News Release Henkel to acquire Sun Products Corporation from Vestar Capital Partners

202 Pages·2017·7.29 MB·English

ANNUAL
REPORT
2021
Henkel Annual Report 2021 1

The Company Consolidated financial statements
Contents
2 Fiscal 2021 at a glance 176 Consolidated statement of financial position
6 What drives us 178 Consolidated statement of income
7 Foreword 179 Consolidated statement of comprehensive income
15 Report of the Supervisory Board 180 Consolidated statement of changes in equity
26 Our Management Board 181 Consolidated statement of cash flows
28 Shaping our future 183 Notes to the consolidated financial statements
299 Subsequent events
29 Shares and bonds 300 Recommendation for the approval of the annual
financial statements and the appropriation of the
Corporate governance profit of Henkel AG & Co. KGaA
39 Takeover-relevant information 301 Corporate bodies of Henkel AG & Co. KGaA
44 Corporate governance statement
Further information
Combined management report 306 Independent Auditor’s Report
72 Fundamental principles of the Group 317 Responsibility statement
86 Economic report 318 Quarterly breakdown of sales
142 Henkel AG & Co. KGaA 319 Multi-year summary
(condensed version according to the German
321 Glossary
Commercial Code [HGB])
325 Credits
149 Risks and opportunities report
326 Contacts
170 Forecast
326 Financial calendar

Note: All individual figures in this report have been commercially rounded. Addition may result in deviations from the totals indicated.
Henkel Annual Report 2021 2

Organic
The Company Fiscal 2021 at a glance
sales growth
Shares and bonds
7.8
Corporate governance %
Key financials
Combined management report
+/-
Consolidated financial statements in million euros 2017 2018 2019 2020 2021 2020–2021 Adjusted1
Sales 20,029 19,899 20,114 19,250 20,066 4.2% EBIT margin
Further information Operating profit (EBIT) 3,055 3,116 2,899 2,019 2,213 9.6%
Adjusted1 operating profit (adjusted EBIT) 3,461 3,496 3,220 2,579 2,686 4.2% 13.4
Credits Return on sales (EBIT margin) 15.3% 15.7% 14.4% 10.5% 11.0% 0.5pp %
Adjusted1 return on sales (adjusted EBIT margin) 17.3% 17.6% 16.0% 13.4% 13.4% 0.0pp
Contacts Net income 2,541 2,330 2,103 1,424 1,629 14.5%
Attributable to non-controlling interests 22 16 18 16 -5 –
Financial calendar Attributable to shareholders of
Adjusted1
Henkel AG & Co. KGaA 2,519 2,314 2,085 1,408 1,634 16.1%
EPS
Earnings per preferred share (EPS) in euros 5.81 5.34 4.81 3.25 3.78 16.3%
Adjusted1 earnings per preferred share
(adjusted EPS) in euros 5.85 6.01 5.43 4.26 4.56 7.0% 4.56
Return on capital employed (ROCE) 16.3% 15.5% 13.5% 9.6% 11.0% 1.4pp €
Dividend per ordinary share in euros 1.77 1.83 1.83 1.83 1.832 –
Dividend per preferred share in euros 1.79 1.85 1.85 1.85 1.852 –
pp = percentage points
Development of adjusted1
EPS at constant exchange
Sales by business unit 2021 Sales by region 2021
rates
1% Adhesive Technologies 3%1% Emerging markets⁴ 9.2
Beauty Care Western Europe %
33% Laundry & Home Care 25% North America
Corporate³ 41% Japan/Australia/
48% New Zealand
Dividend per preferred
Corporate
share2
18% 30% 1.85
€
3 Umsätze u3n dU Lmesisättuzne guennd, dLeieis ntuicnhgte dne, nd iUen ntiecrhnte dhemne Unnsbteerrneeichhmene nzsubgeeroeridchneent wzuegrdeeonrd knöent nweenr.den können.
4 Osteuropa4, A Ofrsitkeau/rNoaphao, Astf,r Likaat/eNinaahmoestr,i kLaa,t eAisnieamn (eorhiknae, AJaspieann )(.ohne Japan).
1 Adjusted for one-time expenses and income, and for restructuring expenses.
2 Proposal to shareholders for the Annual General Meeting on April 4, 2022.
3 Sales and services not assignable to the individual business units.
4 Eastern Europe, Africa/Middle East, Latin America, Asia (excluding Japan).
Henkel Annual Report 2021 3
Our top brands
The Company Adhesive Technologies
Shares and bonds
Corporate governance
Key financials
Combined management report
in million euros 2020 2021 +/-
Consolidated financial statements
Sales 8,684 9,641 11.0%
Proportion of Henkel sales 45% 48% –
Further information Operating profit (EBIT) 1,248 1,524 22.2%
Adjusted1 operating profit (adjusted EBIT) 1,320 1,561 18.2%
Credits Return on sales (EBIT margin) 14.4% 15.8% 1.4pp
Adjusted1 return on sales (adjusted EBIT margin) 15.2% 16.2% 1.0pp
Contacts Return on capital employed (ROCE) 13.4% 17.2% 3.8pp
Economic Value Added (EVA®) 410 747 82.1%
Financial calendar
1 Adjusted for one-time expenses and income, and for restructuring expenses.
pp = percentage points
Sales Adhesive Technologies
in million euros
2017 9,387
Organic sales growth 2018 9,403
2019 9,461
13.4
2020 8,684
%
2021 9,641
0 2,000 4,000 6,000 8,000 10,000
Henkel Annual Report 2021 4
Our top brands
The Company Beauty Care
Shares and bonds
Corporate governance
Key financials
Combined management report
in million euros 2020 2021 +/-
Consolidated financial statements
Sales 3,752 3,678 -2.0%
Proportion of Henkel sales 19% 18% –
Further information Operating profit (EBIT) 246 77 -68.8%
Adjusted1 operating profit (adjusted EBIT) 377 351 -6.9%
Credits Return on sales (EBIT margin) 6.6% 2.1% -4.5pp
Adjusted1 return on sales (adjusted EBIT margin) 10.0% 9.5% -0.5pp
Contacts Return on capital employed (ROCE) 6.2% 1.8% -4.4pp
Economic Value Added (EVA®) -47 -208 –
Financial calendar
1 Adjusted for one-time expenses and income, and for restructuring expenses.
pp = percentage points
Sales Beauty Care
in million euros
2017 3,868
Organic sales growth 2018 3,950
2019 3,877
1.4
2020 3,752
%
2021 3,678
0 2,000 4,000
Henkel Annual Report 2021 5
Our top brands
The Company Laundry & Home Care
Shares and bonds
Corporate governance
Key financials
Combined management report
in million euros 2020 2021 +/-
Consolidated financial statements
Sales 6,704 6,605 -1.5%
Proportion of Henkel sales 35% 33% –
Further information Operating profit (EBIT) 688 797 15.9%
Adjusted1 operating profit (adjusted EBIT) 1,004 904 -10.0%
Credits Return on sales (EBIT margin) 10.3% 12.1% 1.8pp
Adjusted1 return on sales (adjusted EBIT margin) 15.0% 13.7% -1.3pp
Contacts Return on capital employed (ROCE) 9.3% 11.4% 2.2pp
Economic Value Added (EVA®) 150 326 >100%
Financial calendar
1 Adjusted for one-time expenses and income, and for restructuring expenses.
pp = percentage points
Sales Laundry & Home Care
in million euros
2017 6,651
Organic sales growth 2018 6,419
2019 6,656
3.9
2020 6,704
%
2021 6,605
0 2,000 4,000 6,000 8,000
Henkel Annual Report 2021 6

The Company What drives us
Shares and bonds
Corporate governance
Our purpose Our values
Combined management report
Pioneers at heart for the good We put our customers and consumers at the center
Consolidated financial statements
of generations. of what we do.
Further information
We value, challenge and reward our people.
Credits
Our vision We drive excellent sustainable financial
Contacts performance.
Win the 20s by outperforming the markets
Financial calendar We are committed to leadership in sustainability.
through innovative and sustainable solutions.
We shape our future with a strong entrepreneurial
spirit based on our family business tradition.
Henkel Annual Report 2021 7

The Company “We will introduce
Shares and bonds important changes in 2022
Corporate governance
to strengthen our com-
Combined management report
petitiveness and deliver
Consolidated financial statements
sustainable profitable
Further information
Credits growth going forward.”
Contacts
Financial calendar CARSTEN KNOBEL
CHAIRMAN OF THE MANAGEMENT BOARD
The COVID-19 pandemic has profoundly changed our lives over the past two years. We had all hoped that we
might see a greater degree of normality by now. However, at the start of 2022, COVID-19 still affects the way we
live and work. In many countries, infection rates have again soared. At the same time, vaccination and booster
campaigns are under way and there is reason to hope that we might finally return to a more normal life.
Our highest priority has been and will always be clear: to lead our teams and our company safely through the
crisis. Throughout the pandemic, we have done everything possible to ensure the safety and wellbeing of more
than 52,000 Henkel colleagues, as well as to protect their jobs and incomes.
Henkel Annual Report 2021 8

In 2021, we once again navigated Henkel through a year with many unpredicted challenges, which has only been
The Company
possible thanks to the unwavering commitment shown by our people around the world. Together, as a strong
Shares and bonds global team, we managed to advance our Purposeful Growth agenda – even in these challenging times. I would
like to thank all Henkel employees for their resilience and tireless efforts – particularly those who keep our pro-
Corporate governance
duction and business-critical processes running on site, as well as those who have had to work off-site or
from their homes during the pandemic. They have all gone above and beyond to ensure our business continuity
Combined management report
while following our precautionary measures. Every day, our strong team spirit and company culture make me
Consolidated financial statements proud and confident for our future.
Further information Good business performance in 2021
Overall, we delivered a good business performance in 2021. We recorded organic growth across all business
Credits
units, kept our margin stable and achieved a significant increase in earnings per preferred share – despite a very
challenging business environment with unprecedented disruptions in global supply chains, a shortage of raw
Contacts
materials, and exceptionally strong material price increases.
Financial calendar
Henkel Group sales in fiscal 2021 rose to 20,066 million euros. This corresponds to an organic sales growth of
7.8 percent versus 2020. A significant recovery in demand in the industrial and hair salon businesses had a
particularly positive effect. In the consumer goods business, demand in many categories returned to more normal
patterns compared to the previous year, when demand was particularly strong for hygiene and cleaning products as
well as hair colorants and less strong for styling products. At the same time, the impact of significantly higher
raw material and logistics prices and currency effects weighed on profitability.
Thanks to significantly increased sales volumes, successful price increases, active cost management and ongoing
structural adjustments, we were able to more than offset the impact of the crisis on our earnings. Adjusted1
earnings before interest and taxes (EBIT) grew by 4.2 percent to 2.7 billion euros. Adjusted1 return on sales
(EBIT margin) was unchanged year on year at 13.4 percent. And adjusted1 earnings per preferred share (EPS)
rose to 4.56 euros, marking a significant improvement of 9.2 percent at constant exchange rates.
1 Adjusted for one-time expenses and income, and for restructuring expenses.
Henkel Annual Report 2021 9

The performance of our business units was affected by a range of factors in 2021. Sales of our Adhesive Technologies
The Company
business unit increased to 9,641 million euros, reflecting double-digit organic sales growth of 13.4 percent,
Shares and bonds driven primarily by the global economic recovery and a significant increase in demand from key customer indus-
tries. Adjusted1 return on sales (EBIT margin) for Adhesive Technologies amounted to 16.2 percent. Beauty Care
Corporate governance
recorded sales of 3,678 million euros and organic growth of 1.4 percent. While the recovery in the Professional
business area had a positive effect following the closures imposed in the first waves of the pandemic, Beauty
Combined management report
Care’s consumer business area was impacted in particular by a normalization of demand – after strong increases in
Consolidated financial statements the previous year – in the body care category, causing a decline in performance. Adjusted1 return on sales for
Beauty Care was 9.5 percent. In Laundry & Home Care, sales grew to 6,605 million euros, with both business areas
Further information
delivering a strong performance. The organic growth rate was 3.9 percent. Adjusted1 return on sales (EBIT margin)
for Laundry & Home Care amounted to 13.7 percent.
Credits
Contacts The net financial position of Henkel improved significantly in the course of 2021, mainly due to the good free
cash flow. At the end of 2021, net debt amounted to 292 million euros compared to 888 million euros at the end
Financial calendar of 2020.
Henkel shares declined overall in fiscal 2021. The preferred share closed at 71.14 euros, significantly below the
previous year and the DAX performance. The ordinary shares closed the year at 68.70 euros. This is clearly not in
line with our own ambitions as a management team and your expectations as our shareholders. We are con-
vinced that we can – and must – generate more value for our shareholders going forward. We will therefore ini-
tiate a range of far-reaching measures in 2022 to underpin our commitment and deliver on our ambitions.
At the Annual General Meeting on April 4, 2022, we will propose to our shareholders a stable dividend of
1.85 euros per preferred share and 1.83 euros per ordinary share. This represents a payout ratio of 40.5 percent
and is thus slightly above our target range of 30 to 40 percent of adjusted1 net income after non-controlling
interests.
1 Adjusted for one-time expenses and income, and for restructuring expenses.