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

86 Group management report
Adhesive Technologies
Henkel Annual Report 2011
Sales
in million euros
2007 5,711
2008 6,700
2009 6,224
2010 7,306
2011 7,746
+8.3%
organic sales growth in a
world market with growth in
the low single-digits.
30%
innovation rate.
worldwide. We intend to further expand our leading
market positions with high profitability in all
our business segments and regions, endeavoring
to grow faster than the respective markets. An
important success factor in this regard is our
specific application know-how in the relevant
technical fields. Due to the close contact and the
extensive cooperation existing between our sales
personnel and our customers, we can deliver
tailored products and services on a global scale.
Through strict portfolio management and our
focus on strengthening our top brands, we increased
the proportion of sales accounted for by
our top ten brands to 54 percent in the year under
review.
The close contact of our employees with customers
and users is also an important source of innovation.
We further see our commitment to developing
sustainable solutions as a significant innovation
driver and differentiator within the competitive
environment. We have already attained an acknowledged
leading position in the sustainability field
within our markets. We will consistently extend
this as we pursue the long-term sustainability
strategy that Henkel has put in place.
Through a range of measures, we are continually
increasing our innovation rate: In 2011, we generated
around 30 percent of our sales with products
successfully launched onto the market within
the last five years.
Our strong position in emerging markets is also
an important engine for growth. We harness the
high market dynamics and the disproportionate
rise in demand for adhesives encountered in
these markets to drive our business development.
We will thus continue to increase our investments
in these regions going forward.
In the future, we intend to utilize our scale even
more effectively in order to add to our competitiveness.
As in recent years, we will further improve
our structures. We are currently placing
new emphasis on the global standardization of
our business processes and the grouping of activities
within our shared service centers. We also
intend to generate further economies of scale by
reducing complexity in our product ranges and
our brands portfolio. We regularly review all components
of our portfolio in terms of their contribution
to achieving the long-term objectives of
the business sector. Hence, in 2011 again we
divested a number of small, non-core activities.
Sales and profits
The Adhesive Technologies business sector continued
its profitable growth trend in 2011. In an
increasingly difficult general market environment,
we improved sales by 6.0 percent nominally to
a new high of 7,746 million euros. At 8.3 percent,
organic growth – i.e. after adjusting for foreign
exchange and acquisitions/divestments – was
once again significantly higher than the rate by
which our relevant markets expanded. This good
performance was achieved through a mix of price
and volume increases. With growth in the midsingle-digit
percentage range, the mature markets
of Western Europe and North America showed
favorable expansion overall. In our emerging markets,
we again generated disproportionate doubledigit
growth, with our highest rates of increase
occurring in the Eastern Europe region.
As in recent years, we continued to pursue the
long-term adaptation of our cost structures and
capacities in 2011. With an EBIT of 1,002 million
euros for 2011, we succeeded for the first time in
posting an operating profit figure above the 1 billion
euro mark. Adjusted operating profit for the
year came in at 1,075 million euros. As a result,
return on sales rose by 0.9 percentage points
versus the previous year, to 12.9 percent. Adjusted
return on sales once again reached a new high
with 13.9 percent.
The negative impact on gross margin emanating
from the substantial rise in material costs was
extensively offset by price increases in all our businesses
and regions, as well as our ongoing measures
to reduce costs and increase efficiency in
both production and supply chain. Net working
capital expressed as a proportion of sales amounted
to 15.1 percent. Return on capital employed
(ROCE) increased appreciably by 2.1 percentage
points to 14.6 percent. Our economic value
added (EVA ® ) improved by 209 million euros to
282 million euros.