Henkel Annual Report 2011 - Henkel AG & Co. KGaA Annual Report ...

58
Group management report
Business performance
Guidance versus performance 2011
Guidance 2011 Performance 2011
Organic sales growth
Outperform relevant market development
Laundry & Home Care: +2.9 percent
(relevant market: slight decline)
Cosmetics/Toiletries: +5.4 percent
(relevant market: predominantly
declining)
Adhesive Technologies: +8.3 percent
(relevant market: low single-digit growth)
Adjusted return on sales Increase to around 13 percent Increase to 13.0 percent
Adjusted earnings per preferred share Increase of around 10 percent Increase of 11.3 percent
Comparison between actual business performance
and guidance
In our report for fiscal 2010, we offered guidance
for the coming financial year of 2011 indicating
that we intended to once again outperform our
relevant markets in terms of organic sales growth,
expec ting an increase within the range of 3 to
5 percent. Building on the figures of 2010, we
anticipated adjusted return on sales (EBIT) to
increase to around 13 percent, and adjusted earnings
per preferred share to undergo a rise of
around 10 percent.
Although the price rises encountered for our total
direct materials were higher than budgeted,
we succeeded in delivering in full our sales and
earnings guidance: With an organic growth rate
of 5.9 percent, we actually exceeded the guidance
corridor. In all three business sectors, we posted
organic growth rates above those of the relevant
markets. At Group level, we achieved a significant
increase in adjusted return on sales from 12.3 to
13.0 percent, and also an improvement in adjusted
earnings per preferred share of 11.3 percent to
3.14 euros (2010: 2.82 euros).
In our 2010 annual report, moreover, we indicated
that we expected the increase in the prices for
raw materials, packaging, contract manufacturing
and traded goods to be in the high single-digit
percentage range. The actual price increase was
in the low double-digit range and therefore higher
than expected.
Expense items
Henkel Annual Report 2011
In the following, we discuss our operating expenses
adjusted for one-time charges/gains and
restructuring charges. The reconciliation statement
and also the allocation of the restructuring
charges to the various items of the statement of
income can be found on page 100.
The cost of sales in 2011 outstripped the increase
in revenues, coming in 5.9 percentage points
higher at 8,455 million euros due to the rise in raw
material prices. Gross profit rose to 7,150 million
euros, while our gross margin decreased by
–1.3 percentage points to 45.8 percent. The negative
impact from the cost of sales rise was about
80 percent offset by increases in our selling prices,
savings from cost reduction measures, and
efficiency improvements in both production and
supply chain.
At 4,081 million euros, marketing, selling and
distribution expenses decreased by 3.5 percent
compared to the figure for the previous year. We
were able to make our sales and distribution processes
more efficient. Lower marketing expenditures
reflected a market environment characterized
by a decline in general advertising
expenditures.
We spent a total of 396 million euros on research
and development. Our R&D ratio (R&D expenses
expressed as a proportion of sales) therefore remained
constant versus prior year at 2.5 percent.