Annual Report 2013

Economic report

Sales
in million euros
2009
13,573
2010
15,092
2011
15,605
2012
16,510
2013
16,355

44%

of our sales generated
in emerging markets.

Results of operations

Sales and profits

Sales in fiscal 2013 were slightly below the previous year, at 16,355 million euros. With growth of 3.5 percent, organic sales – i.e. after adjusting for foreign exchange and acquisitions/divestments – showed a solid rate of increase. This was driven by both price and volume.

The rate of sales growth improved over the course of the year. While organic growth in the first half came in at 3.2 percent, it increased to 3.8 percent in the second half.

Sales development1
in percent 2013
Change versus previous year – 0.9
Foreign exchange – 4.4
Adjusted for foreign exchange 3.5
Acquisitions/divestments 0.0
Organic 3.5
of which price 0.8
of which volume 2.7

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We achieved 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.
in each of our business units, further expanding our share in our relevant markets. The Laundry & Home Care business unit recorded a 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.
of 5.7 percent. The Beauty Care business unit achieved solid 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 3.0 percent. The Adhesive Technologies business unit also generated solid organic growth of 2.7 percent.

Price and volume effects
in percent Organic sales growth of which price of which volume
Laundry & Home Care 5.7 0.9 4.8
Beauty Care 3.0 0.5 2.5
Adhesive Technologies 2.7 0.8 1.9
Henkel Group 3.5 0.8 2.7
 

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We were able to further improve organic sales in all regions:

In a highly competitive market environment, sales in the Western Europe region were slightly below the level of the previous year at 5,580 million euros. Organically, we increased sales by 0.2 percent. We were able to compensate for the effects of the recessionary developments in Southern Europe. The share of sales from the Western Europe region remained constant at 34 percent.

Sales in the Eastern Europe region increased by a nominal 1.6 percent to 3,034 million euros. The 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 6.0 percent was driven primarily by our businesses in Turkey and Russia. The share of sales from the region increased from 18 to 19 percent.

Despite negative foreign exchange effects and the political and social unrest in some countries, our sales in the Africa/Middle East region increased nominally by 0.3 percent to 1,080 million euros. Organically, we were able to grow sales by 17.6 percent. Our business units Laundry & Home Care and Beauty Care made a particularly important contribution to this performance. The share of sales from the region remained stable at 7 percent.

Due to negative exchange rate effects, sales in the North America region decreased by 3.2 percent to 2,928 million euros. Organically, sales grew by 1.0 percent, despite fierce promotional and price competition in our consumer businesses. The share of sales from the region stayed at 18 percent.

In the Latin America region, sales remained constant at 1,061 million euros on a nominal basis. Organically, we increased sales by 8.7 percent, with particular contributions from our business performance in Mexico and Brazil. The share of sales from the region remained unchanged at 6 percent.

As a result of negative exchange rate effects, sales in the Asia-Pacific region came in at 2,524 million euros, 2.8 percent below the prior-year figure. The region demonstrated a solid development with an 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.
rate of 3.3 percent, supported particularly by the growth in China and India. The share of sales from the Asia-Pacific region declined year on year from 16 to 15 percent.

Sales in the emerging markets of Eastern Europe, Africa/Middle East, Latin America and Asia (excluding Japan) increased nominally by 1.6 percent to 7,230 million euros. We achieved 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 8.3 percent, with all business units contributing. The share of sales from emerging markets increased from 43 to 44 percent.

In order to continuously adapt our structures to our markets and customers, we spent 159 million euros on restructuring (previous year: 124 million euros). We further expanded our shared services and optimized our production footprint.

The following explanations relate to the results achieved by the business units adjusted for one-time charges/gains and restructuring charges, in order to provide a more transparent presentation of operational performance:

Adjusted operating profit (EBIT)
in million euros 2012 2013 +/-
EBIT (as reported) 2,199 2,285 3.9 %
One-time gains –10  
One-time charges 12 82  
Restructuring charges 124 159  
Adjusted EBIT 2,335 2,516 7.8 %
 

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We were able to increase adjusted operating profit (adjusted EBITadjusted EBIT
Earnings Before Interest and Taxes (EBIT) adjusted for exceptional items in the form of one-time charges, onetime gains and restructuring charges.
) to 2,516 million euros, an increase of 7.8 percent on the prior-year figure of 2,335 million euros. All three business units contributed to this positive development. We improved adjusted return on sales (adjusted EBITadjusted EBIT
Earnings Before Interest and Taxes (EBIT) adjusted for exceptional items in the form of one-time charges, onetime gains and restructuring charges.
margin) for the Group by 1.3 percentage points to 15.4 percent.

The Adhesive Technologies business unit generated an excellent improvement in margin, with an increase from 15.1 to 16.9 percent. This was supported amongst other things by the consistent further development of our portfolio as well as through cost reductions and efficiency improvements. The improvement in profitability in the Laundry & Home Care business unit was also excellent, with an increase to 15.6 percent (previous year: 14.5 percent). Beauty Care posted a strong increase in adjusted return on sales to 15.0 percent (previous year: 14.5 percent). In our consumer businesses, we were able to benefit from our successful innovations and continued measures to reduce costs and improve efficiency. Further explanations relating to our business performance can be found in the description of the business units starting here.

Sales by region1 / EBIT by region1