Strategy Laundry & Home Care - · PDF fileStrategy Laundry & Home Care Friedrich Stara...

Strategy Laundry & Home Care

Friedrich StaraExecutive Vice President

Laundry & Home Care Investors and Analysts DayDuesseldorf, September 2, 2009

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This information contains forward-looking statements which are based on current estimates and assumptions made by the corporate management 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.

Disclaimer

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Agenda

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The Laundry & Home Care Market

Henkel Laundry & Home Care

Key Data

Laundry & Home Care Strategy

Outlook

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World 2008: 86 bn€

Laundry & Home Care Market 2008

52% 48%

Laundry Care 45 bn€

• Fabric detergents 35 bn€

• Fabric softener 6 bn€

• Laundry additives 4 bn€

Home Care 41 bn€

• Surface cleaning 13 bn€• Dishwashing 9 bn€• Toilet care 3 bn€• Air care 5 bn€• Insecticides 5 bn€• Rest 6 bn€

Source: Euromonitor 2009

The Laundry & Home Care Market 1 2 3 4 5

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Source: Euromonitor 2009; ( ) Relevance of the regions within the world

The Laundry & Home Care MarketWorld Market 2008

1 2 3 4 5

Market worldwide: 86 bn€

North AmericaMarket: 15.3 bn€ (18%)

Western Europe Market: 25.1 bn€ (29%)

Eastern EuropeMarket: 7.6 bn€ (9%)

Latin America Market: 13.3 bn€ (15%)

Middle East / Africa Market: 4.9 bn€ (6%)

Asia Pacific / Austr.Market: 20.3 bn€ (23%)

The Laundry & Home Care Market

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Source: Euromonitor 2009

The Laundry & Home Care Market 2008Global Market Shares in % – Top 10

Henkel #4 competitor within global Laundry & Home Care marketHenkel is active in ~ 60% of global Laundry & Home Care market

1 2 3 4 5

19.0

10.48.9

7.0 6.4

3.62.1 1.8 1.7 1.4

P&G

Unilever

ReckittBenckiser

Henkel

SC Johnson

Colgate

Kao

Clorox

Sara Lee

Lion Corp.

The Laundry & Home Care Market

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Global No. 2 in Active Markets

GERMANY # 1

EUROPE # 2

WORLD # 2

• Henkel covers ~60% of Laundry & Home Care market

Source: GfK/IRI, Nielsen

Strong global presence1 2 3 4 5 The Laundry & Home Care Market

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Performance in Active MarketsMarket Leader in Germany

33.634.1

15.615.9

6.0

9.8 10.1

4.74.3

2006 2007 2008 1–6 / 09

4.7

Henkel with dominant market leadership position1 2 3 4 5

Competitor A

Henkel

Competitor CCompetitor BCompetitor D

The Laundry & Home Care Market

Source: GfK/IRI, Nielsen, May/June 2009

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Performance in Active MarketsCo-Leader in Europe

21.6 22.1

23.4 22.4

11.1 10.7

10.5

4.9 4.3

2006 2007 2008 1–6 / 09

9.9

Henkel achieved co-leadership1 2 3 4 5

Competitor AHenkel

Competitor CCompetitor B

Competitor D

The Laundry & Home Care Market

Source: GfK/IRI, Nielsen, May/June 2009

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Performance in Active MarketsGlobal No. 2

16.9 17.4

33.0 31.6

11.48.2

7.47.2

3.64.2

2006 2007 2008 1–6 / 09

Source: GfK/IRI, Nielsen, May/June 2009

Henkel outpaces peers1 2 3 4 5

Competitor A

Henkel

Competitor CCompetitor B

Competitor D

The Laundry & Home Care Market

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Performance in Active MarketsGlobal Market Position

1 2 3 4 5 The Laundry & Home Care Market

17.2 17.6

8.0 8.3

30.832.4

7.47.33.6 3.6

JF 09 MA 09 MJ 09

In 2009 best development amongst peers

Competitor A

Henkel

Competitor CCompetitor B

Competitor D

Source: GfK/IRI, Nielsen, May/June 2009

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Agenda

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2

3

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The Laundry & Home Care Market

Henkel Laundry & Home Care

Key Data

Laundry & Home Care Strategy

Outlook

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Laundry & Home Care within HenkelSales and EBIT 2008

Sales share 2008 (4,172 m€) EBIT share 2008* (439 m€)

Laundry & Home Care accounts for ~1/3 of Henkel´s sales & EBIT

Laundry & Home Care

Cosmetics / Toiletries

Corporate

30%

21%

2%

Adhesive Technologies

47%

* Without corporate

Laundry & Home Care

Cosmetics / Toiletries

Adhesive Technologies

30%

25%

45%

Henkel Laundry & Home Care1 2 3 4 5

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Significantly Strengthened Global PresenceSales by Region

2000 2008

Emerging markets share already 40%1 2 3 4 5

4%

45%

24%

15%

9%3%

2%

71%

14%

8%5%

Asia-PacificLatin America

Asia-PacificLatin America

WesternEurope

EasternEurope

MENA

WesternEurope

EasternEurope

North-America

MENA

Henkel Laundry & Home Care

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Business Segments

Laundry &Home Care

69 % Laundry Care

31 % Home Care

1 2 3 4 5 Henkel Laundry & Home Care

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Agenda

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2

3

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The Laundry & Home Care Market

Henkel Laundry & Home Care

Key Data

Laundry & Home Care Strategy

Outlook

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Organic Sales Growth Development

05-07: Excellent development08-09: Outperforming the market in a challenging environment

4.6%

3.0%

5.5%

-0.7%

6.3%

1.2%

2.2%

0.4%

3.8%

2002 2003 2004 2005 2006 2007 2008 Q1 09 Q2 09

1 2 3 4 5 Key Data

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EBIT Margin Development

05-08: Positive development despite strong input cost head wind2009: Continuation of positive development

1 2 3 4 65 Key Data

8.5%

9.3% 9.7%

10.6%10.9%

11.1%

10.5% 10.6%

11.2%

2002 2003 2004 2005 2006 2007 2008 Q1 09 Q2 09

*

*

* incl. goodwill amortization

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Positive organic sales development despite global economic downturnExcellent EBIT development

Successful H1 2009

Sales (m€) (OSG in %)

EBIT margin (%)

EBIT (m€)

10.9%

2,071

H1 2009

226

H1 2008

+ 1.5% pp

Change

(+3.3%)

+ 21.4% (fx-adj.)

+ 1.3%2,043

192

9.4%

1 2 3 4 5 Key Data

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Success Factors H1 2009

Right measures implemented back in 2008 in responseto input cost increase:• Price increases based on strong brands / innovation /

pricing power

• Increased investments behind strong brands

• Fundamental restructuring successfully implemented

1 2 3 4 5 Key Data

Relief from decreasing input costs offset byunfavorable FX development

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Agenda

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The Laundry & Home Care Market

Henkel Laundry & Home Care

Key Data

Laundry & Home Care Strategy

Outlook

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Five Pillar Strategy for Profitable Growth

Successfully established 2005Sharpened for challenging environment 2008Foundation for achieving targets 2012

Laundry & Home Care Strategy1 2 3 4 5

Innovation Leadership

Portfolio Steering Category / Region

Customer Focus

Cost Focus

Brand Equity

People / Mission based Management

People / Mission based Management

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4

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Brand Equity

Target• Leverage 130 years experience in brand building to

strengthen consumer loyalty / trust and to assure further growth

Key Measures1. Leading global brand equity clusters2. Leverage synergies with intelligent branding3. Increased brand support4. Improved marketing efficiency (Neuromarketing) 5. DNA advantage: Performance based on sustainability

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1 2 3 4 5

Brand equity building fostered by innovation

Laundry & Home Care Strategy

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Innovation Leadership

Target• Be the recognized leader in market-relevant innovation

Key AreasInnovation with focus on:1. Basic needs / better performance

2. Additional / combined benefits

3. “A little affordable luxury“

2

1 2 3 4 5 Laundry & Home Care Strategy

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Portfolio Steering

Profitable growth balance

Categories• Mass• Specialty

Regions• Developed• Developing

3

1 2 3 4 5 Laundry & Home Care Strategy

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Portfolio Steering Profitable Growth Balance in Categories

3

1 2 3 4 5

Mass Categories main driver for margin improvementLaundry & Home Care Strategy

• Exit marginal positions (Food, Private Label)

Specialty categories - Drive growthGeographical roll-out(40% of portfolio)

Mass categories - Drive marginsPush InnovationPrice increasesSynergies through brand clusters

(60% of portfolio)

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Transfer to Middle East/Africa

Developed regions - Drive growthKey means: Blockbuster Innovation

Developing regions - Drive margins

Portfolio SteeringProfitable Growth Balance in Regions

3

1 2 3 4 5

Developing regions main driver for margin improvementLaundry & Home Care Strategy

Role Model Eastern Europe

EBIT

Sales 195

452

100 100

2004 2005 2006 2007 2008

164

131

EBIT

Sales100

• Exit marginal positions (China)

2004 2005 2006 2007 2008

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Customer Focus4

1 2 3 4 5 Laundry & Home Care Strategy

Target• We strive for best in class customer

relations to create value for the customerand for Henkel

3-Step Approach 1. Excellent relationship on operational level

(buyer/ sales) as base

2. Top-2-Top contacts to go for additional win-win solutions beyond the operative business

3. Multifunctional teams to leverage all opportunities along the entire value chain

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Cost Focus5

1 2 3 4 5

Target• Striving for best in class lean cost structure to

improve margin and increase brand investment

Key Measures …

1. Excellence in supply chain2. Excellence in purchasing3. GAIN / cost chase initiatives4. Global Excellence… leading to savings of > 250 m€ p.a. from 2012 on

Laundry & Home Care Strategy

Discipline in costs / structures Changing mind-set

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Strong Leadership Model

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Guiding framework for empowerment

• Common business understanding

• Common procedures / rules / guidelines

• Global / regional / local responsibilities

Management Standards as precondition

Laundry & Home Care Strategy

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Mission Based Management

• Empowerment • Drives entrepreneurial mind set

Strong Leadership Model

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Leads to operational excellenceLaundry & Home Care Strategy

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Agenda

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The Laundry & Home Care Market

Henkel Laundry & Home Care

Key Data

Laundry & Home Care Strategy

Outlook

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Outlook H2 2009

• Slow down of market growth

• Risk of higher raw material costs (price/FX)

• Trade pressure on prices

• Trade focus on Private Label

• Sharpened strategy

• Pricing power of our brands

• Leading Innovations

• Ramp-up Global Excellence

• Ramp-up GAIN /new initiatives

Increased competition / Fight for market positionsOutlook1 2 3 4 5

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Challenge 2009

&&

Balancing

Volume / market

positionPrice / margin

Outlook1 2 3 4 5

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Laundry & Home Care is well prepared andcommitted to reach targets 2012

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Summary

Outlook1 2 3 4 5

Five Pillar Strategy for Profitable Growth

• Enabled turnaround since 2005

• Sharpened in 2008 to meet challenge of exploding input costs

• Success factor 2009

• Foundation for future success

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Henkel is a leader with brands and technologies that make people's lives

easier, better and more beautiful.