Henkel holds course

Düsseldorf (ots/PROTEXT) - Henkel holds its course despitethe weak economic situation. Sales in the first half-yearamounted to EUR 6.7 billion, operating profit (EBIT) was at EUR463 million and net earnings for the half-year at EUR 260million. The positive development was due to the improvedbusiness performance compared to the first quarter.

In the first half-year 2001, the Henkel Group generated salesof EUR 6.7 billion. This represents an 8.1 percent increase overthe previous year's figure (EUR 6.2 billion). Organic growthaccounted for 2.5 percent, foreign exchange factors contributed1.1 percent to the rise in sales, and a net gain fromacquisitions and divestments provided a plus of 4.5 percent. AtEUR 463 million, operating profit (EBIT) remained at last year'slevel (EUR 462 million) despite a loss of EUR 28 million causedby the devaluation of the Turkish lira. The return on capitalemployed (ROCE) was 13.3 percent. Net earnings for the half-yearamounted to EUR 260 million. This represents a 6.1 percentincrease with respect to last year (EUR 245 million). Earningsper share rose 7.6 percent to EUR 1.69 (previous year: EUR 1.57).

Regional developments

All business sectors contributed to the increase in Europeansales including Africa and the Middle East. Operating profit forthe region improved despite the economic crisis in Turkey. In theUSA and Canada, sales increased above average due to theacquisitions of Dexter (Adhesives) and Atofina (SurfaceTechnologies). The sales increase in Latin America resulted fromthe takeover of the heavy-duty detergents business of Colgate inMexico. Sales growth achieved in Asia-Pacific was due to theacquisition of Dexter and good performance from Cosmetics.

Development of business sectors

The Adhesives business sector increased sales by 10.7 percentto EUR 1.6 billion. Operating profit decreased by 16.2 percent toEUR 109 million. This decrease has a number

of causes, including the rather sluggish business situationin Germany, the crisis in Turkey, product forgeries in Brazil andthe fall in demand in Japan. Sales of consumer and craftsmenadhesives remained at the previous year's level. Pritt and theadhesive tapes business (Manco) in the USA performed well.

Sales of engineering adhesives rose 28.0 percent during thefirst half-year. This was primarily due to the acquisition of thespecialty polymers business of Dexter. There was further organicgrowth in the existing businesses in Europe and Latin America.

Industrial and packaging adhesives registered strong salesgrowth of 8.5 percent. Market share gains were achieved in NorthAmerica and Asia with respect to adhesives for the graphic artsindustry and laminating adhesives.

Sales of the business sector Cosmetics/Toiletries increasedby 7.4 percent to EUR 1.1 billion. Operating profit rose by 6.3percent to EUR 68 million. Market shares were gained in Germany,Benelux, Italy, Russia and Latin America. The Yamahatsuacquisition, in Japan, contributed 1.1 percent to the rise insales. The rise in operating profit came from very goodperformance of the businesses in Germany, Russia and Benelux.

The brand-name products business produced a 7.1 percentincrease in sales for the first half-year. Sales of haircosmetics rose by 16.3 percent.

The main growth drivers were colorants, which performedparticularly well in Japan and continued along their upwardgrowth curve in Europe. The styling and hair care segmentslikewise showed good sales growth thanks to the launch of furtherproduct lines.

Sales in body care increased by 3.0 percent. The Fa brand wasadditionally strengthened by the launch of the Wellness series.

Sales in facial care products were slightly higher than lastyear. Diadermine and Aok performed well as a result of newproduct launches.

Sales in oral care matched the level of the previous year.The innovative tube product Theramed Perfekt was successfullyintroduced in a number of European countries.

Hair Salon sales (Schwarzkopf Professional) grew 8.3 percent.

The Laundry & Home Care business sector increased sales by12.9 percent to EUR 1.5 billion in the first half-year. Operatingprofit rose by 9.4 percent to EUR 105 million. This positivedevelopment is due in particular to business performance inGermany, Italy and the Middle East.

Sales growth (23.1 percent) was mainly driven by heavy-dutydetergents, while sales in special detergents fell 1.7 percentwith respect to last year.

Household cleaners registered a sales increase of 3.1 percentand expanded their European market leadership.

Of the 6.0 percent sales increase registered in Industrialand Institutional Hygiene/Surface Technologies, 3.0 percent werecontributed by the acquisitions Atofina and Vagnone & Boeri.

Operating profit decreased by 6.3 percent to EUR 75 million.This was mainly due to price increases for raw materials(Industrial and Institutional Hygiene) and the significantdownturn in economic activitity in North America (SurfaceTechnologies).

Sales of Industrial and Institutional Hygiene increased by4.3 percent with respect to last year. Sales of SurfaceTechnologies were up 8.2 percent on the previous year.

The Chemical Products business sector, now an independentlegal entity under the name Cognis, increased sales by 4.0percent to EUR 1.5 billion. Operating profit rose by 3.6 percentto EUR 116 million.

The increase was achieved despite an appreciable downturn ineconomic activity, particularly in the USA. The rise in operatingprofit, achieved despite the restructuring program implemented inthe USA (EUR 15 million) and the negative effects of the Turkishcrisis, is particularly gratifying.

Major participations

Ecolab Inc., St. Paul, Minnesota, USA, in which Henkel holdsa participating interest of 25.3 percent, registered a growth insales of 7.3 percent to US$ 1,177 million in the first half ofthe year. Net earnings for the half-year rose 1.7 percent to US$93 million.

The Clorox Company, Oakland, California, USA, in which Henkelholds a participating interest of 26.6 percent, reported salesfor its 2000/2001 fiscal year of US$ 3,903 million, 2.2 percentdown on the previous year. At US$ 323 million, net earningsdropped by 18 percent with respect to last year.

Employees

By June 30, 2001, the Henkel Group had close to 61,000employees. The proportion of Henkel personnel working outsideGermany was 74 percent.

Major event

In June 2001, Henkel announced a worldwide employee shareprogram due to start in September. All employees of the HenkelGroup will then be able to purchase Henkel preferred shares atfavorable conditions. For every euro that an employee invests,Henkel will add another EUR 0.50. The shares must be held for aminimum of three years.

Outlook

The deterioration of the economic environment and thevolatile currency situation in certain emerging countries make aforecast difficult. In view of the economic slowdown exhibited invirtually all regions, Henkel expects the business situation forAdhesives and Industrial and Institutional Hygiene/SurfaceTechnologies to remain difficult in the second half of the year.

Henkel anticipates, however, an improvement in sales andprofits in its branded consumer businesses.

Henkel is confident of achieving a respectable increase insales for fiscal 2001 as a whole. Operating profit, net earningsfor the year and earnings per share should either reach orslightly exceed the level of the previous year.

ots Originaltext: Henkel Corporate Communications Im Internetrecherchierbar: http://www.presseportal.de Contact: HenkelCorporate Communications Ernst Primosch Fon: +49-211-797-3533Fax: +49-211-798-2484 e-mail: ernst.primosch@henkel.com LarsWitteck Fon: +49-211-797-2606 Fax: +49-211-798-4040 e-mail:lars.witteck@henkel.com Internet: www.henkel.com

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