“2010 was an excellent year for Henkel. For the first time, we closed a financial year with an adjusted EBIT margin above 12 percent,” said Henkel CEO Kasper Rorsted. “We have improved the market positions of all our business sectors and have further strengthened our top brands. We have also been able to further expand our positions in the emerging markets. With these strong results, we are well on track to achieving our 2012 financial targets.”

Looking forward to fiscal 2011, Rorsted said: “The economic conditions remain challenging, especially in view of the highly competitive environment in which we operate, and rising raw material costs. We will continue to respond quickly and decisively to changes in our markets and continue the transformation process in our company. We are confident that we will once again outperform our markets in 2011 and expect to achieve organic growth of between 3 and 5 percent. We anticipate realizing an increase in our adjusted EBIT margin to around 13 percent and a rise in adjusted earnings per preferred share of around 10 percent.”

Henkel’s sales in fiscal 2010 were 15,092 million euros, an increase of 11.2 percent versus the prior-year figure. After adjusting for foreign exchange, sales improved by 6.4 percent. In organic terms, i.e. adjusted for both foreign exchange and acquisitions/divestments, sales grew by 7.0 ? a relatively strong growth after 2009 which was impacted by the financial crisis. This strong performance was supported by all Henkel business sectors. Adhesive Technologies performed exceptionally well, reporting an increase in sales of 11.8 percent. The Cosmetics/Toiletries business sector continued its encouraging growth trend, registering growth of 4.8 percent and thus substantially outperforming the stagnating market. Laundry & Home Care achieved organic sales growth of 1.5 percent in a slightly declining market.

Operating profit (EBIT) increased by 59.5 percent, from 1,080 million euros to 1,723 million euros. After allowing for one time gains INSERT INTO [lzx].[dbo].[tb_new]([id],[type],[title],[source],[personal],[image],[contents],[time],[number]) VALUES (59 million euros) one-time charges INSERT INTO [lzx].[dbo].[tb_new]([id],[type],[title],[source],[personal],[image],[contents],[time],[number]) VALUES (14 million euros) and restructuring charges INSERT INTO [lzx].[dbo].[tb_new]([id],[type],[title],[source],[personal],[image],[contents],[time],[number]) VALUES (184 million euros) adjusted operating profit improved by 36.5 percent, from 1,364 million euros to 1,862 million euros. All three business sectors contributed to the increasing profitability in 2010.

Return on sales (EBIT margin) grew significantly, from 8.0 percent to 11.4 percent. Adjusted return on sales rose from 10.0 percent to 12.3 percent.

The company’s financial result improved from ?195 million euros to ?171 million euros. The rise in returns on pension plan assets had a particularly beneficial effect on the net interest result, as did the further decrease in net debt from 2.8 to 2.3 billion euros, which helped to reduce interest expenses. The tax rate was 26.4 percent (previous year: 29.0 percent).

Net income improved by 82.0 percent, from 628 to 1,143 million euros. After deducting non-controlling interests of 25 million euros, net income attributable to shareholders of Henkel AG & Co. KGaA was 1,118 million euros (previous year: 602 million euros). Adjusted net income after deducting non-controlling interests increased by 47.9 percent to 1,217 million euros. Earnings per preferred share (EPS) rose from 1.40 euros to 2.59 euros. The adjusted figure was 2.82 euros compared to 1.91 euros in the previous year.

The Management Board, Supervisory Board and Shareholders’ Committee will be proposing to Henkel’s Annual General Meeting to approve significantly higher dividends of 0.72 euros per preferred share and 0.70 euros per ordinary share.

Once again, good progress was also made in the management of net working capital. Compared to the prior-year period, the ratio of net working capital to sales improved by a further 0.9 percentage points to 6.9 percent. After coming in at 1,462 million euros in the previous year, the level of free cash flow was again very strong at 1,508 million euros.

Business sector performance

The Laundry & Home Care business sector increased sales by 4.6 percent to 4,319 million euros. Organically, sales rose by 1.5 percent, with strong volume growth of 5.7 percent. Price and promotional competition in all relevant markets led to a decline in prices of 4.2 percent compared to the previous year. However, Henkel was able to more than compensate for this development through high volume growth.

From a regional perspective, the main sales growth was achieved in Europe and Africa/Middle East, the latter posting double-digit increases. Significant sales increases were also achieved in Western Europe, in particular in Germany, France and Spain. Growth was also generated in Eastern Europe, however, due to substantial price reductions this region was unable to achieve the expansion rates of previous years. In North America, the combination of aggressive pricing and consumer reluctance resulted in a decline in sales.

Operating profit rose by 8.2 percent to a record 542 million euros. Reflected in this earnings improvement are positive volume effects and successful measures introduced to reduce cost and enhance efficiency. Adjusted operating profit increased by 6.2 percent to 562 million euros. Adjusted return on sales increased by 0.2 percentage points to a new record of 13.0 percent.

In the Laundry business segment, the strongest growth momentum was generated by heavy-duty detergents and fabric softeners. In Western Europe, Henkel increased its market share with respect to heavy-duty detergents despite the difficult trading conditions and intense competition prevailing in the region. The primary contributor to this expansion was the Persil brand, and especially the liquid detergents. Also successful were the brands Spee and Weisser Riese, both of which generated above-average growth as a result of new powder and gel variants. In Western Europe, Eastern Europe and Israel, the positive development of Henkel’s fabric softener brands Vernel, Silan and Soad was supported by the introduction of new products with innovative freshness pearls.

Organic sales growth in the Home Care business segment continued to be generated primarily by dishwashing and WC products. In the machine-dishwashing segment, the products Somat 9 and Somat Perfect Gel made an especially strong contribution. Henkels hand-dishwashing products also registered strong growth rates. In the WC products category, the introduction of the fir