Henkel Roadshow Presentation 2019 - Seeking Alpha

Henkel Roadshow Presentation

May 2019

2May 2019

This information contains forward-looking statements which are based on current estimates and assumptions made by the corporatemanagement of Henkel AG & Co. KGaA. Statements with respect to the future are characterized by the use of words such as “expect”,

“intend”, “plan”, “anticipate”, “believe”, “estimate”, and similar terms. Such statements are not to be understood as in any way

guaranteeing that those expectations will turn out to be accurate. Future performance and 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 any forward-looking statements.

This document includes – in the applicable financial reporting framework not clearly defined – supplemental financial measures that are or

may be alternative performance measures (non-GAAP-measures). These supplemental financial measures should not be viewed in

isolation or as alternatives to measures of Henkel’s net assets and financial positions or results of operations as presented in accordance

with the applicable financial reporting framework in its Consolidated Financial Statements. Other companies that report or describe

similarly titled alternative performance measures may calculate them differently.

This document has been issued for information purposes only and is not intended to constitute an investment advice or an offer to sell, or

a solicitation of an offer to buy, any securities.

Disclaimer


3

1. Strong foundation and consistent financial performance

2. Compelling ambition and strategy 2020+, outlook 2019

3. Consistent capital allocation supporting our ambition

4. Strong portfolio of three business units

5. Henkel – a compelling investment

Agenda

May 2019Henkel Roadshow Presentation

4May 2019

Henkel: Three areas of competenceA global leader in brands and technologies

Consumer BusinessIndustrial Business

Adhesive Technologies

Globally leading positions

#1 Global

Laundry & Home Care

#3 Global

#1 Europe, #2 North America

Beauty Care

#3 Hair Coloration

#3 Hair Professional


5May 2019

Well diversified and balanced portfolioThree business units operating across all regions

Sales by business unit 1 Sales by region 1

Beauty Care20%

Laundry &Home Care

32%

AdhesiveTechnologies

47%2018 2018

1 Corporate sales not included (account for 1% of sales)

Emerging

Markets 40%

Asia/Pacific 17%

Africa/Middle East 6%

Eastern Europe 14%

Western Europe 31%

Latin America 6%

North America 25%


6May 2019

Strong and consistent performanceKey financial developments

Key developments Sustainable and profitable growth path

▪ Sales reaching € 19.9 bn with an average organic

sales growth of 3.2%1

▪ Good organic sales growth complemented by

compelling acquisitions in all business units

▪ Continued improvement of Adj. EBIT Margin and

new high in Adj. EBIT of € 3.5 bn

▪ Adjusted EPS (preferred share) up by 2.7% to

€ 6.01 in 2018 (+7% ex. FX), strong CAGR of 8.4%1

16.5 16.4 16.4

18.118.7

20.0 19.9

14.1%

15.4%15.8%

16.2%16.9%

17.3% 17.6%

2012 2013 2014 2015 2016 2017 2018

Sales

€ bn

OSG %

Adj.

EBIT %

+3.1%+3.1%+3.0%+3.4%+3.5%+3.8%

1 2012-2018

+2.4%


7

Challenging macroeconomic environment

Henkel Roadshow Presentation May 2019

Mixed market dynamics in Q1 2019

Stronger USD, but pressure from key Emerging Market currencies persists

Slight currency tailwind

Continued direct material price pressure in uncertain and volatile markets

Commodity inflation

IPX weakening with some industry segments negative

Slower industrial production growth

Competitive environment remains intense, especially in Western Europe

HPC markets mixed

8

Key developments in Q1 2019


€ 5.0 bn +0.7%Sales Organic Growth

€ 795 m 16.0%Adjusted EBIT Adjusted EBIT %

-6.3%Adjusted EPS Growth1

1 At constant currencies

▪ Nominal sales up 2.8% to € 5 bn, supported by positive currency and M&A effects

▪ Good performance of Laundry & Home Care

▪ Beauty Care with weak start into the year

▪ Adhesive Technologies affected by slow-down of some industry segments

▪ Adj. EBIT Margin impacted by direct material price pressure, transactional currency effects and investments

▪ Adj. EPS below previous year, down mid-single-digit % at constant currencies

9

Western Europe

€ 1,569 m (32%)

Eastern Europe

€ 693 m (14%)

North America

€ 1,266 m (25%)

Latin America Asia-PacificAfrica/Middle East

+1.1% -1.3% +6.5%

+8.0% +13.5% -8.8%

OSG in %

€ 320 m (6%) € 754 m (15%)€ 335 m (7%)

Emerging Markets: +2.2% to € 1,968 m, 40% of Group Sales

Mature Markets: -0.4% to € 2,969 m


Organic sales development by regionQ1 2019

abs. in € m (share of total)

10

EBIT Margin Adj. in %

-130bps

18.116.8

Q1/18 Q1/19

May 2019

Adhesive TechnologiesKey Financials Q1 2019

Sales in € m, OSG1 in % Drivers of Performance

-0.8%

2,270 2,309

Q1/18 Q1/19

1 Volume: -3.7% Price: 2.9% Henkel Roadshow Presentation

Organic sales development

impacted by weak Automotive and

Electronics in Asia Pacific and North

America, supported by strong pricing

EBIT margin below prior year

due to negative volume / mix effects;

direct material headwinds

compensated by pricing and

cost efficiency initiatives

11May 2019

Beauty CareKey Financials Q1 2019

1 Volume: -2.0% Price: -0.2% Henkel Roadshow Presentation


-170bps

16.715.0

Q1/18 Q1/19


-2.2%

965 960

Q1/18 Q1/19

Organic sales development

impacted by Western Europe and

destocking in China, North America

recovering, Professional strong

Profitability impacted

by continued direct material price

pressure and negative volume

effects, partially compensated by

cost efficiency initiatives

12May 2019

Laundry & Home CareKey Financials Q1 2019

Henkel Roadshow Presentation1 Volume: 1.4% Price: 3.3%


-140bps

18.517.1

Q1/18 Q1/19


+4.7%

1,5691,667

Q1/18 Q1/19

Very strong organic sales growth

driven by significant Emerging

Markets growth and very strong

North America growth

EBIT margin below previous year

adversely impacted by continued

direct material and EM currency

headwinds, support from cost

efficiency initiatives

13Henkel Roadshow Presentation May 2019

Adjusted Gross Profit to Adjusted EBIT

-23.8% -0.2pp

46.2%-1.3pp

-2.4% +/-0.0pp

-4.4% +0.1pp +0.4%

+/-0.0pp16.0%-1.4pp

in % of sales

Impact on Adjusted EBIT Margin in pp vs. PY

Adjusted Gross Profit

Marketing, selling & distribution

R&D Admin OOI/OOE Adjusted EBIT

14

Sales Volume Price M&A FX SalesSales Q1/18 Volume Price M&A FX Sales Q1/19


Positive top line supported by FX and M&A

Organic & inorganic

-1.7% +2.4% +0.6%+1.5%

+2.8%

Sales in € m, changes in %

+1.3%

4,835

4,969

15

Adjusted EPS development 1

Q1 2019

Adj. EPS Organic / anorganic FX Sales

€ 1.43€ 1.34+/-0.0%

-6.3%

-6.3%

Q1/2018 FX Q1/2019at constant currencies

Adjusted EPS in Q1 mid-single-digit % below prior year both nominally and at constant currencies

May 2019Henkel Roadshow Presentation1 per preferred share

16

Net Working Capital above prior year

+190bpsAdhesive Technologies

Beauty Care

Laundry & Home Care

Henkel Group

+100bps

-190bps

+40bps

13.8

11.9

6.8

5.8

-3.1

-1.2

6.6

6.2

in % of sales

Q1 2018 Q1 2019


▪ Effects from weaker demand in key customer

segments and M&A in Adhesive Technologies

▪ Increase in Beauty Care driven by higher inventories

from lower volumes and mix

▪ Strong improvement in Laundry & Home Care thanks

to positive trend in inventories and receivables

17

Strong Free Cash Flow generation

Net Financial Position in €m

-3,247

-2,478-2,895

Investments Other Sales

624+233

Operating CF CapEx Other

Free Cash Flow in €m, ∆ PY in €m

FCF

-155+190 +54

+78523

+501

Strongly improved Free Cash Flow driven by higher Operating Cash Flow and lower CapEx

Continuously strong balance sheet and further improvement of Net Financial Position

31.12.18 31.03.1931.03.18


18






Agenda


19May 2019

▪ Generate profitable growth and attractive returns

▪ Become more customer-focused, innovative and agile

▪ Lead digital transformation in all business activities

▪ Promote sustainability across the entire value chain

▪ Advance our portfolio with value-adding acquisitions

We pursue a compelling ambition


20May 2019

Mid- to long-term financial ambitionCommitted to sustainable profitable growth

▪ Achieve organic sales growth of 2-4%

▪ Deliver mid to high single-digit % adjusted EPS growth at constant currencies

▪ Continued focus on Free Cash Flow expansion

▪ Pursue compelling growth opportunities with superior execution

▪ Maintain rigorous cost discipline and focus on margin


21

Henkel 2020+ Strategic Priorities


22May 2019

Drive growth, accelerate digitalization

▪ Outperform by leveraging scale and breadth

of the Adhesive Technologies portfolio

▪ Accelerate growth in Beauty Care Retail,

continue momentum in Professional

▪ Leverage strong innovation program in

Laundry & Home Care

▪ Advance to next level of digitalization


23May 2019

Drive growth in Adhesive TechnologiesFocus on future growth trends

▪ Mobility: Enabler of industry transformation Alternative Drives – Autonomous Driving – Lightweight

▪ Connectivity: New functions & designs requiredMobile Devices – Internet of Things – Digital Infrastructure

▪ Sustainability: Drive change along the value chainRenewable Feedstock – Efficient Production – Circular Economy


24May 2019

▪ Drive superior growth in HairHolistic innovation plan across all Hair segments addressing key trends and target groups

▪ Back to growth in North AmericaTargeted growth plan with strong initiatives in Body Care and Hair Coloration

▪ Continue to outperform in ProfessionalSustain very strong growth momentum

Drive growth in Beauty Care


25

Drive superior growth in HairSelection of innovations with launch in H1 2019

May 2019

Schauma – relaunch of

biggest family brand

Nature Box – rollout in

new markets

OnlyLove – launch of

new brand

100% natural cold pressed oils,

‘free-from’ formulas

Eco-certified formula –

no ammonia, silicone and alcohol

Vegan formulas with micronutrients,

no silicones and parabens


26

Back to growth in North AmericaSelection of innovations with launch in H1 2019

May 2019

Dial – strong line

extensions

Keratin Color –

strong new subline

got2b – expansion into

new categories

Launch new Keratin Color variants

for multi-ethnic target groups

New trend color offerings and

extension of male line in hair care

Strong new lines in moisturizing body

wash and antibacterial handwash


27

Continue to outperform in ProfessionalSelection of innovations with launch in H1 2019

May 2019

Authentic Beauty Concept –

launch of premium brand

IGORA Vibrance –

global relaunch

Launch new

B2B eShop

Leveraging technology leadership in

Hair Coloration

Driving sales via convenience

and end-to-end customer

experiences

Creation of new premium

vegan OTC brand with pure

recognizable ingredients


28May 2019

Drive growth in Laundry & Home Care

▪ Innovation offensive for leading megabrand PersilAccelerate market share gains with cutting-edge and exclusive technologies

▪ Turn around North AmericaStrong innovations, caps initiatives and brand relaunches for new growth momentum

▪ Expand Home Care to strengthen profitable growthLeveraging blockbuster brands and key trends


29

Relaunch of leading megabrand PersilSelection of innovations with launch in H1 2019

May 2019

Persil Deep Clean –

global relaunch

Persil DISCS – launch of

4-chamber caps

eCommerce

offensive

Patented technology and

unique enzyme blend for

superior performance

Formula and packaging innovations

with up to 2x concentrated formulas,

SIOCs1 for optimized logistics

New cutting-edge Deep Clean

Technology with exclusive

advanced enzyme mix

1 Ship in own container Henkel Roadshow Presentation

30

Turn around North AmericaSelection of innovations with launch in H1 2019

May 2019

Caps offensive – win in fast

growing segment

‘all relaunch – boost growth

of largest US brand

Snuggle Scent Shakes –

US market launch

New advanced formulas leveraging

global technology expertise for

#1 sensitive skin brand

Entry in premium fragrance

segment with leading fabric

finisher brand

Strong caps initiatives across all

price tiers: premium, mid-tier and

value-for-money


31

Expand Home Care to strengthen profitable growthSelection of innovations with launch in H1 2019

May 2019

Somat All-in-1 Gel –

launch of next generation

Bref DeLuxe –

line extension

Pro Nature –

new product lines

New premium line with new

premium DeLuxe scents

Eco-certified formulas and

sustainable plastic strategy

Strengthen leadership in the

fast growing gel segment


32May 2019

▪ Driving digital sales and new business modelsStrong development of eFormats and specific offers to boost digital sales

Develop new digital services and products, implement IoT strategy

▪ Advance digital customer & consumer interactionRapid expansion of digital analytics, eCRM and eShopper category mgmtDedicated in-house social media team & content factory

▪ Leveraging Industry 4.0Real-time leverage of automation and robotics, sensorics and analytics

▪ Digital infrastructureSet-up of new digital workspaces and investments in cyber security,

upgrade of network capacity and site infrastructure

Advance to next level of digitalizationSignificant expansion of investments in digital businesses, analytics & infrastructure


33

▪ Sustainably higher growth investments

▪ Accelerating top-line growth with focus on consumer goods business

▪ Step-up of investments in digitalization

May 2019

€ 300 million higher investmentsin brands & technologies, innovation and digitalization



Drive growth, accelerate digitalizationStatus of Growth Initiatives, Q1 2019

Beauty Care Laundry & Home Care Digitalization

▪ Core brands with first product activities

addressing key consumer needs

▪ Innovations dedicated to growth areas

North America, Hair and Professional

▪ Start of growth initiatives with

major relaunches & format innovations

▪ Clear focus on top priorities

North America, Persil and Home Care

▪ Investments in data analytics, digital-

ready infrastructure and cyber security

▪ Increasing activities in customer &

consumer interaction and e-commerce

35

▪ Return to growth in Adhesive Technologies

▪ Build on good start of Laundry & Home Care executing strong innovation strategy

▪ Reinforce growth in Beauty Care Retail, continue outperformance in Professional

▪ Continue to drive digitalization in all aspects

▪ Strong focus on cost discipline, driving efficiency and adapting structures

▪ Implement extra measures to improve Working Capital; expand Free Cash Flow

▪ Enhance value proposition of portfolio organically and via acquisitions

May 2019

Business Priorities 2019


36May 2019

Henkel Group

Organic Sales Growth

Adjusted EBIT Margin

Adjusted EPS (constant currencies) Mid single digit % below PY

Henkel Group 16 - 17%

Adhesive Technologies 18 - 19%

Beauty Care 15 - 16%

Laundry & Home Care 16.5 - 17.5%

2 - 4%All Business Units within Group range

Guidance 2019


37






Agenda


38

Consistent capital allocation

May 2019

Strong sources of cash

Excellent Free Cash Flow Balance sheet optionality

Investments Acquisitions Dividends


39May 2019

▪ Strong Free Cash Flow of € 1.9 bn in 2018, up

from average of € 1.7 bn p.a. in 2013-17 period

▪ Continued focus on FCF expansion in mid- to long-

term financial ambition, driven by operating

performance, efficient capital management and

disciplined CapEx

▪ Very robust balance sheet with equity ratio of

58% and net financial position of € -2.9 bn as per

FY 2018

Strong FCF generation and balance sheet

in € bn

2018Ø 2013-17

1.7

1.9


40

CapEx: Asset-light business model

May 2019

▪ Asset-light business model with low CapEx

requirements, especially in Adhesive Technologies

▪ CapEx of around € 3 bn planned in strategic cycle

2017-20, ~40% up on previous cycle

▪ Significant investments to support growth

initiatives, innovation, infrastructure and IT

2012 2013 2014 2015 2016 2017 2018

422 436517

625

543

663

853

2013-16: € 2.1 bn

CapEx for existing operations in € million

2017-20: € 3 bn~


41May 2019

Focused CapEx investments

▪ Adhesive Technologies Europe – Spain New production facility for aerospace

▪ Beauty Care Eastern Europe – Russia Capacity expansion

▪ Laundry & Home Care North America – USA Expansion of detergent capsule production

~€ 850 m spent in 2018


42

Strong track record in value accretive M&A

May 2019

▪ > € 8 bn invested since 2012 with projects

evenly spread across business units

▪ > € 3 bn in annual sales1 added across business units

with substantial synergy potential

▪ Adhesive Technologies focuses on complementary

technologies, consumer businesses target leading

country/category positions and white spots

▪ M&A remains integral part of strategy,

complemented by selective VC investments

Acquisitions in € million

1 Sum of annualized sales contributions

2012 2013 2014 2015 2016 2017 2018

94 29

1,697

354

3,866

1,818

428


43May 2019

Acquisitions remain integral part of strategy~€ 400 m invested in 2018

▪ Adhesive TechnologiesExpanded footprint in Emerging Markets

▪ Beauty CareSuccessfully integrated Hair Professional acquisitions

▪ Laundry & Home CarePosition in North America further strengthened

▪ Venture CapitalStrengthening digital and technological expertise by investments in start-ups and VC funds


44

Continuously increasing dividend

May 2019

▪ Consistent dividend policy based on strong earnings and cash flow profile

▪ More than € 4 bn paid out since 2012 via dividends

▪ Continuous increase of payout with 2018 dividend almost twice as high as 2012

▪ Increase of target dividend payout range from 25 - 35% to 30 - 40% from fiscal 2019

2012 2013 2014 2015 2016 2017 2018

0.95

1.22 1.311.47

1.621.79

Dividend per preferred share in €, payout ratio in %

CAGR 2012-201811.7%

1.85

25.6%

30.0% 30.0% 30.2% 30.3% 30.7% 30.9%


45

Consistent capital allocation

May 2019

Investments

▪ Asset-light business model with

2/3 of investments in growth

▪ CapEx ~40% up to around € 3 bn in

strategic cycle 2017-20

Acquisitions

▪ Strong track record in value

accretive M&A and integration

▪ M&A remains integral part of

Henkel’s strategy

Dividends

▪ Consistent dividend policy based

on strong earnings and FCF profile

▪ Continuous increase of dividend

pay-out in past years


46May 2019

▪ Adj. Economic Value Added (EVA) increased

to ~ € 2 bn in 2018

▪ Expansion of Capital Employed mainly driven by

accelerated M&A activity

▪ Strong focus on sustainable profitable growth and

M&A integration with full realization of synergies

Strong value creationEVA expansion driven by value-accretive M&A and strong operating performance

Adj. ROCE in %Capital employed in € bn Adj. EVA1 in € bn

1 Calculated based on Henkel Group WACC

2013 2014 2015 2016 2017 2018

22.6% 22.0% 20.1% 20.0% 18.3% 17.4%

11.1 11.8

14.515.9

18.9

1.6 1.6 1.71.9

2.0 1.9

20.1


47






Agenda


Adhesive Technologies

49May 2019

Packaging & Consumer

Goods (31%)

Transport & Metal

(24%)

General Industry

(15%)

Electronics

(11%)

Industrial

Electronic devices,

consumer and industrial

#1

Industrial manufacturing,

maintenance & repair

#1

Automotive, aerospace,

metal industries

#1

Consumer goods,

packaging, furniture

#1

Consumer, Craftsmen

and Building (19%)

#3

Building & construction,

DIY, stationery, repair

Consumer

Note: % share in 2018 business unit sales

Adhesive TechnologiesGlobal leader in high-impact solutions in Adhesives, Sealants & Functional Coatings


50May 2019

Adhesive TechnologiesProven track record of sustainable profitable growth

Key developments Profitable growth path

▪ Strong organic sales growth driven by all

business areas

▪ Superior customer value and economies of scale

▪ Active portfolio management and disciplined

capital allocation

▪ Continuous and sustainable margin improvement

8.1 8.19.0 9.0

9.4 9.4

16.9% 17.2% 17.1%

18.2%18.5% 18.7%

2013 2014 2015 2016 2017 2018

Sales

€ bn

OSG %

Adj.

EBIT %

+5.0%+2.8%+2.4%+3.7%+2.7% +4.0%


51

Market and competitionLeading position through broad technology & product portfolio

May 2019

Global market leadership

▪ Highly specialized and fragmented

market with ~50 segments

▪ Henkel with ~14% global market

share the only player present across all segments

Strong performance

▪ Industrial Production Index (IPX)

as key market indicator

▪ Strong business performance with

consistently good OSG over the past years

Competitive advantage

▪ Global delivery of highest quality

and performance

▪ Technology and application

know-how

~€65 bnmarket

OSG (%)

IPX (%)

2012 2013 2014 2015 2016 2017 2018


52

Key success factors for profitable growthHigh-impact solution provider

May 2019

▪ >130,000 customers across

broad range of industries

▪ Create value for our customers

and establish partnerships

▪ Digitalize customer touch-points

▪ Develop innovations and customized

solutions

▪ Broadest portfolio of 40 technologies

& manufacturing network of 141 sites

▪ Bringing know-how to our customers

with >6,500 experts

▪ Truly global footprint, active in

more than 150 countries

▪ Winning combination of best-in-

class service & leading technologies

▪ Global R&D and manufacturing

capabilities on all continents

Through customer proximity,… …broadest expertise and… …global scale…


53

Key success factors for profitable growthHigh-impact solution provider

May 2019

▪ 5 business areas with 26 market

focused steering units

▪ Ongoing optimization towards

solution-oriented business model

▪ Broad geographical & industry

coverage

▪ Flexible cost structures (e.g.

Shared Service Centers) according

to market requirements

▪ High-impact solutions drive

customers’ product performance

but represent low share of cost

▪ Material cost increases are passed

on to customers over time

…to resilient structures and……viaactiveportfoliomanagement1… …superior pricing1

1 Illustrative Henkel Roadshow Presentation

54

Global coverage through state-of-

the-art innovation centersIndustry insights through strong and

unique customer base

Driving GrowthCreating value through transformative solutions

May 2019

Foundation

Industry trends

Customized solutions

People Technologies Applications Footprint Digitalization

Mobility Connectivity Sustainability Conscious lifestyle Mass personalization


55

Adhesive TechnologiesWell positioned to deliver sustainable profitable growth

▪ Strong portfolio with leading positions across industries,

regions and technologies

▪ Proven track record to adapt resource allocation to capture

best opportunities

▪ Superior value to our customers through high-impact

solutions

▪ High-touch business model, driven by customer insights and

deep technology/ application expertise

▪ Capture growth by leveraging megatrends such as

connectivity, e-mobility or sustainability

▪ Unique, scalable platform to expand into new segmentsMay 2019Henkel Roadshow Presentation

Beauty Care

57May 2019

Beauty CareLeading market positions in active markets

Hair Professional 26% Hair Retail 47% Body Care 23% Skin / Oral 4%

Professional Retail

Note: % share in 2018 business unit sales

#3 globally

#2 North America

Salon, Color, Care, Styling Hair Color, Care, Styling Soaps, Shower, Deo Face, Mouthwash

#1 Styling Europe

#2 Coloration Europe#3 Personal Cleansing US


58May 2019

Beauty CareSteady topline improvement and strong profitability


▪ Sales growth through strong innovations and

successful integration of acquisitions

▪ Ongoing growth momentum of Professional

▪ 2018 adj. EBIT impacted by direct material prices

and promotional intensity – partly offset by fund

growth initiatives

▪ Strategic growth priorities focus on strong

innovations and targeted investments into core

portfolio

3.5 3.53.8 3.8 3.9 4.0

15.0% 15.3%15.9%

16.9%17.2% 17.1%

2013 2014 2015 2016 2017 2018

Sales

€ bn

OSG %

Adj.

EBIT %

+0.5%+2.1%+2.1%+2.0%+3.0% -0.7%


59

Market and competitionAttractive, dynamic and challenging markets

May 2019

Attractive market

▪ Largest non-food FMCG market

with more than € 400 bn

▪ Structurally high gross margins and

premiumization opportunities

▪ Long-term growth dynamics,

low cyclicality and seasonality

Consolidation &intense competition

▪ Consolidation of retailers and

manufacturers

▪ Increased price & promo pressure

especially in mature markets

▪ Small challenger brands competing

for shelf space and market share

Channel shifts

▪ Growing share of digital

investment and sales

▪ New online players

(retailers and brands)

▪ eCommerce reducing ‘offline’

basket & traffic


60

Key success factors for profitable growthStrong brands and innovations since over 120 years

May 2019

Key competence in Hair…

▪ Schwarzkopf Hair mega-brand

with > € 2 bn annual sales

▪ Global #3 in Hair Professional

thanks to strong base and

successful M&A

▪ Top Retail positions in Europe

…and strong customer focus…

▪ Leveraging category leadership

positions in brick & mortar and

eCommerce

▪ Deepening partnerships through

unique interactive customer

experience center

…leveraging innovation power

▪ In-depth consumer insights &

early identification of latest trends

▪ Leading, consumer-centric

innovations

▪ Agile organizational setup with

fast-track innovation process


61

Driving growthAcceleration of performance with strong innovation focus

May 2019

Strengthen core InnovationsExpand core

▪ Rejuvenate brand equities and

innovate on top trends

▪ Insight-driven innovation process &

multi-channel communication

▪ Clear channel focus, best-in-class

insights & strong customer proximity

▪ Disruptive new brands, technologies

and business models

▪ Enhance portfolio focusing on

key trends

▪ Leverage synergies in Retail &

Professional

▪ Top brands in new categories

(e.g. got2b Color) and countries

▪ Further leverage Professional

portfolio globally

▪ Step-change eCommerce in

Retail and Professional


62

Beauty CareStrong brands and innovations

▪ Strong long-term profitable growth and

leading positions in attractive markets worldwide

▪ Core competence in Hair Professional and Retail, Body Care

as second pillar focusing on Europe and North America

▪ Comprehensive innovation plan addressing key trends and

targeting new consumers

▪ Fast integration of value-adding acquisitions


Laundry & Home Care

64

#1 Europe #2 North America #3 Global

Home Care SpecialtiesDishwashingLaundry Specialties

May 2019

Heavy Duty Detergents

Laundry Care (73%) Home Care (27%)

Premium, Mid-Tier,

Value for Money

Special Detergents, Fabric

Finishers, Laundry Additives

Hand Dishwashing

Automatic Dishwashing

Surface Cleaners, Toilet Care,

Air Care & Insect Control

Laundry & Home CareLeading market positions in active markets

Note: % share in 2018 business unit sales Henkel Roadshow Presentation

65May 2019

Laundry & Home CareProven track record of sustainable profitable growth


▪ Good organic sales growth in 2018

▪ Growth driven by Middle East / Africa and

Eastern Europe as well as successful innovations

▪ Adj. EBIT margin significantly improved

▪ Substantial efficiency measures implemented

4.6 4.65.1

5.8

6.7 6.4

15.6%16.2%

17.1% 17.3%17.6%

18.1%

2013 2014 2015 2016 2017 2018

Sales

€ bn

OSG %

Adj.

EBIT %

+2.0%+4.7%+4.9%+4.6%+5.7% +1.9%


66

Market and competitionDynamic market environment with intense competition

May 2019

Attractive market

▪ Huge market of ~€ 131 bn, growing

but at a lower pace

▪ Potential to grow via penetration

and consumption in EM and MM

▪ Innovations as strong lever to fuel

growth

Competitive / pricing pressures

▪ Intense competition between global

players; growing local players in EM

▪ High trade and promotion pressure

in many countries

▪ Increase of discounters, smaller

store formats and drugstores

Emerging digital channels

▪ Online channels growing fast but still

small in our markets

▪ Convergence of online and offline

channels

▪ Industry transformation e.g. through

services and advanced machines


67

Key success factors for profitable growthMoving ahead of competition

May 2019

Unique coverage…

▪ Present in 11 out of 12 categories

of LHC market

▪ Leading positions in active markets

with >70 #1 positions globally

…with strong brands and…

▪ Well-known brands with strong

equity (Top 10: 65% of sales in 2018)

▪ Unique position in growing retailer

brands business in North America

…agile & “Glocal” model

▪ Platform innovations regionally

adapted and locally implemented

▪ Strong shopper insights to

strengthen innovation power and

customer relationships

Global

Local

Regional


68

Driving growthStrengthen leading positions and expand into new businesses

May 2019

Drive penetration and loyalty

▪ Educate, generate trial and initiate

re-purchase

▪ Strengthen core and drive

complementary categories via

strong innovations

Strengthen footprint

▪ Reinforce leadership in MM and

strengthen positions in EM

▪ ‘Smart’ entry into new geographies

and white spots

Innovations

▪ Enhance portfolio focusing on

key trends

▪ Grow via expansion of laundry

services as well as in digital / IoT


69

Laundry & Home CareLeading brands around the world

▪ Strong financial track record and clear initiatives for

profitable growth going forward

▪ Challenging market environment, but major

opportunities due to significant transformation

▪ Unique category / country coverage, strong brands and

agile “Glocal” approach as key success factors

▪ Targeted innovations addressing strategic search fields

to drive future growth

▪ Clear action plan to leverage digital opportunities


70






Agenda


71

Henkel – a compelling investment

May 2019

▪ Strong foundation based on a well-balanced portfolio with distinct competitive advantages

▪ Global leader in brands and technologies, leveraging growth opportunities in attractive markets

▪ Strong and consistent financial performance

▪ Strong progress in the implementation of our strategic priorities 2020+

▪ Committed to long-term sustainable value creation and attractive returns


Back-up

73

Adaptation of our structures to the market


0 +2+57736

-0.4%

795-5.6%

Reported EBIT Q1/2019

Adjusted EBIT Q1/2019

One-time gains One-time charges Restructuring expenses

in € m, change in %

Focus of restructuring measures in Q1 2019 on adapting go-to-market approach and optimizing structures

Restructuring expenses of € 200 – 250 m expected in FY 2019

74May 2019

FY 2019: Additional input for selected KPIs

1 versus the prior year

Currency Impact on Sales Low single digit % negative1

Prices for Direct Materials Low single digit % increase1

Restructuring Charges € 200 - 250 m

CapEx € 750 - 850 m



New IFRS 16 Leases StandardP&L impact from first-time application

Impact on Q1/19 results Estimated Full Year 2019 impact

Sales No impact No impact

Operating expense +€37 m Low triple-digit €m decrease

EBITDA +€37 m Low triple-digit €m increase

D&A -€33 m Low triple-digit €m increase

Operating profit (EBIT) +€4 m High single-digit to low double-digit €m increase

EBIT Margin No material impact No material impact

Financial result -€4 m High single-digit to low double-digit €m decrease

Net income No material impact No material impact

76May 2019

Adhesive TechnologiesTop Brands, Sales 2018

~€ 0.9 bn~€ 1.6 bn~€ 3.1 bn

Top 10 brands: >80% of total Adhesive Technologies sales


77May 2019

Adhesive TechnologiesKey Competitors


http://www.sika.com/

http://www.hbfuller.com/

78May 2019

Beauty CareTop Brands, Sales 2018

Top 10 brands: 90% of total Beauty Care sales

~€ 0.3 bn~€ 0.3 bn~€ 2.0 bn


//upload.wikimedia.org/wikipedia/de/2/2a/Schwarzkopf_(Haarkosmetik)_logo.svg

79May 2019

Beauty CareLarge Customers


80May 2019

Beauty CareMain Competitors


81May 2019

Laundry & Home CareTop Brands, Sales 2018

Top 10 brand clusters: ~65% of total Laundry & Home Care sales

~€ 0.3 bn~€ 0.4 bn~€ 1.3 bn


82May 2019

Laundry & Home CareLarge Customers


83May 2019

Laundry & Home CareMain Competitors


84May 2019

Management StructureHenkel AG & Co. KGaA

Henkel

Management AG

▪ AG as sole personally liable partner

▪ Management of the businesses of Henkel AG & Co. KGaA

Shareholders’

Committee (KGaA)

▪ Approval of significant corporate actions, strategy

▪ Appointment of Management Board (indirect via Supervisory Board AG)

Supervisory Board

(KGaA)

▪ Supervision of management

▪ Appointing the statutory auditor

Annual General

Meeting (KGaA)

▪ Approval of the financial statements

▪ Decision about the dividendHenkel Roadshow Presentation

85May 2019

Management BoardHans Van Bylen

Chief Executive Officer (CEO)

Jan-Dirk Auris Adhesive Technologies

Carsten Knobel Finance (CFO), Purchasing & IBS

Jens-Martin SchwärzlerBeauty Care

Sylvie NicolHR & Infrastructure Services

Bruno PiacenzaLaundry & Home Care

Born 1961,

with Henkel

since 1984,

Member of

Board since

2005

Born 1968,

with Henkel

since 1984,

Member of

Board since

2011

Born 1969,

with Henkel

since 1995,

Member of

Board since

2012

Born 1973,

with Henkel

since 1996,

Member of

Board since

2019

Born 1963,

with Henkel

since 1992,

Member of

Board since

2017

Born 1965,

with Henkel

since 1990,

Member of

Board since

2011


86

Bonus (key financials )


Long-term incentive (LTI)Proportion of target remuneration: around 23%Cap: max. 150% of the target amount

Variable annual cash remuneration (STI)Proportion of target remuneration: around 56%Cap: max. 150% of the target amount

Fixed remunerationProportion of target remuneration: around 21%

Long-term variable

cash remuneration

Short-term variable

cash remuneration

(65% STI)

Share deferral

(35% STI)

Non-performance-related componentsPerformance-related components, short-termPerformance-related components, long-term

Management Board RemunerationComponents and calculation

50% target achievement

Organic Sales Growth

50% target achievementIncrease in adj. EPS

(preferred)

Multiplier forindividual

performance0.8 - 1.2

+ x Functional Factor1

0.9 - 1.75x

LTI calculation based on ROCEThree-year average return on capital employed (ROCE)

Target achievement

Year 2

Target achievement

Year 3+ : Functional Factor1

0.9 - 1.75x

STI calculation based on OSG and adj. EPS

Target achievement

Year 13+

1 The functional factor differs according to area of responsibility

87

▪ July 02, 2019 Investor & Analyst Day Adhesive Technologies

▪ August 13, 2019 Q2 2019 Earnings Release

▪ November 14, 2019 Q3 2019 Earnings Release &

Investor & Analyst Day Consumer Businesses

▪ March 05, 2020 FY 2019 Earnings Release

▪ April 20, 2020 Annual General Meeting

Upcoming Events


88May 2019

Contact Investor RelationsHenkel AG & Co. KGaA

Investor Relations

Henkelstrasse 67

40589 Düsseldorf

Germany

www.henkel.com/ir

Phone: +49-211-797-3937

Fax: +49-211-798-2863

E-mail: [email protected]

From left to right: Lars Korinth,

Andrea Haschke, Ines Göldner,

Dorothee Brinkmann, Mona Niermann,

Steffen Nix


Documents

Henkel Roadshow Presentation 2019 - Seeking Alpha