Annual Report 2013

Economic report

Comparison between actual business performance and guidance

In our 2013 reports, we expected 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.
of between 3 and 5 percent for the Henkel Group in fiscal 2013. Compared to the figures for 2012, we expected adjusted return on sales (EBIT)return on sales (EBIT)
Operating business metric derived from the ratio of EBIT to revenues. Also known as EBIT margin.
to increase to about 15 percent, and adjusted earnings per preferred share to rise by about 10 percent.

We delivered on our sales and earnings guidance. Our organic growth rate of 3.5 percent is within the guidance corridor. Each of the three business units made an important contribution to this growth. At Group level, we also posted a significant increase in adjusted return on sales from 14.1 to 15.4 percent, as well as a 10.0 percent improvement in adjusted earnings per preferred share, increasing the figure to 4.07 euros (2012: 3.70 euros).

Additionally, prices for direct materials (raw materials, packaging, and purchased goods and services) remained at the level of the prior year, as anticipated in our reports for 2013. Our restructuring expenses totaled 159 million euros, exceeding the expected level of 125 million euros. This reflects our ongoing efforts to adjust our structures promptly to changing market conditions. We invested 404 million euros in property, plant and equipment. We adjusted a number of individual project schedules in response particularly to the geopolitical situation in Africa/Middle East.

Guidance versus performance 2013
Guidance for 2013 Performance in 2013
Organic sales growth Henkel Group: 3–5 percent
All business units: 3–5 percent
Henkel Group: 3.5 percent
Laundry & Home Care: 5.7 percent
Beauty Care: 3.0 percent
Adhesive Technologies: 2.7 percent
Adjusted return on sales Increase to about 15 percent Increase to 15.4 percent
Adjusted earnings per preferred share Increase of about 10 percent Increase of 10.0 percent
Prices for direct materials at prior-year level at prior-year level
Restructuring charges around 125 million euros 159 million euros
Investments in property, plant and equipment around 450 million euros 404 million euros

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Reconciliation from sales to adjusted operating profit1
in million euros 2012 % 2013 % Change
Sales 16,510 100.0 16,355 100.0 –0.9 %
Cost of sales –8,738 –52.9 – 8,497 – 52.0 –2.8 %
Gross profit 7,772 47.1 7,858 48.0 1.1 %
Marketing, selling and distribution expenses –4,278 –25.9 –4,199 – 25.7 –1.8 %
Research and development expenses –406 –2.6 –414 – 2.6 2.0 %
Administrative expenses –727 –4.4 –749 – 4.5 3.0 %
Other operating income/charges –26 –0.1 20 0.2
Adjusted operating profit (EBIT) 2,335 14.1 2,516 15.4 7.8 %
Calculated on the basis of units of 1,000 euros; figures commercially rounded.

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