Henkel achieves new highs in sales and earnings

Strong performance in fiscal year 2017

• Sales increase to 20,029 million euros, first time above 20 bn
  euros: nominal growth +7.0%, organic growth +3.1%
• EBIT margin* reaches new high: +40 basis points to 17.3%
• Earnings per preferred share*: +9.1% to new high of 5.85 euros
• Record dividend** payout: +10.5% to 1.79 euros per preferred share
• Substantial progress in implementation of strategic initiatives
• Financial ambition for 2020 confirmed

DÜSSELDORF–(BUSINESS WIRE)–“2017 was a successful year for Henkel. Despite challenging and volatile
market conditions, we reached new record levels in sales and earnings
and achieved our financial targets for the year. This strong performance
was driven by our engaged and passionate global team. For the first
time, we exceeded annual sales of 20 billion euros. We also achieved
record margins and new highs in earnings per share – in line with our
commitment to deliver sustainable profitable growth,” said Henkel CEO
Hans Van Bylen.

“We focused on the implementation of our strategic priorities and
achieved substantial progress with many key initiatives and projects. In
the course of the year, we also made several attractive acquisitions
which will complement and further strengthen our portfolio.”

Outlook for 2018

Based on the strong performance in 2017 and substantial progress made in
the implementation of the strategic priorities, Henkel reconfirmed the
financial ambition for 2020 – organic sales growth of 2 to 4 percent,
continued increase in adjusted EBIT margin, adjusted EPS growth of 7 to
9 percent – and provided its outlook for 2018.

For 2018, Henkel expects to generate organic sales growth of 2 to 4
percent with each business unit in this range. For adjusted return on
sales (EBIT), Henkel anticipates an increase to more than 17.5 percent
with all three business units contributing. Reflecting the uncertainties
in the currency markets, especially the US dollar trend, Henkel expects
an increase in adjusted earnings per preferred share in euro of between
5 and 8 percent.

“Going forward, we will continue to focus on sustainable profitable
growth with attractive returns. We are committed to deliver on our
financial ambition 2020,” said Hans Van Bylen.

Sales and earnings performance 2017

In the fiscal year 2017, sales exceeded 20 billion euros for the
first time and increased by 7.0 percent to 20,029 million euros. Foreign
exchange movements had an overall negative effect of 2.0 percent on
sales. Acquisitions and divestments accounted for 5.9 percent of sales
growth. Organic sales, which exclude the impact of foreign
exchange effects and acquisitions/divestments, showed a strong increase
of 3.1 percent. This improvement is in line with the full year guidance
of 2 to 4 percent organic sales growth.

The Adhesive Technologies business unit delivered very strong
organic sales growth of 5.0 percent. The Beauty Care business
unit generated positive organic sales growth of 0.5 percent. The Laundry
& Home Care business unit reported a good increase in organic
sales of 2.0 percent.

The emerging markets again made an above-average contribution to
the organic growth of the group, showing a very strong increase in
organic sales of 5.3 percent. The mature markets registered
positive organic sales growth of 1.5 percent.

Sales increased organically in all regions. In the Western Europe region
sales showed a positive organic development. In Eastern Europe,
sales grew organically by 6.0 percent. Africa/Middle East posted
organic sales growth of 1.7 percent. Sales in North America
increased organically by 3.0 percent. Latin America achieved
organic sales growth of 4.4 percent, and in the Asia-Pacific
region, sales grew organically by 5.9 percent.

Adjusted operating profit (EBIT) improved by 9.1 percent from
3,172 million euros to 3,461 million euros. All three business units
contributed to this increase.

Adjusted return on sales (EBIT) rose by 0.4 percentage points to
17.3 percent, matching the full year guidance of an increase to more
than 17 percent.

The financial result amounted to -51 million euros after -33
million euros in fiscal 2016 due to the financing costs of the
acquisitions closed in fiscal 2016 and 2017.

Adjusted net income for the year after non-controlling interests
increased by 9.1 percent to 2,534 million euros (2016: 2,323 million
euros).

Adjusted earnings per preferred share (EPS) grew by 9.1 percent
from 5.36 euros to 5.85 euros. This is in line with the improved
guidance for 2017, which anticipated an EPS growth of around 9 percent.

The Management Board, Supervisory Board and Shareholders’ Committee will
propose to the Annual General Meeting on April 9, 2018 an increase in
the dividend per preferred share of 10.5 percent to 1.79
euros (previous year: 1.62 euros).

The proposed dividend per ordinary share is 1.77 euros, an increase of
10.6 percent compared to the previous year (1.60 euros). This would be
the highest dividend in the company’s history and equal a payout
ratio of 30.7 percent, which is in line with Henkel’s target payout
ratio of 25 to 35 percent.

Net working capital as a percentage of sales was 1.3 percentage
points above the prior-year period, reaching 4.8 percent.

The net financial position closed the year at -3,225 million
euros (December 31, 2016: -2,301 million euros). The change compared to
the end of the previous year was primarily due to payments for
acquisitions.

Business unit performance

The Adhesive Technologies business unit generated very strong organic
sales growth of 5.0 percent in fiscal 2017. In nominal terms,
sales grew by 4.8 percent to 9,387 million euros. Adjusted operating
profit increased by 6.4 percent to 1,734 million euros. Adjusted
return on sales registered a good increase and reached a new high of
18.5 percent.

The Beauty Care business unit registered positive organic sales
growth of 0.5 percent in fiscal 2017. Nominally, sales grew by 0.8
percent to 3,868 million euros. Adjusted operating profit grew by
2.7 percent to 665 million euros. Adjusted return on sales showed a good
increase, reaching a new high of 17.2 percent.

The Laundry & Home Care business unit generated good organic
sales growth of 2.0 percent in fiscal 2017. Nominally, sales
increased by 14.8 percent to 6,651 million euros. Adjusted operating
profit grew by 17.0 percent to 1,170 million euros. Adjusted return
on sales showed a good increase and reached a new high of 17.6 percent.
The acquisition of The Sun Products Corporation contributed
significantly to both sales and operating profit.

Henkel 2020+: Substantial progress in 2017

“Through to 2020 and beyond, we are pursuing a compelling ambition for
Henkel. We want our company to generate sustainable profitable growth
and to become more customer-focused, innovative, agile, and digital,”
said Henkel CEO Hans Van Bylen.

To achieve these ambitions, Henkel has defined four strategic
priorities: drive growth, accelerate digitalization, increase
agility and fund growth. In the fiscal year 2017, Henkel made
substantial progress in the implementation.

To drive growth, Henkel successfully deepened its engagement
with customers and consumers across all levels. In its
Adhesive Technologies business, Henkel is implementing ambitious roadmaps
for the top 100 customers to accelerate growth with tailor-made
solutions. In the consumer businesses, Henkel expanded its digital “Connect2Consumer”
program to create insight-driven innovations and services.

Henkel also continued to grow its leading brands and innovative
technologies. In the Adhesive Technologies business, the strong
performance was driven by superior, high-impact solutions for dynamic
growth industries such as consumer electronics and the automotive
industry as well as general industry. In Beauty Care, innovations in
coloration and styling were driving growth and market share gains. In
Hair Professional business in the US, Henkel successfully launched its
first influencer brand #mydentity. Laundry & Home Care expanded its
portfolio through innovations in attractive categories such as special
detergents and toilet care.

Following the acquisition of Sun Products, the combined North
American Laundry & Home Care business recorded a very good performance
in 2017.

Henkel also made several attractive acquisitions in 2017 with a
total value of around 2 billion euros, which will complement its
portfolio and strengthen the competitiveness of its industrial and
consumer businesses.

Henkel also captures new sources of growth through investments
and co-operations in digital services and technologies for example in
the area of 3D-printing and innovative consumer business models.

As part of its strategic priority “accelerate digitalization”,
Henkel further digitized its interactions with customers, consumers,
business partners, and suppliers along the entire value chain. Digitally
driven sales increased double-digit across all business units.
Henkel invested in Industry 4.0, implemented smart factory
concepts and further digitized its integrated Global Supply Chain. To
strengthen the digital capabilities of employees, specific
training and development programs were rolled out. The newly appointed
Chief Digital Officer established a dedicated organization, driving the digital
transformation across all units. Henkelx
will be the new platform to bring together internal and external
networks and collaboration events, digital engagement formats as well as
new ways of working.

To create a more agile organization, Henkel has fostered the entrepreneurial
spirit of its employees, introduced more flexible business models
to better adapt to dynamic markets. In Adhesive Technologies, 28
customer-facing steering units enable closer customer collaboration.
Henkel also further optimized workflows and processes
to become faster and more flexible. As part of the Fastest-Time-To-Market
initiative, innovation lead times have been reduced and entries into
new markets have been accelerated.

All initiatives to fund growth are on track to realize the
targeted benefits: By 2020, they are expected to generate annual
efficiency gains of more than 500 million euros.

ONE!ViEW drives higher efficiency through optimized cost
management and increased transparency on a global scale. ONE!GSC
integrates Henkel´s global supply chain organization across all business
units. Henkel also rolled out net revenue management across all
business units and further increased efficiency in its structures,
for example through new approaches in its shared service centers
focusing on automation and robotics.

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.
Henkel employs more than 53,000 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 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 forward-looking statements.

* Adjusted for one-time charges/gains and restructuring charges

** Proposal to shareholders for the Annual General Meeting on April 9,
2018

Contacts

Investors & Analysts
Lars Korinth
Phone: +49
211 797 – 1631
Email: [email protected]
Dr.
Eva Sewing
Phone: +49 211 797 – 5277
Email: [email protected]
Christopher
Huesgen
Phone: +49 211 797 – 4314
Email: [email protected]
Mona
Niermann
Phone: +49 211 797 – 7151
Email: [email protected]

Press & Media
Lars Witteck
Phone: +49 211
797 – 2606
Email: [email protected]
Wulf
Klüppelholz
Phone: +49 211 797 – 1875
Email: [email protected]
Hanna
Philipps
Phone: +49 211 797 – 3626
Email: [email protected]
The
2017 Annual Report and other information with download material relating
to fiscal 2017 can be found in our press folder on the internet at:
www.henkel.com/press
www.henkel.com/ir