
1.3%
33% Packaging, Cons. Goods & Constr. Adh.
21% Transport and Metal
2008
14% General Industry*
2009
11% Electronics*
* 2015 restated: Business transfer of 2% of sales from General Industry to Electronics
** EBIT margin adjusted for one-time charges/gains and restructuring charges.
As of September 2016
2011
2012
2013
2014
2015
*
21% Adh. for Consumers, Craftsmen & Building
36
2010
Henkel Roadshow Presentation
-10.2%