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Strategy Laundry & Home Care
Friedrich StaraExecutive Vice President
Laundry & Home Care Investors and Analysts DayDuesseldorf, September 2, 2009
2
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
3
Agenda
1
2
3
4
5
The Laundry & Home Care Market
Henkel Laundry & Home Care
Key Data
Laundry & Home Care Strategy
Outlook
4
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
7
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
9
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
10
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
12
Agenda
1
2
3
4
5
The Laundry & Home Care Market
Henkel Laundry & Home Care
Key Data
Laundry & Home Care Strategy
Outlook
13
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
16
Agenda
1
2
3
4
5
The Laundry & Home Care Market
Henkel Laundry & Home Care
Key Data
Laundry & Home Care Strategy
Outlook
17
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
18
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
20
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
21
Agenda
1
2
3
4
5
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
3
5
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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
1
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
28
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
2929
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
1 2 3 4 5
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
1 2 3 4 5
Leads to operational excellenceLaundry & Home Care Strategy
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Agenda
1
2
3
4
5
The Laundry & Home Care Market
Henkel Laundry & Home Care
Key Data
Laundry & Home Care Strategy
Outlook
3333
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
34
Challenge 2009
&&
Balancing
Volume / market
positionPrice / margin
Outlook1 2 3 4 5
35
Laundry & Home Care is well prepared andcommitted to reach targets 2012
35
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
36
Henkel is a leader with brands and technologies that make people's lives
easier, better and more beautiful.