Annual Report 2013

Laundry &
Home Care

Sales
in million euros
2009
4,129
2010
4,319
2011
4,304
2012
4,556
2013
4,580

+5.7 %
organic sales growth.

Sales and profits

The Laundry & Home Care business unit recorded strong organic sales growthorganic sales growth
Growth in revenues after adjusting for effects arising from acquisitions, divestments and foreign exchange differences – i.e. “top line” growth generated from within.
and posted an excellent performance in adjusted return on sales in the reporting period, thus continuing its profitable growth trend of the previous years. Organically (i.e. adjusted for foreign exchange and acquisitions/ divestments), we succeeded in increasing sales by 5.7 percent. Adjusted return on sales reached 15.6 percent for the full year for the first time, with an increase of 1.1 percent year on year. Organic sales growthOrganic sales growth
Growth in revenues after adjusting for effects arising from acquisitions, divestments and foreign exchange differences – i.e. “top line” growth generated from within.
was significantly above our relevant markets, which recorded slightly negative performance overall. Due to the competitive intensity of the market, organic growth was mainly driven by volume.

In the following, we comment on our organic sales performance in the regions.

The strong organic sales growthorganic sales growth
Growth in revenues after adjusting for effects arising from acquisitions, divestments and foreign exchange differences – i.e. “top line” growth generated from within.
was generated exclusively by the emerging markets. Sales in emerging markets improved by double digits overall. Eastern Europe showed a very strong sales increase, mainly driven by double-digit growth in Turkey. We once again achieved a double-digit increase in sales in the Africa/Middle East region, despite persistent political and social unrest. We posted strong sales expansion in Latin America, where we benefited mainly from very strong growth in Mexico. In Asia-Pacific we posted a double- digit sales increase. Our presence in this region is exclusively in South Korea.

Sales in the mature markets declined slightly in a difficult economic environment. In Western Europe, strong performance in France and solid growth in Germany offset sales declines in Southern Europe. In North America, sales in an intensely competitive and still declining market were slightly below the level of the prior year.

At 9.7 percent, growth in operating profit (EBIT) was nearly in the double-digit range thanks to positive business performance in comparison to the previous year. Adjusted operating profit increased by 8.5 percent while adjusted return on sales improved by 1.1 percentage points to an all-time high of 15.6 percent for the full year. Ongoing measures to reduce costs and enhance production and supply chainsupply chain
Encompasses purchasing, production, storage, transport, customer services, requirements planning, production scheduling and supply chain management.
efficiency enabled us to offset the effects of continued strong promotional and price competition, and to maintain our gross margingross margin
Indicates the percentage by which a company’s sales exceed cost of sales, i.e. the ratio of gross profit to sales.
at the prior-year level. We also benefited from a slight decrease in overall prices for direct materials. Ongoing efforts to optimize our cost structures additionally contributed to the increase in profitability.

Net working capitalNet working capital
Inventories plus payments on account, receivables from suppliers and trade accounts receivable, less trade accounts payable, liabilities to customers and current sales provisions.
was –8.0 percent of sales, and therefore improved further compared to the already very low level of the previous year. We posted a substantial improvement in return on capital employed (ROCE)return on capital employed (ROCE)
Return on Capital Employed (ROCE)
of 3.6 percentage points to 29.4 percent. This increase was mainly due to the improvement in operating profit. Economic value added (EVA®)Economic value added (EVA®)
The EVA concept reflects the net wealth generated by a company over a certain period. A company achieves positive EVA when the operating result exceeds the weighted average cost of capital. The WACC corresponds to the yield on capital employed expected by the capital market. EVA is a registered trademark of Stern Stewart & Co.
reached 507 million euros, increasing by 114 million euros compared to the prior year.