02/27/2007, Düsseldorf and Gulph Mills, PA




Name Wulf Klüppelholz
  Corporate Communications, Financial Communications
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Name Lars Witteck
  Corporate Communications
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Name Cindy Demers
  Head Corporate Communications
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Henkel to Propose 1:3 Share Split

Today Henkel presented its Annual Report for fiscal 2006 at its press and analysts' conferences. In fiscal 2006, Henkel once again significantly exceeded its good prior-year sales and profits, with all its business sectors contributing. Henkel also announced that a higher dividend and a 1:3 share split will be proposed for approval at the Annual General Meeting to be held in April.

Today Henkel presented its Annual Report for fiscal 2006 at its press and analysts' conferences. In fiscal 2006, Henkel once again significantly exceeded its good prior-year sales and profits, with all its business sectors contributing. Henkel also announced that a higher dividend and a 1:3 share split will be proposed for approval at the Annual General Meeting to be held in April.

"Fiscal 2006 was another very successful year for Henkel, with the launch of numerous innovations and our increased involvement in the growth markets as major contributory factors," said Ulrich Lehner, Chairman of the Management Board of Henkel KGaA. "We want to continue achieving profitable growth in the future and to further expand our market positions. We also expect the merger of our adhesives and technologies businesses to generate additional growth momentum. With the share split, we want to make the Henkel shares even more attractive, particularly for individual investors."

Sales increased by 6.4 percent to 12,740 million euros, with all the business sectors and regions contributing. Organic sales growth, i.e. growth adjusted for foreign exchange and acquisitions/divestments, was a very encouraging 6.0 percent.

Operating profit (EBIT) rose by 11.7 percent to 1,298 million euros. Net earnings also strongly increased by 13.1 percent to 871 million euros. Earnings per preferred share were 5.98 euros, significantly exceeding the prior-year figure by 12.6 percent.

Free cash flow grew by 102 million euros to 786 million euros.

The Management Board, the Shareholders' Committee and the Supervisory Board will propose to the Annual General Meeting an increase in dividends from 1.36 euros to 1.50 euros per preferred share, and from 1.30 euros to 1.44 euros per ordinary share.

1:3 share split

In order to increase the liquidity and attractiveness of Henkel shares, the Annual General Meeting will also be asked to pass a resolution proposing a 1:3 share split. Henkel preferred shares are currently among the highest-priced shares in the DAX. With the share split, Henkel shares should become even more attractive, particularly to individual investors.

The split is to be conducted such that the capital stock of the company is initially increased by around 64 million euros to about 438 million euros through the conversion of capital reserves. This will mean that the proportion of the capital stock attributable to each share will be 3 euros (instead of the previous 2.56 euros). The capital stock will then be redistributed with a tripling of the previous number of shares, i.e. each previous ordinary and preferred share is to be divided into three shares, each share thereby accounting for a proportion of the capital stock equivalent to 1 euro. As no new shares are to be issued, there will be no dilution effect.

Business Sector Performance

Organic sales growth of the Laundry & Home Care business sector was a very encouraging 4.6 percent. At 4,117 million euros, total sales were 0.7 percent above the level of the previous year, despite the divestment of the Dial foods business. Operating profit increased versus prior year by 3.7 percent to 449 million euros. In Western Europe including Germany, business picked up again after a period of slower growth. The highest growth rate of all our regions was achieved in Eastern Europe. In North America, the implemented price increases, advertising for Purex, and innovations in the air freshener business led to a robust increase in sales. Growth in the laundry segment was supported in the heavy-duty detergents category by the strong development of the premium brands, particularly Persil. The European anti-gray relaunches and also the introduction of "Persil with a Touch of Vernel" contributed to this positive development. In the case of special detergents, successful Aromatherapy concepts under the fabric softener brands Vernel and Silan substantially contributed to growth. In the home care segment, dishwashing products enjoyed particular success. In Western Europe, design-oriented innovations such as the "Pril Funny Man" bottle and technological innovations as with Somat 5 were the main growth drivers. Further variants of the rim block in the "Alessi" design also contributed to the improvement in sales.

In the Cosmetics/Toiletries business sector, sales rose by 8.9 percent to 2,864 million euros. Organic sales grew by 4.1 percent compared to the previous year. Operating profit improved by 11.7 percent to 359 million euros. In Western Europe, growth in the branded consumer goods business was significantly above the market average, and double-digit rates of rise were again achieved in Eastern Europe, accompanied by further improvements in both the Middle East and Latin America. In North America, the expansion of the Dial business and the successful integration of the brands acquired from Gillette had a positive effect on results. In the hair cosmetics business, record market shares where achieved due to significant growth in sales, with major contributions coming from new product launches and line extensions among the top brands in the segments colorants, hair care and styling. The body care segment also continued to perform well. The Fa brand registered strong sales growth thanks to the innovations Fa Yogurt and Fa Asia Spa. The Dial brand further expanded its position in the North American body wash market thanks particularly to the successful introduction of the Dial for Men line. The skin care business benefited from the introduction of a new generation of anti-aging care products under the international brand Diadermine. In the oral care segment, the launch of new Theramed 2 in1 3D Clean was especially successful. In the hair salon business, the focus was on relaunches of the Igora Royal colorants and the styling brand OSiS.

Sales of the Consumer and Craftsmen Adhesives business sector rose by 13.5 percent to 1,977 million euros. Organic sales growth was 7.8 percent. Operating profit rose to 209 million euros, 13.0 percent above the prior-year figure. The main growth driver was once again Eastern Europe. Henkel's businesses in Latin America, Asia and the Middle East also performed well above average. Growth in Western Europe, on the other hand, was restrained due to prevailing market conditions. In North America, performance was influenced by declining levels of activity in housing construction. One of the priorities in the adhesives and adhesive tapes for home, school and office segment was to update the entire range of cyanoacrylates on an international scale, with substantially improved product formulations being implemented. Supported by increased advertising and promotional activity, a substantial strengthening of the leading international position in this product group was achieved. In the adhesives and sealants for construction, DIY and craftsmen segment, the sealants business was further expanded. The building adhesives business once again performed very well, with the strongest impetus coming from Eastern Europe. A new generation of tiling adhesive products offering reduced dust development during usage was successfully introduced into the market.

The Henkel Technologies business sector increased sales by 8.2 percent to 3,533 million euros, due largely to strong organic growth of 8.9 percent. Operating profit improved to 370 million euros, a rise of 7.2 percent compared to the prior-year figure. Posting double-digit percentage sales growth rates, the Eastern Europe, Latin America and Asia-Pacific regions continued to develop very successfully. In addition, good growth was achieved in Western Europe and North America. The transportation market segment performed well. Both the automotive business and the business serving the aircraft industry underwent expansion, boosted by the increasing use of adhesives and sealant technologies in aircraft engineering particularly. The continuing high level of demand for electronic devices contributed to further growth in the business serving the electronics industry, where lead-free solder pastes profited from a new EU directive promoting their application. In the steel industry, innovative chrome-free coating products under the Granocoat brand showed highly promising development. This segment also benefited from strong growth in the Asian market. The business with packaging materials for the consumer goods segment continued to perform well, supported by a new generation of Liofol laminating adhesives with reduced solvent content and improved curing behavior.

Regional Development

On a regional basis, sales of Europe/Africa/Middle East significantly increased by 7.4 percent to 8,045 million euros, with all Henkel's business sectors contributing. Eastern Europe and Africa/Middle East exhibited growth rates far above average, while Western Europe including Germany likewise posted a gratifying plus. Overall, the share of sales accounted for by this region increased slightly to 63 percent. Despite the divestment of the Dial foods business, sales of the North America region rose by 0.4 percent to 2,742 million euros. Sales growth adjusted for foreign exchange amounted to 0.8 percent, and at 22 percent, the region's share of sales remained roughly at the level of the previous year. Latin America posted an increase in sales of 16.1 percent to 663 million euros, with all the business sectors again contributing. Adjusted for foreign exchange, sales of this region increased by 14.2 percent. The share of sales accounted for by this region remained unchanged at 5 percent. Business in the Asia-Pacific region exhibited similarly positive developments. Sales rose by 11.7 percent to 1,041 million euros, after adjusting for foreign exchange by 12.0 percent. The Consumer and Craftsmen Adhesives and Henkel Technologies business sectors exhibited a particularly high rate of growth. The region's share in total sales remained at 8 percent.

Major Participation

Ecolab Inc., St. Paul, Minnesota, in which Henkel has a 28.9 percent interest, generated sales of $4,896 million USD in fiscal 2006, representing a rise of 8 percent above the level for the previous year. Net earnings for the year increased by 15 percent to $369 million USD. The market value of this participation at December 31, 2006 was 2,495 million euros (previous year: 2,235 million euros).


Henkel expects to achieve organic sales growth (i.e. growth after adjusting for foreign exchange and acquisitions/divestments) of 3 to 4 percent in 2007.

Henkel expects to achieve an increase in operating profit (EBIT) - adjusted for foreign exchange - in excess of organic sales growth.

Henkel likewise expects an increase in earnings per preferred share (EPS) in excess of organic sales growth.

"Henkel - A Brand like a Friend". Henkel is a leader with brands and technologies that make people's lives easier, better and more beautiful. Henkel, a Fortune Global 500 company, operates in three strategic business areas - Home Care, Personal Care, and Adhesives, Sealants and Surface Treatment. More than 50,000 employees work for Henkel worldwide. People in approximately 125 countries around the world trust in brands and technologies from Henkel.

This document contains forward-looking statements which are based on the current estimates and assumptions made by the corporate management of Henkel KGaA. Forward-looking statements are characterized by the use of words such as expect, intend, plan, predict, assume, believe, estimate, anticipate, etc. Such statements are not to be understood as in any way guaranteeing that those expectations will turn out to be accurate. Future performance and the results actually achieved by Henkel 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.