Henkel Reports Third Quarter 1997; Business Develops On Track.DUSSELDORF, Germany--(BUSINESS WIRE)--November 10, 1997--The Henkel Group, a global leader in specialty chemicals A Specialty chemical is a chemical produced for a specialized use. They are produced in lower volume than bulk chemicals, of which petrochemicals, made from oil feedstocks, are the most common. However, both are produced in a chemical plant. and consumer products, today reported its results for the third quarter and nine months ended September 30, 1997. Sales and Profit In the period January through September 1997, Henkel Group sales Group sales Block sale (of large amounts) of securities to institutional investors. group sales The distribution of a new security issue to institutional clients. rose by 23% to DM 14.9 billion ($8.4 billion) compared to the same period in 1996. Acquisitions contributed 13% of this growth, while exchange rate fluctuations positively affected sales growth by 4%. Domestic sales grew only slightly compared to sales growth outside of Germany, which increased by 32%. Profit before taxes for the first three quarters of 1997 grew by 13% to DM 624 million ($354 million) compared to the same period last year (1996: DM 550 million). -- US dollar equivalents are provided for readers convenience at September 30, 1997 exchange rate of DM1 = US$1.7611 Development of Business Sectors Sales in the Chemical Products business sector increased by 15% to DM 3,622 million compared to the first three quarters of 1996. Growth was attained throughout all regions. Sales of oleochemical Oleochemicals are chemicals derived from biological oils or fats. They are analogous to petrochemicals which are chemicals derived from petroleum. The hydrolysis or alcoholysis of oils or fats form the basis of the oleochemical industry. base materials also continued their positive trend in the third quarter. Fatty acids fatty acid, any of the organic carboxylic acids present in fats and oils as esters of glycerol. Molecular weights of fatty acids vary over a wide range. The carbon skeleton of any fatty acid is unbranched. Some fatty acids are saturated, i.e. and fatty alcohols fatty alcohol n. Any of various alcohols derived from plant or animal oils and fats and used in plastics and pharmaceuticals. plants are operating at full capacity. High sales growth was achieved in naturally sourced vitamins, while the food additives food additives, substances added to foods by manufacturers to prevent spoilage or to enhance appearance, taste, texture, or nutritive value. By quantity, the most common food additives are flavorings, which include spices, vinegar, synthetic flavors, and, in the business improved, with sales exceeding last year's level. Sales of care chemicals showed a marked increase over last year's level in all segments. Sales of cosmetic base and constituent materials, as well as products for detergents and cleansers, all contributed to this outcome. Sales growth of organic specialty chemicals were also at a high level. Favorable economic conditions for Henkel's customers positively affected sales of textile auxiliaries as well as additives for plastics, paints and coatings. Above-average sales growth of lubricant Lubricant A gas, liquid, or solid used to prevent contact of parts in relative motion, and thereby reduce friction and wear. In many machines, cooling by the lubricant is equally important. additives in Europe and North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. continued. Surface Technologies business sector sales growth continued in all regions and all strategic business units. Sales increased by 58% to DM 1,202 million. Favorable exchange rates supported this development. This year's acquisitions (mainly that of Novamax) considerably strengthened market positions in some segments of the metal industry and contributed to cost improvements in all segments. Business with the automotive industry The automotive industry is the industry involved in the design, development, manufacture, marketing, and sale of motor vehicles. In 2006, more than 69 million motor vehicles, including cars and commercial vehicles were produced worldwide. profited from the favorable order situation worldwide. Sales growth in Europe was in the double digits Double Digits was a pricing game on the American television game show, The Price Is Right. Played from April 20, 1973 through May 18, 1973's show, it was played for a car and used small prizes. , with sales in the Americas almost doubling. The still growing activities in China and India continued their positive development. Sales in the Industrial Adhesives/Technical Consumer Products business sector, including Loctite, increased by 70% to DM 3,200 million compared to the first nine months of 1996. The technical consumer products business registered sales growth of 16% with very positive development outside of Germany. The Do-It-Yourself segment as well as the paper, office and stationery business were the primary contributors to this sales growth. Decreasing investments in the construction sector resulted in a slight sales decrease in the building chemicals segment. Industrial adhesives once again increased sales and expanded growth compared to 1996's first nine months. The laminating lam·i·nate v. lam·i·nat·ed, lam·i·nat·ing, lam·i·nates v.tr. 1. To beat or compress into a thin plate or sheet. 2. To divide into thin layers. 3. and packaging adhesives business developed favorably, both in Germany and abroad, as did reaction adhesives and sealants for insulating glazing systems in Germany and the USA. The worldwide Loctite adhesives business also developed positively and the integration of Loctite continues on schedule. Sales in the Cosmetics/Toiletries business sector were DM 2,214 million or 12% higher than during the same period last year, with above-average growth in the third quarter. Hair salon A hair salon (also called 'Hairdresser' and 'Hair Parlour')is a place where one goes to get their hair cut, as well as styled, highlighted or coloured. There are many different types of hair salons that one can choose to go to. product sales grew by 15% and branded products increased by more than 11%. Sales growth was achieved primarily in Henkel's international markets while sales in Germany grew 4%, as planned. Sales growth was registered in all product sectors. Internationally, hair care product sales demonstrated above average growth and the Group's market position in hair colors was strengthened. Higher marketing expenditures and active product support resulted in market share increases for Schauma, Taft and Gliss Kur. The relaunched Fa product line, complemented by new and attractive fragrances, developed very successfully in the third quarter. Market share development in oral care was also successful. Outstanding market shares were gained by Licor del Polo in Spain, Tera-xyl in France and Antica Erboristeria in Italy. Sales in the Detergents/Household Cleansers business sector increased by 7% to DM 3,388 million in the first nine months of 1997. The majority of the increase in sales was from the growth markets of Russia, China and Egypt, as well as from new businesses in Israel, Lebanon and Tunesia. In Europe, market shares were further strengthened, with sales growth spurred by business in Italy, Eastern and Central Europe Central Europe is the region lying between the variously and vaguely defined areas of Eastern and Western Europe. In addition, Northern, Southern and Southeastern Europe may variously delimit or overlap into Central Europe. and Turkey. Machine dishwashing agents showed a slight weakness and did not maintain their market shares. In Germany, overall, market shares were slightly improved despite a decrease in the total market due to price competition. Spee Megaperls developed particularly positively. Sales in the Industrial and Institutional Hygiene business sector totaled DM 1,103 million and were up 5% over the same period last year. The new markets in Eastern Europe Eastern Europe The countries of eastern Europe, especially those that were allied with the USSR in the Warsaw Pact, which was established in 1955 and dissolved in 1991. largely contributed to sales growth. A Moscow-based distribution company was established to improve marketing in Russia. Market shares were also expanded in Central Europe and secured by exclusive supply contracts with key account customers in the Floordress business and in textile hygiene. Henkel purchased Ecosan, Hanau, a transaction which returned that company to the German Ecolab business. This business had to be sold due to anti-trust regulations, when the Ecolab joint venture was set up. Major participations Our major participations in associated US companies -The Clorox Company and Ecolab Inc. - performed well. During the first quarter (July-Sept 1997) of the 1997/1998 fiscal year, sales of Clorox increased by 10% $649 million over the same period last year, while net profit rose by 14% to $74 million. In the first nine months of 1997, Ecolab sales increased by 11% to $1,218 million and net profit grew by 20% to $100 million. Investor Relations Investor relations The process by which the corporation communicates with its investors. The German business magazine Capital for the first time awarded the Capital Investor Relations Prize, with Henkel taking top honors in the large company category and coming in first place in the DAX (German Stock Index) category. The award was made on the basis of the quality of communication between analysts and the companies as well as the quality of corporate information, with 900 capital market experts participating in the survey. Moreover, in a survey made by the American magazine The American Magazine was a periodical publication founded in June of 1906, stemming from failed publications purchased a few years earlier from publishing mogul Miriam Leslie. Fortune, Henkel ranks fifth of all German companies among the "world's most admired companies". Research Henkel's innovation-oriented research efforts provided its operating businesses with considerable benefits during the third quarter. In cooperation with a US appliance producer, a control method for the microbiological process control for cooling lubricants lubricants preparations for the lubrication of passages to reduce frictional injury, e.g. oily preparations, including petroleum jelly, lanolin or water-soluble preparations such as methyl cellulose. was developed. The upcoming introduction of a new organic coil coating process is another research success. In the field of raw materials for cosmetic applications, cocimic monoglycemide sulfate sulfate, chemical compound containing the sulfate (SO4) radical. Sulfates are salts or esters of sulfuric acid, H2SO4, formed by replacing one or both of the hydrogens with a metal (e.g., sodium) or a radical (e.g., ammonium or ethyl). (under the brand name: Plantapon CMGS CMGS Clinical Molecular Genetics Society (UK) CMGS Cyan Magenta Gelb Schwarz ), a new, extraordinarily mild surfactant Surfactant Definition Surfactant is a complex naturally occurring substance made of six lipids (fats) and four proteins that is produced in the lungs. It can also be manufactured synthetically. , was developed and is being readied for market introduction. Capital expenditures In the first nine months of 1997, new capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. was DM 476 million, DM 124 million higher than last year. Capital projects were spread geographically as follows: Germany 44%; other European countries 35%; and other international markets 21%. Important projects for environmental protection were completed in the detergents plants in Dusseldorf-Holthausen and at Stalo Chemicals in Lohne, Germany. Employees On September 30, 1997, the Henkel Group employed 52,423 people (December 31,1996: 46,665), 70% working outside of Germany. The share of employees in Germany decreased by about 4 percentage points compared to last year. Outlook Based on the positive results for the first nine months of 1997, we are confident that the favorable sales and profit development of our Company will continue. We expect profit to be markedly above last year's figure, even without proceeds from the disposal of our GFC GFC Geelong Football Club (Australia) GFC GMD (Ground-Based Midcourse Defense) Fire Control GFC Georgia Forestry Commission GFC Generic Flow Control GFC Grace Fellowship Church GFC Gaelic Football Club participation, which is not yet included in profit figures for the first nine months. Headquartered in Dusseldorf, Germany, Henkel KGaA is a global market leader in specialty chemicals and consumer products. The company is the number one producer of oleochemicals and adhesives worldwide, as well as being Europe's second largest producer of detergents and household cleansers. Henkel's US interests include the Clorox Company (27.8%) and Ecolab (21.9%). Henkel KGaA preference and ordinary shares are listed on the Frankfurt Stock Exchange Frankfurt Stock Exchange The largest of Germany's eight securities exchanges, operated by Deutsche Borse AS. , as well as a number of other exchanges. Henkel is a component of the DAX, the index of 30 German blue chip companies. In the US, Henkel's ADRs, each equivalent to one Henkel ordinary share, trade over the counter under the symbol "HENKY" and ADR's, each equivalent to one Henkel preference share trade over the counter under the symbol "HENOY". Information on Henkel KGaA preference shares is available on Bloomberg under the symbol HEN3 GR, on Reuters under HNKG_p.F. and on Quotron under HEND.EU. Information on the Henkel ordinary shares is available on Bloomberg under the symbol HEN GR, on Reuters under HNKG.F and on Quotron under HNKD.EU. CONTACT: Henkel KGaA Waltraud Muller 49-211-797-7278 Anke Meier 49-211-797-3008 - or - Taylor Rafferty Associates James Prout 212-889-4350 |
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