Henkel Ag & Co. Kgaa · XETR:HEN
Henkel Ag & Co. Kgaa — FY2023 Earnings Presentation
42 slides from Henkel Ag & Co. Kgaa's earnings presentation, Mar 4, 2024
Slide 1: Henkel FY 2023
HENKEL FY 2023 CARSTEN KNOBEL, MARCO SWOBODA – 4 MARCH 2024
Slide 2: Disclaimer
DISCLAIMER This presentation 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”
Slide 3: Agenda
AGENDA 01 Key Developments & Strategic Progress 02 Financial Performance FY 2023 & Outlook 03 Key Take-Aways & Closing 3 HENKEL FY 2023
Slide 4: Henkel with sustained growth and margin expansion
HENKEL WITH SUSTAINED GROWTH AND MARGIN EXPANSION FY 2023 ▪ Strong performance in both business units – HENKEL ADHESIVE CONSUMER including further improved sequential volume development in Q4 GROUP TECHNOLOGIES BRANDS ▪ Organic sales growth driven by sustained strong pricing – OSG OSG OSG while rein
Slide 5: Driving our competitive edge – backed by strong company culture
DRIVING OUR COMPETITIVE EDGE – BACKED BY STRONG COMPANY CULTURE Selected highlights STRENGTHENING INNOVATION LEVERAGING DIGITALIZATION ACROSS ADVANCING OUR SUSTAINABILITY CAPABILITIES THROUGH NEW R&D OUR BUSINESSES PERFORMANCE AND CUSTOMER CENTERS NEW BATTERY FURTHER ORGANIC -61% ENGINEERING GROWTH
Slide 6: Megatrends as catalyst for growth in Adhesive Technologies
MEGATRENDS AS CATALYST FOR GROWTH IN ADHESIVE TECHNOLOGIES… SUSTAINABILITY MOBILITY CONNECTIVITY DIGITALIZATION URBANIZATION Reliable thermal Automation & Sustainability High performance Sustainable management & digitalization of solutions fostering solution for engineered wood functional coating gl
Slide 7: Fueling high-impact innovations for our customers
…FUELING HIGH-IMPACT INNOVATIONS FOR OUR CUSTOMERS NEW SOLUTION FOR CAMERA LENS BONDING IN AUTOMOTIVE ADVANCED DRIVER ASSISTANCE SYSTEMS Projected threefold increase in number of sensors used in new cars by 2030 driven by FIRST BIO-BASED transition to autonomous driving POLYURETHAN- ADHESIVES FOR LO
Slide 8: Driving inorganic growth opportunities in Adhesive Technologies – scaling the MRO business
DRIVING INORGANIC GROWTH OPPORTUNITIES IN ADHESIVE TECHNOLOGIES – SCALING THE MRO1 BUSINESS Scaling our MRO business – EXPANDING PLATFORM WITH ADJACENT BUSINESSES HIGH SINGLE-DIGIT OSG CAGR in past 5 years Strengthening MRO PLATFORM by adding competencies in Repair & Overhaul to our existing portfo
Slide 9: Superior technologies addressing consumer trends and driving growth in Consumer Brands
SUPERIOR TECHNOLOGIES ADDRESSING CONSUMER TRENDS AND DRIVING GROWTH IN CONSUMER BRANDS WASHING AT LOWER HYGIENIC GENTLE HEALTHY TEMPERATURES CLEANLINESS HAIR COLORATION HAIR Innovative proprietary Unique formulas with Powerful cleaning enzyme technology removes Breakthrough Dual Bond HAPTIQ system c
Slide 10: Fostering value-adding innovations under strong billionaire brands
FOSTERING VALUE-ADDING INNOVATIONS UNDER STRONG BILLIONAIRE BRANDS LAUNCH OF SCHWARZKOPF GLISS NIGHT ELIXIRS WITH INNOVATIVE BONDING TECHNOLOGY PERSIL DEEP CLEAN Contributing to significant organic sales growth WITH UNIQUE of Gliss Kur in 2023 PROPRIETARY ENZYME-BASED FORMULA Double-digit organic sa
Slide 11: Consumer Brands: driving growth in hair organically and through M&A
CONSUMER BRANDS: DRIVING GROWTH IN HAIR ORGANICALLY AND THROUGH M&A STRENGTHENING OUR FOOTPRINT IN Strong growth trajectory of our ATTRACTIVE APAC MARKET >€3bn Hair business ~9% OSG – with significant growth of our top brand Schwarzkopf POSITIVE SHISEIDO PROFESSIONAL VIDAL SASSOON volume development
Slide 12: Accelerated integration of our consumer businesses
ACCELERATED INTEGRATION OF TOTAL NET SAVINGS OUR CONSUMER BUSINESSES EXPECTED BY 2026 ~€525m ~€400m ▪ Implementation in both phases ahead of plan ~€250m ▪ Phase 1: focus on optimization of organizational setup and portfolio ~€150m 2026 ▪ Phase 2: focus on optimization of supply chain Phase II Phase
Slide 13: Consumer Brands integration well on track – Phase I
CONSUMER BRANDS INTEGRATION WELL ON TRACK Phase I: Focus on optimization of organizational set up and portfolio Phase I ▪ Optimization of organizational set-up well advanced: PHASE I agreements for >2,000 positions concluded by end of 2023 ▪ Portfolio measures clearly on track: ~€275m net savings ta
Slide 14: Consumer Brands integration well on track – Phase II
CONSUMER BRANDS INTEGRATION WELL ON TRACK Phase II: Focus on supply chain network, commercial integration and operational excellence PHASE II ▪ >800 projects launched to drive operational efficiency in manufacturing and logistics ~€250m net savings ▪ Average complexity reduction by 15% initiated (Ta
Slide 15: Consumer Brands integration well on track – Operational and commercial integration
CONSUMER BRANDS INTEGRATION WELL ON TRACK Overview Selected Examples1 ▪ Country-by-country roll-out of “1-1-1 ▪ Required harmonizations of system and logistical processes well Commercial Integration approach” (one order-one shipment-one on track to enable the 1-1-1 go-live in first countries invoice
Slide 16: Key achievements and outlook 2024
KEY ACHIEVEMENTS OUTLOOK 2024 ▪ Successfully executing on strategic initiatives ORGANIC SALES GROWTH 2.0 to 4.0% ▪ Sustained growth and margin expansion in both businesses ▪ Increased focus on M&A – adding total of more than €0.5bn1 to Group sales ADJUSTED EBIT MARGIN ▪ Consumer Brands integration a
Slide 17: Agenda
AGENDA 01 Key Developments & Strategic Progress 02 Financial Performance FY 2023 & Outlook 03 Key Take-Aways & Closing 17 HENKEL FY 2023
Slide 18: Very strong organic sales growth driven by strong pricing
VERY STRONG ORGANIC SALES GROWTH DRIVEN BY STRONG PRICING FY 2023 4.2% -3.9% -4.3% -3.9% OSG M&A FX NOMINAL PRICE VOLUME SALES 9.6% -5.4% €21.5bn 18 HENKEL FY 2023
Slide 19: Organic sales development by region
ORGANIC SALES DEVELOPMENT BY REGION FY 2023 Organic sales growth Europe 2.2% North America 2.4% IMEA 24.7% Asia-Pacific -1.5% Latin America 11.7% 19 HENKEL FY 2023
Slide 20: Adhesive Technologies
In progress ADHESIVE TECHNOLOGIES FY 2023 ORGANIC ADJ. SALES GROWTH EBIT MARGIN 3.2% 14.7% SALES ADJ. EBIT €10.8BN €1.6BN PRICE VOLUME 7.0% -3.8% 20 HENKEL FY 2023
Slide 21: Adhesive Technologies – Business unit performance
Price/Volume Development ADHESIVE TECHNOLOGIES in % 15 10 FY 2023 – Business Unit Performance 11.4 5 9.0 4.9 7.0 2.6 0 -4.6 -4.1 0.2 -3.8 -6.3 -5 ▪ Strong organic sales growth with -10 continued strong pricing Q1/23 Q2/23 Q3/23 Q4/23 FY23 OSG 6.8 2.7 0.8 2.8 3.2 ▪ Volume development showed further s
Slide 22: Adhesive Technologies – Business area performance
ADHESIVE TECHNOLOGIES FY 2023 – Business Area Performance MOBILITY & PACKAGING & CRAFTSMEN, ELECTRONICS CONSUMER GOODS CONSTRUCTION & PROF. SALES OSG SALES OSG SALES OSG €3,848m 8.5% €3,413m -2.4% €3,529m 3.4% Growth driven by Automotive; Negative development in Growth driven by all Industrials stro
Slide 23: Consumer Brands
CONSUMER BRANDS FY 2023 ORGANIC ADJ. SALES GROWTH EBIT MARGIN 6.1% 10.6% SALES ADJ. EBIT €10.6BN €1.1BN PRICE VOLUME 12.4% -6.3% 23 HENKEL FY 2023
Slide 24: Consumer Brands – Business unit performance
Price/Volume Development CONSUMER BRANDS in % 15 15.4 FY 2023 – Business Unit Performance 5 12.7 11.9 9.5 12.4 -5.7 -5.7 -2.6 -6.3 -5 -10.9 ▪ Very strong organic growth driven -15 by double-digit pricing Q1/23 Q2/23 Q3/23 Q4/23 FY23 ▪ Further sequential improvement in volume OSG 7.0 4.5 6.2 6.9 6.1
Slide 25: Consumer Brands – Business area performance
CONSUMER BRANDS FY 2023 – Business Area Performance LAUNDRY & HAIR OTHER CONSUMER HOME CARE BUSINESSES SALES OSG SALES OSG SALES OSG €6,794m 5.5% €3,075m 8.9% €696m 0.2% Very strong growth in both Significant growth driven by Overall stable development Laundry Care and Home Care, double-digit increa
Slide 26: Bridge from adjusted gross profit to adjusted EBIT
BRIDGE FROM ADJUSTED GROSS PROFIT TO ADJUSTED EBIT FY 2023 Impact on adjusted EBIT margin in pp vs. PY, in % of sales 45.7% -26.3% -2.7% -4.9% 0.1% 11.9% +3.4pp -0.9pp -0.3pp -0.4pp -0.3pp +1.5pp Adj. Gross Profit Marketing, selling R&D Admin OOI / OOE Adj. EBIT & distribution 26 HENKEL FY 2023
Slide 27: Bridge from reported to adjusted EBIT
BRIDGE FROM REPORTED TO ADJUSTED EBIT FY 2023 in €m 2,011 -4 281 267 2,556 REPORTED EBIT ONE-TIME INCOME ONE-TIME EXPENSES RESTRUCTURING ADJUSTED EBIT ▪ One-time expenses mainly reflecting divestment of business in Russia ▪ Restructuring mainly related to further shaping Consumer Brands business 27
Slide 28: Bridge from adjusted EBIT to adjusted EPS
BRIDGE FROM ADJUSTED EBIT TO ADJUSTED EPS FY 2023 in €m 2,556 -85 -630 1,841 22 1,819 (25.5%1) ADJUSTED EPS2 €4.35 11.5% y-o-y +20.0% at constant currencies Non- Adj. net income DIVIDEND3 €1.85 Financial Taxes on Adj. Adj. EBIT controlling attributable to result income (adj.) net income interest sha
Slide 29: Development of cash KPIs
DEVELOPMENT OF CASH KPIs FY 2023 in €m ▪ Net working capital significantly improved vs. NET WORKING CAPITAL Change prior year, mainly due to lower inventories y-o-y 2.6% -190 bps ▪ Substantial increase to all-time-high FREE CASH FLOW Change y-o-y free cash flow driven by significantly €2,603 m +€1,9
Slide 30: Outlook 2024 economic environment
OUTLOOK 2024 ECONOMIC ENVIRONMENT Overall heterogenous Industrial production Consumer spending Input costs expected on macroeconomic expected to expand by expected to increase by stable levels vs. PY – environment – ~2% – diverse ~2.5%, with behavior still development remains global GDP expected to
Slide 31: Outlook 2024 performance drivers
OUTLOOK 2024 PERFORMANCE DRIVERS ▪ Automotive production build rates stabilizing above pre-COVID levels yet below all-time high, with customer wins and e-mobility fueling growth ▪ Mixed market dynamics expected in Industrials segments, Electronics with signs of positive developments and stabilizing
Slide 32: Outlook 2024
OUTLOOK 2024 ORGANIC ADJUSTED ADJUSTED SALES GROWTH EBIT MARGIN EPS1 GROUP 2.0 to 4.0% 12.0 to 13.5% +5 to +20% ADHESIVE TECHNOLOGIES 2.0 to 4.0% 15.0 to 16.5% CONSUMER BRANDS 2.0 to 4.0% 11.0 to 12.5% 32 HENKEL FY 2023 1 Per preferred share, at constant exchange rates
Slide 33: Agenda
AGENDA 01 Key Developments & Strategic Progress 02 Financial Performance FY 2023 & Outlook 03 Key Take-Aways & Closing 33 HENKEL FY 2023
Slide 34: Key take-aways
KEY TAKE-AWAYS ▪ Strong top- and bottom-line performance in both businesses reflecting successful execution of strategic priorities and operational initiatives ▪ Consumer Brands integration well advanced – substantial savings realized with further potential going forward ▪ Sustaining elevated level
Slide 35: Questions & Answers
QUESTIONS & ANSWERS 35 HENKEL FY 2023
Slide 36: Upcoming events
UPCOMING EVENTS What‘s next 2024 MARCH 4 | FY 2023 RELEASE Annual Report + Sustainability Report APRIL 22 | AGM MAY 8 | Q1 2024 RELEASE Quarterly Statement AUG 13 | HY 2024 RELEASE Half-Year Report 36 HENKEL FY 2023
Slide 37: Thank you
THANK YOU. 37 HENKEL FY 2023
Slide 38: Balanced and diversified portfolio
BALANCED AND DIVERSIFIED PORTFOLIO FY 2023 1% 38% 50% 49% ADHESIVE €21.5bn CONSUMER 28% SALES TECHNOLOGIES BRANDS 32% 29% 15% 8% 1% 10% Corporate €10.8bn €10.6bn SALES 33% SALES 7% 36% 64% Europe Asia/Pacific IMEA Latin America Mobility & Electronics Laundry & Home Care North America Corporate Packa
Slide 39: Sales by business unit and business area FY 2023
SALES BY BUSINESS UNIT AND BUSINESS AREA FY 2023 - Q1 2023 Q2 2023 H1 2023 Q3 2023 Q4 2023 FY 2023 €m Sales OSG Sales OSG Sales OSG Sales OSG Sales OSG Sales OSG HENKEL GROUP 5,609 6.6% 5,316 3.2% 10,926 4.9% 5,440 2.8% 5,148 4.5% 21,514 4.2% ADHESIVE 2,791 6.8% 2,683 2.7% 5,475 4.7% 2,711 0.8% 2,60
Slide 40: Sales, adj. EBIT and adj. EBIT margin by business unit FY 23
SALES, ADJ. EBIT AND ADJ. EBIT MARGIN BY BUSINESS UNIT FY 2023 - Sales Adj. EBIT Adj. EBIT margin €m FY 2022 FY 2023 YoY OSG FY 2022 FY 2023 FY 2022 FY 2023 HENKEL GROUP 22,397 21,514 -3.9% 4.2% 2,319 2,556 10.4% 11.9% ADHESIVE 11,242 10,790 -4.0% 3.2% 1,530 1,584 13.6% 14.7% TECHNOLOGIES Mobility &
Slide 41: Outlook 2024 additional input for selected KPIs
OUTLOOK 2024 ADDITIONAL INPUT FOR SELECTED KPIS CURRENCY IMPACT ON SALES Mid single-digit % negative1 M&A IMPACT ON SALES Low single-digit % negative PRICES FOR DIRECT MATERIALS flat1 RESTRUCTURING CHARGES € 250 – 300m CAPEX € 650 – 750m 41 HENKEL FY 2023 1 Versus the prior year average
Slide 42: Find out more on henkel.com/ir
FIND OUT MORE ON HENKEL.COM/IR