17.11.2016
Henkel AG & Co. KGaA DE0006048432
DGAP-News: Henkel presents new strategic priorities and financial ambition
DGAP-News: Henkel AG & Co. KGaA / Key word(s): Conference
Henkel presents new strategic priorities and financial ambition
17.11.2016 / 06:33
The issuer is solely responsible for the content of this announcement.
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November 17, 2016
Henkel presents new strategic priorities and financial ambition
Henkel 2020+: Focus on growth, digitalization and agility
- Henkel pursues compelling ambition for 2020 and beyond:
- Continue to deliver profitable growth and attractive returns
- More customer-focused, innovative, agile, and fully digitalized
- Targeted acquisitions to strengthen portfolio
- Clear strategy with four priorities:
- Drive growth
- Accelerate digitalization
- Increase agility
- Fund growth
- Financial ambition for 2020:
- Organic sales growth: average 2% to 4%
- Adjusted* earnings per preferred share: 7% to 9% CAGR**
- Improve adjusted* EBIT margin
- Expand free cash flow
Duesseldorf, Germany - Today, Henkel presented its new strategic priorities
and financial ambition, which will shape Henkel until 2020 and beyond -
summarized as "Henkel 2020+". Based on its strong foundation, Henkel aims
to generate continued profitable growth by focusing on four strategic
priorities: Driving growth, accelerating digitalization, increasing
agility, and funding growth.
"We will build our future on a strong foundation, which will enable us to
generate sustainable profitable growth in the coming years. We have an
excellent track record of outperforming our markets, a balanced and well-
diversified business portfolio with exciting brands, innovative
technologies and leading positions in highly attractive markets and
categories - and a passionate global team with a strong culture, common
purpose and shared values," said Hans Van Bylen, Chief Executive Officer of
Henkel.
"At Henkel, we share the common purpose to create sustainable value - for
our customers and consumers, our employees, our shareholders, as well as
for our stakeholders and the communities in which we operate. In addition,
our values guide all our actions, decisions and behavior," said Hans Van
Bylen.
Ambition for 2020+: Continue Henkel's successful development
"We want to continue Henkel's successful development in a highly volatile
business environment, characterized by globalization, accelerating
digitalization, rapidly changing markets, and an increasing relevance of
resource scarcity and social responsibility. By 2020 and beyond, our
ambition for Henkel is to generate more profitable growth and to become
more customer-focused, more innovative, more agile, and fully digitized in
our internal processes and customer-facing activities. In addition, we aim
to promote sustainability in all our business activities, reinforcing our
leading position," Hans Van Bylen explained.
"In order to achieve this ambition, we will focus on driving growth,
accelerating digitalization across all our businesses and functions,
increasing agility in our organization and teams, and funding our growth
through targeted initiatives. In addition to organic growth, acquisitions
will continue to be an integral part of our strategy in order to further
strengthen our portfolio. We will begin to implement our strategic
priorities in a highly energized way from day one, to continue our
successful development and create sustainable value," said Hans Van Bylen,
summarizing Henkel's future strategic direction.
Profitable growth and attractive returns
In a highly volatile and uncertain market environment, Henkel has defined a
concrete financial ambition for the period until 2020: Over the next four
years, Henkel aims to achieve an average organic sales growth between 2 and
4% with an over-proportionate contribution from emerging markets. For
adjusted earnings per preferred share, Henkel targets a compound annual
growth rate (CAGR) of 7 to 9%. This ambition for EPS growth includes the
impact of currency developments and excludes major acquisitions as well as
share buy-back. In addition, Henkel aims for continued improvements of its
adjusted EBIT margin and free cash flow expansion.
"We have set financial ambitions for 2020 which reinforce our strong
confidence in our ability to deliver excellent financial performance and
attractive returns," said Carsten Knobel, Chief Financial Officer of
Henkel. "We will continue to focus on cost discipline, improving our
profitability, optimizing net working capital and generating strong cash
flows. This will enable us to further invest in both organic and inorganic
growth."
Overview of strategic priorities
1. Drive Growth
Driving growth in mature and emerging markets will be a key strategic
priority for Henkel. The company will launch a range of targeted
initiatives to create superior customer and consumer engagement, further
strengthen its leading brands and technologies, develop exciting
innovations and services, and capture new sources of growth.
With superior customer and consumer engagement, Henkel aims to accelerate
growth with top customers through intensified partnerships, and to
outperform market growth with its leading customers in all three business
units. This will be enabled by a step-change in customer-centricity -
focusing on customer and consumer needs - as well as by executing detailed
customer and consumer engagement plans, involving all levels of the
organization. In addition, Henkel wants to better capture growth
opportunities by addressing the needs of specific target groups with
customized products, services and innovations.
Henkel also plans to further strengthen its leading brands and
technologies, increasing sales of its top-performing global brands as well
as its leading local brands: Sales of the top 10 brands should increase to
75% of total group sales by 2020. This will be driven by targeted
investments to strengthen Henkel's top brands, creating competitive
advantages through capturing new technologies and developing customized
products and solutions across various industry segments.
Growth will also be driven by continuously enhancing Henkel's ability to
develop exciting innovations and services. This will allow Henkel to
differentiate in highly competitive markets and to change from a "product
focus" to a "solution focus" with more differentiating products and
services in both its consumer and industrial businesses. By 2020, Henkel
aims to develop more accretive innovations and plans to increase the sales
share from its top innovations. In order to drive innovation capabilities
and create opportunities to engage its customers, Henkel will develop and
prepare the opening of new innovation centers for its Adhesive Technologies
business in Düsseldorf and Shanghai. At the same time, Henkel will expand
service offerings and models across all business units. These will include
consultancy and technical advice for its industrial and professional
customers, as well as digital service offers in the consumer businesses
such as online booking platforms for hairdresser appointments, subscription
models or automatized reordering.
Henkel will also complement its strategic focus on driving growth in its
existing core business by capturing potential new sources of growth, for
example by entering into new markets to close white spots in mature and
emerging markets. Targeted acquisitions will help to complement Henkel's
portfolio, strengthen its position in attractive markets and categories,
and expand into adjacent categories. In addition, the company will set-up a
dedicated Venture Capital Fund with up to 150 million euros to invest in
start-ups with specific digital or technological expertise.
In order to support its growth ambition, Henkel will increase its
investments and raise capital expenditures (Capex) from around 2 billion
euros in the period from 2013 to 2016 up to 3 billion euros over the period
from 2017 to 2020.
While Henkel aims to drive organic growth, acquisitions will be an integral
part of the company's strategy to further strengthen its portfolio. Henkel
will continue to pursue potential options with a highly disciplined
approach based on clear criteria: strategic fit, availability, and
financial attractiveness. At the same time, Henkel is committed to its
"Single A" rating.
2. Accelerate Digitalization
Accelerating digitalization will help Henkel to successfully grow its
business, strengthen the relationships with its customers and consumers,
optimize its processes and transform the entire company. By 2020, Henkel
will implement a range of initiatives to drive its digital business,
leverage industry 4.0 projects, and transform the organization.
To drive its digital business, Henkel aims to digitize its interaction with
customers, consumers, business partners and suppliers along the entire
value chain in both its consumer and its industrial businesses. "Digitally-
driven" sales should be doubled to more than 4 billion euros by 2020. For
example, in its consumer business Henkel intends to step up its engagement
through "omni-channel" offerings that link e-commerce platforms with
traditional retailing, develop and roll-out new digital platforms and
significantly expand the use of digital media.
Henkel will also leverage industry 4.0 to better plan, source, produce and
deliver its products and solutions. The digitalization of the integrated
global supply chain will help to increase service levels for customers,
better utilize manufacturing plants, improve production and logistics
processes and benefit Henkel's sustainability footprint.
The successful digitalization of Henkel will depend on the capabilities of
its employees and their ability to transform the organization, adopting a
rapid "test and learn" mindset. To promote this change, Henkel will expand
its specific training and development programs. In addition, the position
of a Chief Digital Officer with a cross-business responsibility will be
established.
3. Increase Agility
In a highly volatile and dynamic business environment, increasing the
agility of the organization will be a critical success factor for Henkel in
the future. This will include energized and empowered teams, fastest time-
to-market as well as smart and simplified processes.
In order to create a more agile organization with energized and empowered
teams, Henkel will foster the entrepreneurial spirit of its employees,
promote openness to change, encourage adaptability and enlarge employees'
decision-making power. This will be supported by the strong performance
culture at Henkel, with open feedback as well as rewards and recognition
for excellent results.
As part of its "fastest time-to-market" initiative, Henkel aims to reduce
innovation lead-times through better anticipation of customer and consumer
needs. In Laundry & Home Care and Beauty Care, for example, Henkel targets
a 30% reduction in lead-time. In addition, Henkel aims to accelerate market
entries and penetration into new markets.
Henkel will also leverage a "smart simplicity" approach to become more
agile through flexible business models that are adapted to dynamic markets,
as well as through the optimization of workflows and processes.
4. Fund Growth
In order to fund growth, Henkel will implement new approaches to optimize
resource allocation, focus on net revenue management, further increase
efficiency in its structures, and continue to expand its Global Supply
Chain organization. Together, these initiatives will contribute to further
improve profitability and enable Henkel to fund its growth ambitions for
2020 and beyond.
"Value-creating resource allocation" will help to further optimize cost
management through increased global budget transparency across defined cost
categories, and through improved budget allocation.
Net revenue management will enable increased efficiency of Henkel's
promotion activities. This will include, for example, leveraging exclusive
consumer and shopper insights, as well as category expansion or development
of new categories with retail partners.
Henkel will also continuously work on the implementation of most efficient
structures, for example, through the ongoing transformation of its shared
service centers, which handle a broad range of processes in a highly
standardized and digitized way across all business units. In addition, the
company will also continue to optimize and consolidate its global
manufacturing and warehouse footprint.
Following the successful start in Europe, and the set-up of hubs in both
Europe and Asia, Henkel's integrated Global Supply Chain organization will
be further rolled-out in all regions.
Sustainable value generation
"Henkel aims to create sustainable value in all dimensions of its business
activities. This purpose unites all of our employees and is aligned with a
set of strong values: customers and consumers, people, financial
performance, sustainability, and family business," said Hans Van Bylen.
To reinforce its commitment to sustainability, Henkel has defined clear
targets to improve its resource efficiency, for example by creating more
value with less resources. Henkel has defined ambitious sustainability
milestones which would result in an overall efficiency improvement of 75
percent by 2020 compared to 2010. Engaging all Henkel employees globally to
act as sustainability ambassadors toward customers and consumers, business
partners and society will be a driver of Henkel's sustainability
leadership.
About Henkel
Henkel operates globally with a well-balanced and diversified portfolio.
The company holds leading positions with its three business units in both
industrial and consumer businesses thanks to strong brands, innovations and
technologies. Henkel Adhesive Technologies is the global leader in the
adhesives market - across all industry segments worldwide. In its Laundry &
Home Care and Beauty Care businesses, Henkel holds leading positions in
many markets and categories around the world. Founded in 1876, Henkel looks
back on more than 140 years of success. In 2015, Henkel reported sales of
18.1 billion euros (20.1 billion US dollars), adjusted operating profit of
2.9 billion euros (3.2 billion US dollars). Its three top brands, Persil
(detergent), Schwarzkopf (hair care) and Loctite (adhesive) generated more
than 6 billion euros (around 6.6 billion US dollars) in combined sales.
Henkel employs around 50,000 people globally - a passionate and highly
diverse team, united by a strong company culture, a common purpose to
create sustainable value, and shared values. As a recognized leader in
sustainability, Henkel holds top positions in many international indices
and rankings. Henkel's preferred shares are listed in the German stock
index DAX. For more information, please visit www.henkel.com
This document contains forward-looking statements which are based on the
current estimates and assumptions made by the corporate management of
Henkel AG & Co. KGaA. Forward-looking statements are characterized by the
use of words such as expect, intend, plan, predict, assume, believe,
estimate, anticipate, forecast and similar formulations. Such statements
are not to be understood as in any way guaranteeing that those expectations
will turn out to be accurate. Future performance and the 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
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 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.
Contacts
Investors & Analysts Press & Media
Renata Casaro
Phone: +49 211 797 - 1631
E-Mail: [email protected]
Dr. Eva Sewing
Phone: +49 211 797 - 5277
E-Mail: [email protected]
Christopher Huesgen
Phone: +49 211 797 - 4314
E-Mail: [email protected]
Ewa Wachonin
Phone: +49 211 797 - 7151
E-Mail: [email protected]
Lars Witteck
Phone: +49 211 797 - 2606
E-Mail: [email protected]
Wulf Klüppelholz
Phone: +49 211 797 - 1875
E-Mail: [email protected]
Hanna Philipps
Phone: +49 211 797 - 3626
E-Mail: [email protected]
www.henkel.com/ir
www.henkel.com/press
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17.11.2016 Dissemination of a Corporate News, transmitted by DGAP - a
service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.
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Language: English
Company: Henkel AG & Co. KGaA
Henkel Str. 67
40191 Düsseldorf
Germany
Phone: +49 (0)211 797-0
Fax: +49 (0)211 798-4008
E-mail: [email protected]
Internet: www.henkel.de
ISIN: DE0006048432, DE0006048408
WKN: 604843, 604840
Indices: DAX
Listed: Regulated Market in Berlin, Dusseldorf, Frankfurt (Prime
Standard), Hamburg, Hanover, Munich, Stuttgart; Regulated
Unofficial Market in Tradegate Exchange
End of News DGAP News Service
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