Henkel reports robust Q1 sales performance in very challenging market conditions

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  • Group sales impacted by COVID-19 pandemic: nominal -0.8%, organic -0.9%
  • Adhesive Technologies sales decrease in sharply declining industrial business environment: nominal -4.3%, organic -4.1%
  • Beauty Care sales lower due to significantly negative Hair Salon business: nominal -2.6%, organic -3.9%
  • Laundry & Home Care posts very strong increase in sales: nominal 5.3%, organic 5.5%
  • Differentiated regional sales development: emerging markets 2.2%, mature markets -2.8%

Henkel’s business performance in the first quarter of fiscal 2020 was impacted by the COVID-19 pandemic. Group sales decreased nominally by -0.8 percent to 4.9 billion euros. Despite the effects of the COVID-19 pandemic, sales were organically only slightly below the level of the previous year with a decrease of -0.9 percent.

“We are currently facing a very challenging situation. The COVID-19 pandemic has affected all areas of life and also hit the global economy very hard. Nevertheless, we achieved an overall robust sales performance in the first quarter. In this crisis, the health and safety of our employees, customers and business partners are of the highest priority for us. We have introduced a comprehensive range of protective measures already at an early stage. At the same time, we have done everything possible to continue our business activities, despite these difficult circumstances, and to continue serving our customers. We have also launched a global solidarity program with product donations and financial support. And finally, in the first quarter we initialized the implementation of our new strategic framework,” said Henkel CEO Carsten Knobel.

Henkel reported a robust sales performance in a challenging market environment in the first quarter. Adhesive Technologies was impacted primarily by significantly declining demand from the automotive industry. Beauty Care sales were also down year on year. The Hair Salon business suffered considerably from the salon closures enforced in numerous countries. In contrast, organic sales growth in the Branded Consumer Goods business was flat compared to the prior-year quarter. Thanks to strong demand for laundry detergents and household cleaners, Laundry & Home Care achieved very strong organic sales growth.

“As the crisis evolves, we will continue to adapt and respond quickly and flexibly to changes in our markets. I am convinced that, with our dedicated global team, our new strategic framework focusing on purposeful growth, and our strong balance sheet, we are well-positioned to deal with this difficult situation and that we will emerge stronger from the crisis,” Knobel added.

Group sales performance

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Group sales decreased nominally by -0.8 percent in the first quarter of 2020, from 4,969 million euros in the first quarter of 2019 to 4,927 million euros. Organically (i.e. adjusted for foreign exchange and acquisitions/divestments), sales decreased by -0.9 percent. At Group level, the decline was price-driven, with price and volume developments differing between the business units. Acquisitions and divestments accounted for an increase of 0.4 percent in sales. Foreign exchange effects reduced sales by -0.4 percent.

The emerging markets posted organic sales growth of 2.2 percent. Our sales in mature markets decreased by -2.8 percent. Year on year, organic sales development in the Western Europe region was down -4.6 percent. By contrast, we were able to increase sales in the Eastern Europe region by 10.8 percent. In the Africa/Middle East region, we achieved organic sales growth of 6.8 percent in the first quarter of 2020.

Sales decreased organically in the North America region by -1.4 percent and in the Latin America region by -2.0 percent. Organic sales development in the Asia-Pacific region was also below the prior-year quarter by -5.7 percent.

Sales performance Adhesive Technologies

In the first quarter of 2020, sales in the Adhesive Technologies business unit decreased nominally by -4.3 percent from 2,309 million euros in the prior-year quarter to 2,209 million euros. Organically (i.e. adjusted for foreign exchange and acquisitions/divestments), sales decreased by -4.1 percent driven by volume. Performance in the first quarter was marked by a significant decrease in industrial production in the wake of the COVID-19 pandemic. Foreign exchange effects reduced sales by -0.3 percent. Acquisitions/divestments did not impact sales performance.

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The organic sales development in the individual business areas was influenced to differing degrees by the COVID-19 pandemic. Sales in the Automotive & Metals business area were significantly below the prior-year level, mainly due to production shutdowns in the automotive industry. Sales decreased significantly in the Electronics & Industrials business area, likewise as a result of production shutdowns in the aviation and general industry sectors. The overall decline in the Craftsmen, Construction & Professional business area was partially offset by results from the construction sector. The Packaging & Consumer Goods business area recorded a flat organic sales performance.

The businesses in the emerging markets showed a decline in organic sales development overall. Sales in the Latin America and Africa/Middle East regions and the emerging markets of Asia (excl. Japan) were down year on year. The COVID-19 pandemic had an adverse effect on our businesses in China and India in particular. By contrast, sales in the Eastern Europe region increased significantly. The Packaging & Consumer Goods and Craftsmen, Construction & Professional business areas in Russia were the main contributors to this growth.

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The mature markets likewise exhibited negative organic sales development. While positive growth was achieved in the mature markets of the Asia-Pacific region, sales in the North America and Western Europe regions were below the level of the prior-year quarter. This was primarily due to declining developments in the Automotive & Metals and Electronics & Industrials business areas. Within North America the decrease was partially compensated by strong growth in the Packaging & Consumer Goods business area and very strong growth in the Craftsmen, Construction & Professional business area.

Sales performance Beauty Care

The Beauty Care business unit achieved sales of 935 million euros in the first quarter 2020, equivalent to a nominal decrease of -2.6 percent compared to the prior-year quarter (first quarter 2019: 960 million euros). Organically (i.e. adjusted for foreign exchange and acquisitions/divestments), sales decreased by -3.9 percent. This decline was mainly driven by volume. Foreign exchange effects reduced sales by -0.9 percent. Acquisitions/divestments contributed 2.3 percent to sales development.

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Sales in the Branded Consumer Goods business area were flat year on year, with particularly good performance in the Body Care category, and especially by the Dial brand. In the Hair Cosmetics category, where sales declined slightly overall, we achieved good organic growth with our Hair Colorants business. Hair Care and Hair Styling, by contrast, were down year on year.

The impact of the COVID-19 pandemic on our Hair Salon business was strongly negative. Over the course of the first quarter, hair salon closures enforced by governments in numerous countries resulted in sales decreasing by a double-digit percentage.

The downturn arising from the spread of the COVID-19 pandemic was also reflected in the regions. Performance in the emerging markets was slightly negative. Asia (excluding Japan), Latin America and Africa/Middle East regions were all down year on year. By contrast, the Eastern Europe region achieved strong organic sales growth thanks to the very strong performance of our Branded Consumer Goods business.

Sales decreased overall in the mature markets. The Western Europe and North America regions were down year on year. The Branded Consumer Goods business in North America posted very strong growth in the Body Care category; however, this did not fully offset the decline experienced by the Hair Salon business in the region. Sales performance was slightly below prior year in the mature markets of the Asia-Pacific region.

Sales performance Laundry & Home Care

Sales in the Laundry & Home Care business unit increased nominally by 5.3 percent in the first quarter of 2020, from 1,667 million euros in the prior-year quarter to 1,755 million euros. The very strong organic sales growth of 5.5 percent was volume-driven. Foreign exchange effects reduced sales by -0.2 percent. Acquisitions/divestments had a neutral effect overall on sales performance.

Organic sales growth in the Laundry Care business area was strong – mainly thanks to the performance of our core brand Persil, which achieved a double-digit percentage increase in sales due among other things to our innovation offensive. Our largest North American brand all also posted a very strong performance. Organic growth in the Home Care business area was in the double-digit percentage range, driven mainly by double-digit increases in the PrilBref and Somat brand families.

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With organic sales increases in the double-digit percentage range, the emerging markets were the main drivers of the very strong organic sales growth in this business unit. Henkel achieved sales increases in the double-digit percentage range in the Africa/Middle East, Asia (excluding Japan) and Eastern Europe regions. Sales growth in Latin America was very strong.

Organic sales performance in the mature markets was positive. While sales were slightly negative in the Western Europe region, the North America region recorded positive sales growth. Sales performance was strong particularly in the US, an important market for Henkel. Growth in the mature markets of the Asia-Pacific region was in the double-digit range.

Net assets and financial position of the Group

No substantial changes to the net assets and financial position of the Group occurred in the period under review compared to December 31, 2019.

Outlook

On April 7, 2020, the Management Board of Henkel AG & Co. KGaA decided that the forecast for fiscal 2020 published in the Annual Report 2019 can no longer be upheld. As the dynamic development of the COVID-19 pandemic impacts the global economy, a reliable and realistic evaluation of the future business performance of Henkel is currently not possible.

As soon as it is possible to make a sufficiently reliable evaluation of future business performance in 2020, Henkel will publish a corresponding forecast.

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Henkel reports robust Q1 sales performance in very challenging market conditions - Brand SpurHenkel reports robust Q1 sales performance in very challenging market conditions - Brand Spur

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Henkel reports robust Q1 sales performance in very challenging market conditions - Brand SpurHenkel reports robust Q1 sales performance in very challenging market conditions - Brand Spur

Latest News

Singapore Employees Lack Retirement Support From Companies While Financial Wellbeing Becomes a Top Priority: Aon Survey

SINGAPORE - Media OutReach - 14 April 2021 - Aon plc (NYSE: AON), a leading global professional services firm providing a broad range of risk, retirement and health solutions, has released the findings of the 2021 Trends in Retirement & Financial Wellbeing survey for Singapore.


Working adults in Singapore ranked retirement planning as their top priority but an alarming 80% underestimate how much they really need to retire. While retirement support from employers is also lacking, further challenges remain around transparency in group retirement plans' investment offerings and employees foregoing long-term perspectives to seek short-term gains.


Ashley Palmer, Regional Managing Partner, Retirement & Investments, Asia for Aon, said, ""Employers can have a significant impact on how much their employees save by instilling smart habits and healthy money behaviours. The right long-term savings vehicles, effective communications and financial tools will help Singapore's workforce be more financially resilient in the wake of the COVID-19 pandemic."


The survey identifies three main themes in financial wellbeing and retirement support for Singapore employees.


Financial wellbeing support is the new employee expectation. As a result, close to 40% of employers rank an employee financial wellbeing strategy as their highest priority, followed by emotional and mental wellbeing support. The survey shows that 70% of Singapore employers will formulate or execute financial wellbeing programmes throughout 2021, in line with employee expectations. Companies also view offering a financial wellbeing programme critical in increasing employee engagement and remaining competitive in the talent market.


There is an increasing trend of employer-led supplementary savings plans. Currently, 22% of companies surveyed offer Central Provident Fund (CPF) top-up contributions to citizens and Permanent Residents. But, close to 40% of the working population in Singapore are foreigners who do not have access to CPF and are likely to have foregone their retirement benefits in their home countries. To bridge this gap, and to provide equitable retirement benefits to all employee groups, close to 50% of the organisations surveyed offer supplementary retirement benefits to their foreign staff. Financial services firms are leading in this practice, followed by the technology and the healthcare sectors.


Promisingly, a third of organisations in Singapore are prioritising a thorough review of their supplementary retirement arrangements in 2021.


Alicia Brittain, Senior Consultant & Actuary, Retirement & Investments, Singapore for Aon, said, "Forward-looking companies first need to understand the financial worries of their employees and identify the gaps in their benefits offering. The most effective approaches are aimed at changing individual behaviours towards money and savings and providing accessible programmes and vehicles to deliver sustainable change. For example, when organisations provide retirement benefits as cash-in-lieu, it is most likely immediately spent and so does not form part of an emergency fund or long-term savings for the employees' retirement years. Supplementary retirement plans solve this issue and are more flexible and cost effective - and can also offer contributions above the monthly CPF wage cap to increase employee savings."


Employees in Singapore lack a well-defined default investment strategy. Less than 30% of the surveyed companies in Singapore currently offer their employees an investment choice in their retirement plans, and only 15% of retirement plans have a default investment fund. This leads to employees selecting their own optimal investment funds. They may lack experience in understanding investments, which can lead to misallocating their money and result in inadequate retirement savings or excessive risk taking.


Brittain added, "The key to protecting employees and adding value to savings in any defined contribution retirement plan is a well-defined default investment strategy. This includes frequent performance monitoring, actively managing investment risks and dynamically reducing investment risk as employees move towards retirement."


Notes to Editors

The Aon 2021 Trends in Retirement & Financial Wellbeing for Singapore survey was designed to help organisations understand the unique retirement and financial needs of their Singapore workforce. This tri-annual survey was completed by organisations with employee populations ranging from five to over 4,000 and are based in Singapore. Responding Rewards and Benefits Leaders, HR and Finance Professionals provided feedback and insight on their organisations' financial wellbeing and retirement programmes, interests and concerns. Click here for the full report.

About Aon

Aon plc (NYSE: AON) is a leading global professional services firm providing a broad range of risk, retirement and health solutions. Our 50,000 colleagues in 120 countries empower results for clients by using proprietary data and analytics to deliver insights that reduce volatility and improve performance.

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Henkel reports robust Q1 sales performance in very challenging market conditions - Brand Spur
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