Laundry - Henkel
Laundry - Henkel
Laundry - Henkel
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<strong>Laundry</strong> & Home Care<br />
Friedrich Stara<br />
Executive Vice President<br />
Analyst and Investor Meeting<br />
Düsseldorf, February 21, 2006
Disclaimer<br />
This information contains forward-looking statements which are<br />
based on current estimates and assumptions made by the<br />
corporate management of <strong>Henkel</strong> KGaA. Statements with respect<br />
to the future are characterized by the use of words such as<br />
“expect”, “intend”, “plan”, “anticipate”, “believe”, “estimate”, and<br />
similar terms. Such statements are not to be understood as in any<br />
way guaranteeing that those expectations will turn out to be<br />
accurate. Future performance and results actually achieved by<br />
<strong>Henkel</strong> KGaA and its affiliated companies depend on a number of<br />
risks and uncertainties and may therefore differ materially from the<br />
forward-looking statements. Many of these factors are outside<br />
<strong>Henkel</strong>'s control and cannot be accurately estimated in advance,<br />
such as the future economic environment and the actions of<br />
competitors and others involved in the marketplace. <strong>Henkel</strong> neither<br />
plans nor undertakes to update any forward-looking statements.<br />
2
1. Business Status<br />
2. Dial Update<br />
3. <strong>Laundry</strong> & Home Care<br />
4. Vision & Strategy<br />
3
<strong>Laundry</strong> & Home Care within<br />
<strong>Henkel</strong> Group<br />
Sales share 2005 EBIT* share 2005<br />
<strong>Laundry</strong> &<br />
Home Care<br />
34%<br />
Core business of <strong>Henkel</strong> Group<br />
*excl. Corporate<br />
<strong>Laundry</strong> &<br />
Home Care<br />
34%<br />
Largest sales and EBIT contributor to <strong>Henkel</strong> Group<br />
4
<strong>Laundry</strong> & Home Care<br />
Sales by regions<br />
Europe/Africa/<br />
Middle East<br />
Sales 2005: 4.1 bn €<br />
72%<br />
21%<br />
North America<br />
3%<br />
4%<br />
Asia/Pacific<br />
Latin America<br />
5
<strong>Laundry</strong> & Home Care<br />
Sales by segments<br />
Home Care<br />
Sales 2005: 4.1 bn €<br />
33%<br />
Food<br />
4%<br />
63%<br />
Expert for <strong>Laundry</strong> & Home Care<br />
<strong>Laundry</strong><br />
6
<strong>Laundry</strong> & Home Care<br />
in mill €<br />
Sales<br />
EBIT<br />
2,574<br />
188<br />
1999<br />
2,835<br />
236<br />
CAGR = 8.0 %<br />
3,082 3,131 3,074<br />
CAGR = 14.9%<br />
254<br />
280<br />
295<br />
3,617<br />
351<br />
2000 2001 2002 2003 2004<br />
Continous sales and EBIT improvement<br />
4 bn € sales surpassed<br />
10% EBIT margin surpassed<br />
4,088<br />
433<br />
2005<br />
Margin 7.3% 8.3% 8.2% 8.9% 9.6% 9.7% 10.6% 11.7%<br />
7
<strong>Laundry</strong> & Home Care<br />
Organic Sales growth<br />
2.3%<br />
1.2%<br />
-0.7%<br />
3.0%<br />
2002 2003 2004 2005<br />
Negative trend reversed – strong rebound in 2005<br />
8
<strong>Laundry</strong> & Home Care<br />
Organic Sales growth<br />
2.5%<br />
3.5%<br />
H1/05 H2/05<br />
Strong organic growth – H2 even stronger<br />
9
<strong>Laundry</strong> & Home Care<br />
2005 vs. 2004<br />
• Sales growth: + 13.0%<br />
• Organic growth: + 3.0%<br />
• EBIT growth: + 23.7%<br />
• EBIT margin: + 0.9pp<br />
10
1. Business Status<br />
2. Dial Update<br />
3. <strong>Laundry</strong> & Home Care<br />
4. Vision & Strategy<br />
11
Dial – Initial Goals<br />
• Participation in world´s most important<br />
single market<br />
• Know-how transfer ”Europe USA”<br />
• Experience with “Value Player” /<br />
“Cost Leadership” business model<br />
12
Dial – Business Status<br />
• Sales / EBIT development according to plan<br />
• Market share slightly increased<br />
• Defensive synergies realized<br />
(Purchasing, IT, Admin: ~20 mill $)<br />
Integration process on track<br />
13
Dial – Integration Process / Phases<br />
1. Integration of Dial platform<br />
2. Integration / expansion Clorox brands<br />
3. Exchange of technologies & initiatives<br />
● Purex formulation<br />
(Russia/China)<br />
● Air Care / Insecticides<br />
<br />
● Purex Softener technology<br />
● Soft Scrub technology<br />
● Purex White Relaunch<br />
14
Dial – Persil and Purex Relaunch<br />
„Anti-Grey“ / „Whitening“<br />
First global concept & technology development<br />
First advertising support for Purex<br />
15
1. Business Status<br />
2. Dial Update<br />
3. <strong>Laundry</strong> & Home Care Market<br />
4. Vision & Strategy<br />
16
<strong>Laundry</strong> & Home Care<br />
Market Overview<br />
World market 2005: 74 bn €<br />
<strong>Laundry</strong> Care 38 bn € Home Care 36 bn €<br />
World market growth 2005: 2%<br />
17
<strong>Laundry</strong> & Home Care<br />
World Markets 2005<br />
Core markets (65 bn €)<br />
● <strong>Laundry</strong> (38 bn €)<br />
(detergents, softeners, bleaches)<br />
● Home Cleaning (27 bn €)<br />
(surface, dishwash, toilet)<br />
Additional markets (9 bn €)<br />
● Air fresheners (5 bn €)<br />
● Insecticides (4 bn €)<br />
<strong>Henkel</strong> is focused on core markets<br />
Selective potential in additional markets via Dial /<br />
Clorox brands<br />
18
<strong>Laundry</strong> & Home Care<br />
Overall Position in Core Markets<br />
GERMANY # 1<br />
EUROPE # 2<br />
WORLD # 3<br />
From leading European positions<br />
to strong world market positions<br />
19
<strong>Laundry</strong> & Home Care<br />
Market shares<br />
• Western Europe slight increase<br />
• Eastern Europe strong increase<br />
• North America slight increase<br />
• Rest of world stable<br />
20
<strong>Laundry</strong> & Home Care at <strong>Henkel</strong><br />
● Huge global market<br />
● Strong market positions / gaining m. share<br />
● Clear business focus (regions / core markets)<br />
● Strong sales and EBIT development<br />
Strong basis for sustained<br />
profitable growth<br />
21
1. Business Status<br />
2. Dial Update<br />
3. <strong>Laundry</strong> & Home Care Market<br />
4. Vision & Strategy<br />
22
<strong>Laundry</strong> & Home Care<br />
Vision<br />
Major competitors with reduced focus on<br />
<strong>Laundry</strong> and Home Care<br />
Opportunity to<br />
Become the Undisputed Expert<br />
for <strong>Laundry</strong> and Home Care<br />
Win with the consumer<br />
Become the key partner for the trade<br />
23
<strong>Laundry</strong> & Home Care<br />
Strategic Goal<br />
Our strategic goal: profitable growth<br />
Top-line growth > market growth<br />
Bottom-line growth > top-line growth<br />
Reduce / close gap to peers<br />
24
Strategies for profitable growth<br />
1. Brand Equity Building<br />
2. Innovation Leadership<br />
3. Regional Expansion<br />
4. Portfolio Management<br />
5. Margin Improvement<br />
25
Brand Equity Building<br />
Additionally to product level significantly<br />
increase brand focus to strengthen<br />
brand equities<br />
Prevents from falling into commodity trap<br />
Builds loyalty due to emotional attachment<br />
Enables higher margins (reduced price sensitivity)<br />
28
Brand Equity Building - Pril<br />
Market share<br />
Germany<br />
30.5%<br />
35.1%<br />
2004 2005<br />
Focus on most relevant consumer benefit „Degreasing“<br />
Consistent positioning and steady brand investment<br />
29
Product of the Year 2 0 0 6<br />
Pril wins with consumer and trade !<br />
30
Brand Equity Building<br />
Persil International<br />
Germany Poland Egypt<br />
One platform concept<br />
One international brand / premium positioning<br />
But: local differentiation according to local needs<br />
>500 mill € sales / 26 countries<br />
31
Brand Equity Building - Persil<br />
Understand<br />
the consumer<br />
Most trusted Detergent Brand<br />
Personal<br />
experience<br />
2001 – 2005 Germany / Austria<br />
High<br />
quality<br />
Responsible to<br />
the environment<br />
32
Product of the Year 2 0 0 5<br />
Persil wins with consumer and trade !<br />
33
Innovation Leadership<br />
New Innovation Strategy & Process<br />
● Consumer insight / consumer focus<br />
(make and sell sense and respond)<br />
● Inno teams (cross functional / holistic approach)<br />
● External sourcing / partnering<br />
● Innovation roadmaps<br />
● Innovation pipeline / structured innovation process<br />
(Generation / Development / Monitoring)<br />
35
Increase share of new products<br />
Goal: 35 – 40 %*<br />
2006<br />
„Year of Innovation“<br />
* percentage of sales from new products launched over past three years<br />
36
Award Winning “Innovation Strategy”<br />
37
Success of Innovation - Vernel<br />
„Aromatherapy“<br />
Combination of Vernel / Silan softness with the<br />
well-being of Aromatherapy<br />
38
Success of Innovation - Persil<br />
Persil<br />
with the freshness<br />
by Vernel<br />
Co-Branding of two leading brands, providing<br />
superior added value<br />
39
Success of Innovation – WC Frisch<br />
Alessi FreshSurfer<br />
Combination of <strong>Henkel</strong> 2 chamber technology<br />
with Italian Alessi design<br />
40
Success of Innovation - Pril<br />
Pril PowerSpray<br />
Combination of high perfomance and easy handling<br />
41
Success of Innovation - Pril<br />
Pril Design Edition<br />
Combination of premium quality<br />
with decorative package design<br />
42
Regional Expansion<br />
Regional clustering / regional steering:<br />
● WE Profitability generator<br />
● NA Participation in largest market<br />
● EE / MENA Growth driver<br />
● LA / AP Expand existing platforms<br />
Focus on organic growth and<br />
selected add-on acquisitions<br />
44
Success story Eastern Europe<br />
Sales development (indexed)<br />
100<br />
153<br />
162<br />
213<br />
Success model for other regions<br />
247<br />
335<br />
1995 1997 1999 2001 2003 2005<br />
45
Portfolio Management<br />
<strong>Laundry</strong> Heavy Duty: Base business<br />
• Strengthen market position<br />
• Guarantee critical mass for<br />
emerging countries<br />
<strong>Laundry</strong> Specialties: Profitability leader<br />
• Strive for market leadership<br />
• Penetrate emerging countries<br />
Home Care: Growth engine<br />
• Increase market share<br />
• Check / rollout new categories<br />
(Air care / Insecticides)<br />
47
Margin improvement<br />
● Improve Costs of Goods<br />
- Unlock potentials in purchasing<br />
- Harmonize products (packaging, formulations)<br />
- Cut costs everywhere<br />
● Optimize Supply Chain<br />
- Finalize restructuring<br />
- Focus on entire chain<br />
● Stop loss making activities<br />
- Set clear milestones<br />
- Consider acquisitions for critical mass<br />
49
Margin improvement<br />
● Increase prices<br />
-Direct<br />
- Indirect<br />
● Focus on higher margin products / brands<br />
50
Margin improvement<br />
Automatic dishwashing<br />
Retail price (€)<br />
Cent/tab<br />
Somat 1 Somat 5<br />
Cleaner Cleaner & rinser<br />
& salt & steelshine<br />
& glass protection<br />
5.99 / 50 Tabs<br />
12.0<br />
5.99 / 30 Tabs<br />
20.0<br />
Indirect price increase supported by new product<br />
generation / quality<br />
51
Margin improvement<br />
Hand dishwashing<br />
Retail price (€)<br />
Cent / Job<br />
Pril Original Pril Power Spray<br />
Soaking & scrubbing Just spray & rinse<br />
1.49<br />
0.8<br />
2.99<br />
4.0<br />
Introduction of innovative special product with<br />
higher price and margin<br />
52
Margin improvement<br />
Toilet Care<br />
Retail price (€)<br />
Cent / Job<br />
WC Frisch<br />
Duo-Active<br />
Cleaning & fragrance<br />
1.99<br />
0.7<br />
Absolute price increase supported by<br />
innovative design<br />
WC Frisch<br />
Alessi FreshSurfer<br />
Cleaning & fragrance plus<br />
extraordinary design<br />
2.99<br />
1.0<br />
53
Margin improvement<br />
● Increase prices<br />
-Direct<br />
- Indirect<br />
● Focus on higher margin products / brands<br />
● Improve profitability in Emerging Markets<br />
- Gain market share / critical mass<br />
- Penetrate with high margin products / brands<br />
Key for improvement: Innovation<br />
54
<strong>Henkel</strong> is a leader with brands and technologies<br />
that make people's lives<br />
easier, better and more beautiful.<br />
56
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