Henkel Roadshow Presentation May 2018 · 1 Source: IHS Markit Q1 2018 Henkel Roadshow Presentation...

Henkel Roadshow PresentationMay 2018

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.

May 2018Henkel Roadshow Presentation 2

Agenda

3

1. Strong Foundation, Consistent Performance

2. Key Developments and Financials Q1 2018

3. Henkel 2020+ Progress

4. Outlook FY 2018

Henkel Roadshow Presentation May 2018

Henkel: Three areas of competenceA global leader in brands and technologies

4

Consumer business

Laundry & Home Care

Industrial business

Adhesive Technologies Beauty Care


Well-diversified portfolio

5

Adhesive TechnologiesBeauty Care

Laundry & Home Care 33 %

19 % 47 % Western Europe

Asia - Pacific

30 %

North America 26 %

EasternEurope 14 %

Africa/ Middle East 6 %

Emerging Markets 40%

Latin America 6 %

1 Corporate sales not included (accounts for 1% of sales) Henkel Roadshow Presentation

17 %

Sales by region 20171Sales by business unit 20171

May 2018

Portfolio of strong and leading brands

6Henkel Roadshow Presentation May 2018

Top positions across all business units

Consumer business

Laundry & Home Care

Industrial business

Adhesive Technologies Beauty Care

Global leading positions

#1 globally

Leading category / country positions

#3 Hair Coloration

#3 Hair Professional

#1 Europe

#2 North America / MEA7Henkel Roadshow Presentation May 2018

Strong and consistent performance

16.5 16.4 16.4

18.118.7

20.0

14.1%

15.4%15.8%

16.2%16.9%

17.3%

2012 2013 2014 2015 2016 2017

Profitable growth path

▪ Sales exceeding € 20 bn, strong organic sales growth with all business units contributing

▪ Continued improvement of adjusted EBIT margin and new high of € 3.5 bn in adjusted EBIT

▪ Adjusted EPS (preferred share) up by 9.1% to € 5.85, strong CAGR 2012-17 of 9.6%

+3.1%+3.0%+3.4%+3.5%+3.8%

Sales & Adjusted EBIT Margin development

Sales

€ bn

OSG %

Adj.

EBIT %

+3.1%


Agenda

9




4. Outlook FY 2018


Operating in a heterogeneous environmentQ1 2018 key macroeconomic developments

2 Q1 2018 avg. USD / EUR y-o-y

Significant weakness of major currencies, e.g. US-Dollar -15%2

Currency devaluation

Substantial feedstock price increases, driven by crude oil and force majeures

Commodity inflation

Moderate global GDP growth, IPX increasing by >3.5%

Strong industrial production1

Decelerating volume growth and ongoing competitive/pricing pressure

HPC markets mixed

1 Source: IHS Markit Q1 2018 Henkel Roadshow Presentation May 2018 10

Positive development in Q1 2018

▪ Positive organic sales growth driven by very strong performance of Adhesive Technologies

▪ Delivery difficulties in North American consumer goods businesses

▪ Significant headwinds from FX impacting top and bottom line

▪ Continuous improvement in Adjusted EBIT Margin supported by strong cost management focus

▪ Adjusted EPS above previous year

€ 4.8 bn +1.1%Sales Organic Growth

€ 842 m 17.4%Adjusted EBIT Adjusted EBIT %

+1.4%Adjusted EPS Growth

Henkel Roadshow Presentation May 2018 11

Committed to sustainable profitable growthKey Financials Q1 2018

Sales in €m, OSG in % Gross Margin Adj. in % EBIT Margin Adj. in % EPS Pref. Adj. in €

+1.1% -40bp +50bp +1.4%

x1 x2 2016 2017 x1 x2x1 x2

5,0644,835

47.947.5 16.9

17.41.41 1.43

Q1/17 Q1/18 Q1/17 Q1/18 Q1/17 Q1/18 Q1/17 Q1/18


Focus on disciplined cash managementKey Financials Q1 2018

NWC in % of Sales Free Cash Flow in €m Net Financial Position in €m

+130bp € - 278 m € - 22 m

x1 x2 x1 x2

4.9

6.2

300

22 -3,225 -3,247

Q1/17 Q1/18 Q1/17 Q1/18 FY/17 Q1/18


Delivery difficulties in North AmericaImpact on Q1 2018 results

Henkel Group Results

Q1 2018Actuals

Q1 2018 w/o deliverydifficulties

Organic Growth

+1.1% >2.5%

NWC in % of Sales

6.2% ~ 5%


▪ Q1 impacted by delivery difficulties resulting

from change in the transportation and logistics

processes and systems

▪ Causes have been identified, countermeasures

defined and are being implemented

▪ Service levels already improved significantly –

on track to return to normal service levels in the

course of the second quarter

▪ Excluding the effects from the delivery difficulties

organic growth in Q1 was in line with FY outlook

Strong topline impacted by currencies

Sales Volume Price M&A FX Sales

5,064

4,835

Organic & inorganic

+0.6% +0.5%

+3.0%

-8.6%

-4.5%

Sales Q1/17 Volume Price M&A FX Sales Q1/18

Sales in €m, changes in %

+4.1%


UAE

Japan

UK

Korea

Poland

Turkey

Mexico

Russia

China

USA

Softer US Dollar and EM currencies

Quarterly Development of USD vs. EUR2Top 10 non-€ countries1 and FX-development

1.00

1.05

1.10

1.15

1.20

1.25

1.30

1.23

Q1 Q3 Q4Q2

China

USA

Russia

Turkey

Mexico

Poland

UK

South Korea

Japan

UAEQuarterly avg. exchange rate

1.06

1.10

1.17 1.18

1 Full year 2017 group revenue exposure in EUR terms 2 Source: Bloomberg, as per 8 May 2018

--

-

+

--

----

2017 2018 y-t-d


Western Europe

€ 1,587 m (33%)

Eastern Europe

€ 701 m (14%)

North America

€ 1,095 m (23%)

Latin America Asia-PacificAfrica/Middle East

-6.5% +0.2% +7.6%

+7.3% +8.6% +4.2%

abs. in €m (share of total)

OSG in %

282 m € (6%) € 807 m (16%)€ 332 m (7%)

Emerging Markets: +6.9% to € 1,989 m, 41% of Group Sales

Mature Markets: -2.8% to € 2,814 m

Emerging Markets driving growth


EBIT Margin Adj. in %

+/- 0bp

x1 x2

18.1 18.1

Q1/17 Q1/18

Adhesive TechnologiesKey Financials Q1 2018

Sales in €m, OSG1 in % Regional Performance

+4.7%

x1 x2

2,295 2,270

Q1/17 Q1/18

1 Volume: 3.6% Price: 1.1%

Very strong growth driven by all business areas

Continued implementation of price increases and strict cost management offset direct material headwinds

Mature Markets: good,

driven by Western Europe

and North America

Emerging Markets: significant,

driven by Eastern Europe

and Asia


▪ Industrial AssemblyDouble-digit growth with new assembly solutions for

manufacturers of appliances and white goods

▪ Infrastructure ElectronicsDouble-digit growth with solutions for energy

generation and power management systems

▪ Flexible PackagingSignificant growth with innovative food safety

solutions enhancing sustainability for global customers

Adhesive TechnologiesHighlights Q1 2018

Beauty CareKey Financials Q1 2018

-4.3%

x1 x2

1,011965

Q1/17 Q1/18

Sales in €m, OSG1 in %

1 Volume: -3.6% Price: -0.7%

+/- 0bp

x1 x2

16.7 16.7

Q1/17 Q1/18

EBIT Margin Adj. in %Regional Performance

Mature Markets: negative,

due to North America,

Western Europe mixed

Emerging Markets: very strong,

mainly driven by Eastern Europe

Hair Professional with strong growth, Retail negative

Continued good profitability level despite challenges


▪ Eastern EuropeStrong development in Retail driven by growth

across all categories

▪ ColorationSignificant sales growth and market share expansion

Strong contribution from base portfolio and innovations

▪ Hair ProfessionalStrong growth momentum in Q1 across all regions

fueled by Schwarzkopf Professional and acquisitions

Beauty CareHighlights Q1 2018

Laundry & Home CareKey Financials Q1 2018

-0.7%

x1 x2

1,7261,569

Q1/17 Q1/18

Sales in €m, OSG1 in %

1 Volume: -1.1% Price: 0.4%

+120bp

x1 x2

17.3

18.5

Q1/17 Q1/18

EBIT Margin Adj. in %Regional Performance

Mature Markets: negative,

due to North America

Emerging Markets: significant,

driven by Middle East / Africa

and Eastern Europe

Laundry Care negative, Home Care with good organic growth

Excellent increase in profitability driven by continued realization of Sun synergies and Fund Growth initiatives


Highlights Q1 2018

▪ GermanyStrong development of brand portfolio, especially Persil

with double-digit growth thanks to Liquid and Caps

▪ Middle East / AfricaDouble-digit growth driven by successful Persil

relaunch and strong development of Pril

▪ Toilet CareContinued momentum with double-digit growth

thanks to successful innovations

Laundry & Home CareHighlights Q1 2018

Adjusted Gross Profit to Adjusted EBIT

AdjustedGross Profit

Marketing, selling &distribution

R&D Admin OOI/OOE AdjustedEBIT

-23.6% +0.3pp

47.5%-0.4pp

€ 842 m

-2.4% +0.0pp

-4.5% +0.2pp +0.4%

+0.4pp17.4%+0.5pp

in % of sales

Impact on Adjusted EBIT Margin in pp vs. PY


Strong FX-adjusted EPS growth

Adj. EPS Organic / anorganic FX Sales

€ 1.41€ 1.43

-6.4%+7.8%

+1.4%

Q1 2017 FX Q1 2018Operational

Strong FX-headwinds in the first quarter even above Q4 2017 impact

Excluding FX, continued strong EPS performance despite delivery difficulties in North America


Net Working Capital above prior year

▪ Adjusted for acquisition effects Net Working Capital

of Adhesive Technologies close to prior-year level

▪ Increase in Beauty Care due to delivery difficulties

in North America and acquisitions

▪ Laundry & Home Care negatively affected by

delivery difficulties in North America

+40bpsAdhesive Technologies

Beauty Care

Laundry & Home Care

Henkel Group

+240bps

+120bps

+130bps

11.9

11.5

5.8

3.4

-1.2

-2.4

6.2

4.9

in %


Higher CapEx affecting Free Cash Flow

Net Financial Position in €m

31.03.17 31.12.17 31.03.18

-1,961

-3,247-3,225

Investments Other Sales

391-51

Operating CF CapEx Other

Free Cash Flow in €m, ∆ PY in €m

FCF

-345-227

-24+/- 0

22-278

FCF impacted by NWC development and higher CapEx due to a technology acquisition

Net Financial Position remains stable, continuously strong balance sheet


Agenda

28




4. Outlook FY 2018


Henkel 2020+ Strategic Priorities


Compelling ambition 2020

Organic Sales Growth2 – 4%

(Average 2017 – 2020)

Adjusted EPS Growth7 – 9%

(CAGR 2016 – 2020, per preferred share)

Adjusted EBIT MarginContinued improvement in

adjusted EBIT margin

Free Cash FlowContinued focus on

free cash flow expansion


Focus on implementation of strategic priorities

▪ 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

▪ Clear and exciting growth strategy going forward


Customer & Consumer EngagementRoadmaps for top 100 industrial customers

Digital Connect2Consumer program

Leading Brands & TechnologiesSales of top 3 brands increased to € 6.4 bn

Focus on successful development of local brands

Exciting Innovations & ServicesSuperior tailor-made solutions in growth segments

First influencer brands established in Hair Professional

New Sources of GrowthCompelling acquisitions complementing our portfolio

VC investments in digital services & technologies

Drive Growth

Drive Digital BusinessDouble-digit increase of digital sales in all

business units

Leverage Industry 4.0Smart factory concepts and further digitalization

of integrated Global Supply Chain

eTransform OrganizationChief Digital Officer driving digital transformation,

launch of Henkelx

Accelerate Digitalization

Energized and Empowered Teams“Henkel 2020+ Talks“ – powerful global dialogs

between leaders/employees

Fastest Time-to-MarketAdhesive Technologies’ 28 customer-facing steering

units enable closer customer collaboration,

acceleration of time-to-market of consumer goods

innovations

Smart SimplicityImplementation of flexible business models

to adapt to fast-changing markets

Increase Agility

ONE!ViEWNew approach to further optimize cost management

Net Revenue ManagementIncreased efficiency of our promotion activities

Most efficient structuresContinue optimization and consolidation of structures

ONE! Global Supply ChainOptimize cost, fully capturing cross-business synergies

Fund GrowthInitiatives

FY 2017 - Henkel Investor & Analyst Call February 22, 2018 36

Fund GrowthImplementation at full speed

>€ 100 m efficiency gains in 2017Fully on track in the realization of efficiencies,

already significant contribution in 2017

>€ 500 m annual efficiency gainsExpected sustainable annual efficiency gains

in full swing by 2020

Re-invest in growthFair share of annual efficiency gains are re-invested

to support innovation and future growth

February 22, 2018FY 2017 - Henkel Investor & Analyst Call 37

Visual

Excellence in value creationUsage of cash

Capital Expenditures€ 663 m spent in 2017

Acquisitions€ 2 bn invested in 2017

Dividends€ 736 m distributed in 2017

Adhesives TechnologiesAsia-Pacific – India

New multi-technology plant

Beauty CareEastern Europe – Russia

Plant upgrade & expansion

Laundry & Home CareAfrica / Middle East – Egypt

New production site

CapEx€ 663 m in 2017

Adhesives TechnologiesComplementary leading technologies,

adding more than € 300 m in sales

Beauty CareStrengthen position in Hair Professional,

adding more than € 300 m in sales

Venture Capital Enhance know-how by investments in start-ups

with digital or technological expertise

Acquisitions€ 2.0 bn in 2017

Dividends€ 736 m distributed in 2017

February 22, 2018FY 2017 - Henkel Investor & Analyst Call 40

10.5% higher dividendRecord dividend of € 1.79 per preferred share

paid in April 2018

30.7% payout-ratioIn line with target range of 25-35% of

adjusted net income after minorities

Payout doubled since 2012Compared to dividend of € 0.95 per

preferred share in 2012

Henkel 2020+

Fully committed to deliver on our financial ambition 2020

Henkel 2020 ambition Status 2017

OSG2 – 4%

(Average 2017 – 2020)3.1%

Adj. EPS Growth7 – 9%

(CAGR 2016 – 2020, pref. share)9.1%

Adj. EBIT MarginContinued improvement in

adjusted EBIT margin+40bp (17.3%)

Free Cash FlowContinued focus on

free cash flow expansion€ 1,701 m


Agenda

42




4. Outlook FY 2018


Guidance 2018

FY 2018 – previously FY 2018 – updated1

Organic Sales Growth2 - 4%

All Business Units within this range

Henkel: 2 - 4%

Adhesive Technologies: 2 - 4%Beauty Care: 0 - 2%

Laundry & Home Care: 2 - 4%

Adjusted EBIT MarginImprovement to a level

above 17.5%

Improvement to a level

above 17.5%

Adjusted EPS Growth5 - 8%

Reflecting currency uncertainty

5 - 8%Reflecting currency uncertainty

1 Updated on March 19, 2018 Henkel Roadshow Presentation May 2018 43

▪ Build on strong momentum in Adhesive Technologies and continue to outperform competition

▪ Get back to normal service level in North American consumer businesses in Q2

▪ Fully focus on implementation of innovation strategy in Beauty Care and Laundry & Home Care

▪ Execute fund growth initiatives to support investments and bottom-line

▪ Focus on Net Working Capital improvement

▪ Successfully complete integration of acquisitions

Committed to deliver on our Outlook 2018


▪ May 29, 2018 Investor & Analyst Day Laundry & Home Care, Düsseldorf

▪ August 16, 2018 Q2 2018 Earnings Release

▪ November 15, 2018 Q3 2018 Earnings Release

▪ February 21, 2019 FY 2018 Earnings Release

▪ April 8, 2019 Annual General Meeting

Upcoming Events


Back-up

Adaptation of our structures to the market

Reported EBIT One-time gains One-time charges Restructuring charges Adjusted EBIT

-11

+30

+84

739

842

Reported EBIT Q1/18 Adjusted EBIT Q1/18One-time gains One-time charges Restructuring charges

in €m


FY 2018: Additional input for selected KPIs

Prices for Direct MaterialsModerate increase

vs. the level of the prior year

Restructuring Charges € 200 – 250 m

CapEx € 750 – 850 m


Impact from US tax reform

Reported tax rate in % Adjusted tax rate in %

x1 x2 x1 x2

Positive one-time impact of € 270 m on reported tax rate, mainly from revaluation of deferred tax liabilities

On a recurring basis from 2018 the tax reform should have a neutral to slightly positive effect

23.7

15.4

24.7 25.0

2016 2017 2016

49

2017


Commitment to sustainable profitable growthKey financials FY 2017

Sales in €m, OSG in % Gross Margin Adj. in % EBIT Margin Adj. in % EPS Pref. Adj. in €

+3.1% -130bp +40bp +9.1%

x1 x2 2016 2017 x1 x2x1 x2

18,714

20,029 48.4

47.116.9

17.35.36

5.85

2016 2017 2016 2017 2016 2017 2016 2017


Focus on disciplined cash managementKey financials FY 2017

NWC in % of Sales Free Cash Flow in €m Net Financial Position in €m

+130bp -22.9% € - 924 m

x1 x2 x1 x2

3.5

4.8 2,205

1,701

-2,301

-3,225

2016 2017 2016 2017 2016 2017


Sales Volume Price M&A FX Sales

18,714

20,029

+9.0%

Significant organic & inorganic sales growth

Organic & inorganic

+2.9% +0.2%

+5.9%

-2.0%

+7.0%

Sales 2016 Volume Price M&A FX Sales 2017

in €m, changes in %


Emerging Markets: +5.3% to € 8,130 m, 40% of Group Sales

Mature Markets: +1.5% to € 11,776 m

Western Europe

€ 6,033 m (30%)

Eastern Europe

€ 2,897 m (14%)

North America

€ 5,162 m (26%)

Latin America Asia-PacificAfrica/Middle East

+3.0% +0.5% +6.0%

+4.4% +1.7% +5.9%

abs. in €m (Share of Total)

OSG in %

€ 1,142 m (6%) € 3,371 m (17%)€ 1,302 m (6%)

53

Organic growth supported by all regions


Adhesive TechnologiesKey Financials FY 2017

Sales in €m, OSG1 in % EBIT Margin Adj. in % NWC in % of Sales

+5.0% +30bp -30bp

x1 x2 x1 x2 x1 x2

Very strong growth driven by all regions and business areas

Acceleration of pricing throughout 2017

1Volume: 4.6% Price: 0.4%

8,9619,387

18.218.5

11.0 10.7

2016 2017 2016 2017 2016 2017


Beauty CareKey Financials FY 2017

+0.5% +30bp +330bp

x1 x2 x1 x2 x1 x2

Retail below expectations, Professional continuing good growth momentum

Despite challenges in topline, further increase in adjusted EBIT margin


3,838 3,86816.9

17.2

0.6

3.9

2016 2017 2016 2017 2016 2017

55



Laundry & Home CareKey Financials FY 2017

+2.0% +30bp +300bp

x1 x2 x1 x2

Good organic growth driven by both Laundry Care and Home Care

Successful integration of Sun business, realization of synergies fully on track


5,795

6,65117.3

17.6

-5.4

-2.4

2016 2017 2016 2017 2016 2017

56



Adjusted Gross Profit to Adjusted EBIT

AdjustedGross Profit

Marketing, selling &distribut. expenses

R&D Admin OOI/OOE AdjustedEBIT

€ 9,431 m

-23.3% +1.1pp

47.1%-1.3pp

€ 3,461 m

-2.3% +0.2pp -4.3%

+0.3pp +0.1% +0.1pp

17.3%+0.4pp

in % of sales

impact on adj. EBIT margin in pp vs. PY


Adjusted EPS growth – FX impacts

Currency headwinds increasingly impacting adjusted EPS in fiscal year 2017

58


5.36

5.85

Full Year 2017 Q4 2017

-1.0%+10.1%

+9.1%

Adj. EPS 2016

FX Adj. EPS 2017

Organic / Inorganic


1.27

1.35-3.9%+10.2%

+6.3%

Adj. EPS Q4 2016

FX Adj. EPS Q4 2017

Organic / Inorganic


Henkel: Profitable growth pathHenkel Group

59

Corporate

Adhesive Technologies

Beauty Care

Laundry & Home Care

1 %

47 %33 %

19 %

Corporate = sales and services not assignable to the individual business units.

-3.5%

7.0%5.9%

3.8% 3.5% 3.4% 3.0% 3.1% 3.1%

10.0%

12.3%13.0%

14.1%15.4% 15.8% 16.2%

16.9% 17.3%

2009 2010 2011 2012 2013 2014 2015 2016 2017

Organic Sales Growth Adjusted EBIT margin

Henkel Roadshow Presentation

Sales by Business Unit 2017 Profitable Growth Path

May 2018

Henkel: Profitable growth pathAdhesive Technologies

60

Packaging & Consumer Goods

Transport & Metal

Electronics

Consumer, Craftsmen & Building

32 %

23 %19 %

11 %

-10.2%

11.8% 8.3%

3.6%2.7%

3.7%2.4% 2.8%

5.0%

8.1%

12.8%13.9%

15.1%16.9% 17.2% 17.1%

18.2% 18.5%

2009 2010 2011 2012 2013 2014 2015 2016 2017

General Industry 15%



Sales by Business Areas 2017 Profitable Growth Path

May 2018

Henkel: Profitable growth pathBeauty Care

61

Hair Care

Skin / Oral

70 %

4 %

3.5%4.8%

5.4%

3.1% 3.0%2.0% 2.1% 2.1%

0.5%

12.9% 13.3%14.2% 14.5% 15.0% 15.3%

15.9%16.9% 17.2%

2009 2010 2011 2012 2013 2014 2015 2016 2017

Body Care 26 %




May 2018

Henkel: Profitable growth pathLaundry & Home Care

62

Laundry Care

Home Care

75 %

25 %

2.9%

1.5%

2.9%

4.7%5.7%

4.6% 4.9% 4.7%

2.0%

12.8% 13.0% 13.2%

14.5%15.6%

16.2%17.1% 17.3% 17.6%

2009 2010 2011 2012 2013 2014 2015 2016 2017




May 2018

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Henkel Roadshow Presentation May 2018 · 1 Source: IHS Markit Q1 2018 Henkel Roadshow Presentation...

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