henkel strategy presentation nov 16, 2012 · value creation strengthen strategic relationships...
TRANSCRIPT
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1 Henkel StrategyNovember 16, 2012
HenkelStrategy
LondonNov 16, 2012
Kasper RorstedCarsten Knobel
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2 Henkel StrategyNovember 16, 2012
DisclaimerThis information contains forward-looking statements which are based on current estimatesand 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. Suchstatements are not to be understood as in any way guaranteeing that those expectations willturn 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 andmay therefore differ materially from the forward-looking statements. Many of these factorsare outside Henkel's control and cannot be accurately estimated in advance, such as thefuture economic environment and the actions of competitors and others involved in themarketplace. Henkel neither plans nor undertakes to update any forward-looking statements.
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3 Henkel StrategyNovember 16, 2012
Agenda
Henkel Strategy2
3 Financial Targets 2016
Summary4
Achievements 2008 - 20121
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4 Henkel StrategyNovember 16, 2012
We set a clear strategic direction with 3 priorities…
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5 Henkel StrategyNovember 16, 2012
…and ambitious financial targets for 2012
3-5%
14%
> 10%
Org. Sales Growth (average)
EBIT Margin (2012)*
EPS-Growth (CAGR)*
* adjusted
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6 Henkel StrategyNovember 16, 2012
All strategic priorities were pursued consistently
Strong financial performance
Efficiency gains
Strengthened global footprint
Focus on brands & innovations
Customer focusLeadership insustainability
Performance culture
Improved diversity
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7 Henkel StrategyNovember 16, 2012
Assumptions RealityGDP Growth 3-4% CAGR 1.8% CAGR (-2.1% – +4.1%)
EUR/USD 1.40 – 1.55 1.19 – 1.51
Crude Oil 100 – 120 USD 37 – 127 USD
Volatility
We faced severe headwinds and volatility
Financial crisis
Political turmoils
Material price increases
Euro crisis
Headwinds
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8 Henkel StrategyNovember 16, 2012
Despite all odds, we are underway to reach our targets
3-5%
14%
>10%
Org. Sales Growth ( )
Adj. EBIT Margin
Adj. EPS-Growth (CAGR)*
* per preferred share** Arithmetic mean 2009 through 2011*** 2008 through 2011
Targets2012
Actuals1-9 2012
+3.1%**
13.0%
+12.8%***
Achievementuntil 2011
+3.7%
14.3%
+19.4%
45%Sales Share EM 42% 43%
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9 Henkel StrategyNovember 16, 2012
Our progress is built on various drivers…
…and will continue
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10 Henkel StrategyNovember 16, 2012
Agenda
Henkel Strategy2
3 Financial Targets 2016
Summary4
Achievements 2008 - 20121
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11 Henkel StrategyNovember 16, 2012
Core questions of our strategic review
Which megatrends will shape ourmarkets in the years to come?
How well is our portfolio positionedagainst these trends?
What actions are necessary to capitalizeon these trends?
1
2
3
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12 Henkel StrategyNovember 16, 2012
Consolidation of suppliers,manufacturers and buyers
Shift of market growth toEmerging Markets
Rapidly changing markets &faster transfer of information
Overview of megatrends and their implications
Trend Description Trend Implication
Increasing importance ofcompetitive size
Increasing importance ofEmerging Market presence
Increasing importance ofoperational excellence inprocesses and structures
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13 Henkel StrategyNovember 16, 2012
Overview of megatrends and their implications
Increasing importance ofcompetitive size
Increasing importance ofEmerging Market presence
Increasing importance ofoperational excellence inprocesses and structures
EM sales
Total sales
EPS growth
PerformanceDimensions 2016Trend Implication
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14 Henkel StrategyNovember 16, 2012
Long-term market assessment
Active in markets of significant size
Markets are attractive in terms of profitability and
offer long-term growth potential
Strong potential to expand our businesses
Strong ability to win in attractive markets
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15 Henkel StrategyNovember 16, 2012
Leverage full potential in all businesses
Consumer BusinessLaundry & Home Care Beauty Care Adhesive Technologies
Industrial Business
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16 Henkel StrategyNovember 16, 2012
Our strategy is based on our vision & values
Customers People Financials
Sustainability Family
A global leader in brands and technologies
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17 Henkel StrategyNovember 16, 2012
Leading position
Global footprint
Leading processes
Strong & diverse team
Leading financial performance
Key success factors to achieve our vision
#1 choice for customers & consumers
Innovation leader
Powerful brands
Balanced portfolio
A global leader in brands and technologies
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18 Henkel StrategyNovember 16, 2012
outperform
globalized
simplified
inspired
We will
as a
with
and a highly
our competition
company
operations
team!
Henkel strategy
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19 Henkel StrategyNovember 16, 2012
Henkel strategy
Outperform Globalize
Simplify Inspire
A global leaderin brands
and technologies
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20 Henkel StrategyNovember 16, 2012
20Sales [bn €]*
Henkel’s financial targets 2016
* incl. continuous portfolio optimization (without major acquisitions & divestments)** based on consensus
~20
14.1
20~3.5 bn €
~2.5 bn €
20162012**2008
[bn €]
Henkel StrategyNovember 16, 201220
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21 Henkel StrategyNovember 16, 2012
10EM sales [bn €]*
Henkel’s financial targets 2016
~10
5.2
~3 bn €
~2 bn € 10
20162012**2008
* incl. continuous portfolio optimization (without major acquisitions & divestments)** based on consensus; sales share EM as of 1-9 2012
[bn €]
Henkel StrategyNovember 16, 201221
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22 Henkel StrategyNovember 16, 2012
10EPS CAGR [%]*
2.19
[€]
>10%
10%
20162012**2008
* incl. continuous portfolio optimization (without major acquisitions & divestments); adjusted per preferred share** based on consensus
Henkel’s financial targets 2016
Henkel StrategyNovember 16, 201222
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23 Henkel StrategyNovember 16, 2012
20Sales [bn €]*
10EM sales [bn €]*
10EPS CAGR [%]*
* incl. continuous portfolio optimization (without major acquisitions & divestments); EPS: adjusted per preferred share
Henkel’s financial targets 2016
Henkel StrategyNovember 16, 201223
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24 Henkel StrategyNovember 16, 2012
Active portfolio mgmt
Leverage top brands
Powerful innovations
Focus on customers
Globalize
Simplify Inspire
OutperformOutperform
Henkel strategy
A global leaderin brands
and technologies
Henkel StrategyHenkel StrategyNovember 16, 2012
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25 Henkel StrategyNovember 16, 2012
Outperform – Leverage potential in categories
Core Categories
Continuous investment intop positions
Investments in category andnew segment expansion
Value Categories
Active Portfolio Management
Growth Categories
Leverage profit potentialwith adequate investmentDivest/exit businesses(~500 m€)
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26 Henkel StrategyNovember 16, 2012
Outperform – Build on strong base
Consistent innovationprocessTrend-based innovations
Customer relationshipmanagementConsumer proximity
Focused & balanced brandportfolioStrong growth of top brandsBrand consolidation
Brands CustomersInnovations
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27 Henkel StrategyNovember 16, 2012
Accelerate sales growth with top brandsin % of sales
20162008
Strong growth driven by innovations & further roll-out of global brandsFurther portfolio alignment towards umbrella brands
Top10Other
38%
62%
46%
54%
~60%
~40%
* estimate
2012*
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28 Henkel StrategyNovember 16, 2012
Consistently drive trend-based innovations
AccessibleLuxury
Convenience &Superior Quality
Performance &Sustainability
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29 Henkel StrategyNovember 16, 2012
New R&D sites fostering consumer proximity
Planned new site
Significant expansion of R&D centers in all emerging regionsFurther leverage local competence
Johannesburg
Moscow*
DubaiToluca*
Sao Paulo
Pune
Seoul
* Significantexpansion
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30 Henkel StrategyNovember 16, 2012
Actively deploy customer focus
Beauty CareMeet-your-Consumer
Center
Laundry & Home CareShopper
Marketing
Adhesive TechnologiesTechnology &
Design Partnerships
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31 Henkel StrategyNovember 16, 2012
Leverage strength inMature Markets
Expand footprint inEmerging Markets
Globalize
Simplify Inspire
Outperform
A global leaderin brands
and technologies
Globalize
Henkel strategy
Henkel StrategyNovember 16, 201231
A global leaderin brands
and technologies
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32 Henkel StrategyNovember 16, 2012
Globalize – Focus on regions with high potential
Continuation of profitablegrowth with strong cost focus
Acceleration of growth inexisting Emerging Markets
Enter country white spots inselective Emerging Markets
Mature Markets:Leverage Strengths
Emerging Markets:Go Deep
Emerging Markets:Enter White Spots
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33 Henkel StrategyNovember 16, 2012
Mature Markets – Further leverage strengths
Outperform our marketsIncrease brand investmentsContinue cost focus
2016More top positionsHigher profit contribution
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34 Henkel StrategyNovember 16, 2012
Emerging Markets – Accelerate growth
2016: Balanced EM footprint with 12 EM countries in Henkel Top 20
TurkeyRussia
EgyptChinaBrazilAlgeria
Ukraine
PolandMexicoKoreaIndia
UAE
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35 Henkel StrategyNovember 16, 2012
Henkel strategy
Outperform Globalize
Simplify Inspire
A global leaderin brands
and technologies
Henkel StrategyNovember 16, 2012
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36 Henkel StrategyNovember 16, 2012
Acquisitions
In Line with Strategy Restrictive SelectionBoosting Growth
Active use of strong balance sheet
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37 Henkel StrategyNovember 16, 2012
Cost efficiency
Best-in-class processes
Strong IT focus
Globalize
Simplify Inspire
Outperform
A global leaderin brands
and technologies
Henkel strategy
Simplify
A global leaderin brands
and technologies
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38 Henkel StrategyNovember 16, 2012
Simplify – Drive operational excellence
IT as an enabler to driveperformanceSimplified & standardizedglobal IT structure
Foster leading sourcingContinued expansion ofshared services
IT FocusCost Efficiency Best-in-Class Processes
Further improve admin costsLocation footprint optimizationFurther reduce NWC
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39 Henkel StrategyNovember 16, 2012
Further improve manufacturing footprint
From ~175 in 2012
To ~155 in 2016
Further consolidation both in Emerging & Mature Markets
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40 Henkel StrategyNovember 16, 2012
Foster leading sourcing
Leverage global sourcingSource via global hubs, focus on Emerging MarketsIntegrated worldwide network of suppliers
Value creationStrengthen strategic relationshipsFocus on innovation leadership
Improve efficiency & effectivenessExpand e-sourcing to >10% of spendReduce number of suppliers by ~40%
Henkel StrategyNovember 16, 2012
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41 Henkel StrategyNovember 16, 2012
Expand shared services: >3,000 employees
Enhance and expand SSC capabilities
Multifunctional SSC to generatecompetitive advantageBack Office
transactions-based
Middle Officerules-based
Front Officejudgement-based
September 30, 2012: 1,300 employees in SSCs
2006
2008
2012+
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42 Henkel StrategyNovember 16, 2012
Shared services expansion
Newly established Business Process Outsourcing hub in Bangalore/India
Bratislava
Mexico City
Bangalore Manila
BPO: Indiasince 09/12
Captive SSCs
Hubs for Arabic speaking region & Greater China/N-E Asia
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43 Henkel StrategyNovember 16, 2012
Invest ~140m€ in IT until 2016
# of processes
Horizon
~800
Today
~2,200
Past
>20,000
Reduce complexity & leverage one IT platform
Supply Chain Mgmt.APO
SSC IT SolutionsGlobal integration
Promotion SpendPlanning & management
Global Henkel IT Platform: Horizon (SAP)
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44 Henkel StrategyNovember 16, 2012
Strong leadership
Talent & performance focus
Diverse teams
Globalize
Simplify Inspire
Outperform
A global leaderin brands
and technologies
Inspire
Henkel strategy
Henkel StrategyNovember 16, 2012
A global leaderin brands
and technologies
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45 Henkel StrategyNovember 16, 2012
Diversity
Leverage diversity as keysuccess factor
Inspire – Strengthen our global team
Talent & Performance
Attract the best talentsReward performance
Set clear expectationsDevelop strong leaders
Leadership
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46 Henkel StrategyNovember 16, 2012
Executive Resource Program
Virtual pool of ~100 talents on top mgmt. level
Annual nomination by defined criteria
Personal development plan, high-level training,selective initiatives, etc.
Successful record of promotions and job rotations
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47 Henkel StrategyNovember 16, 2012
Diverse teams as key success factorNationality/Culture
Gender
Age/Seniority
Foster internationality in our teams
Increase female share by systematiccareer development
Leverage experience of senior colleagues
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48 Henkel StrategyNovember 16, 2012
Coherence of success & incentive
Target KPIs: OSG, Adj. EBIT %, NWC
Linked to individual performancePerformance
Pote
ntia
l
Short-term incentive implemented as of 2011:
Linked to long-term financial targets
Target KPI: EPS
Ensures sustainable success & talent retention
20 bn € Sales
10 bn € EM Sales
10 % EPS CAGR
Aligned long-term incentive as of 2013:
Highly competitive reward system
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49 Henkel StrategyNovember 16, 2012
Henkel strategy
Outperform Globalize
Simplify Inspire
A global leaderin brands
and technologies
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50 Henkel StrategyNovember 16, 2012
Agenda
Henkel Strategy2
3 Financial Targets 2016
Summary4
Achievements 2008 - 20121
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51 Henkel StrategyNovember 16, 2012
Henkel’s financial targets 2016
20Sales [bn €]*
10EM sales [bn €]*
10EPS CAGR [%]*
* incl. continuous portfolio optimization (without major acquisitions & divestments); EPS: adjusted per preferred share
Henkel StrategyNovember 16, 201251
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52 Henkel StrategyNovember 16, 2012
Internal
Ongoing adaptation of ourstructures to the market
Continuous portfolio management,including small & mid-sizedacquisitions and divestments(divestment/exit: ~500 m€)
External
Avg. GDP growth:Global: 3.3% p.a.Western Europe: 1.8% p.a.
USD at 1.30 USD/€
Material price development:mid-single digit p.a.
Key assumptions for 2016 targets
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53 Henkel StrategyNovember 16, 2012
Henkel’s financial targets 2016Step-change in scale
20Sales [bn €]*
* incl. continuous portfolio optimization (without major acquisitions & divestments)
Mid-single digit CAGR until 2016
Outperform – Strong investments in categories
Globalize – Focus on regions with high potential
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54 Henkel StrategyNovember 16, 2012
Henkel’s financial targets 2016Improved footprint
10EM sales [bn €]*
* incl. continuous portfolio optimization (without major acquisitions & divestments)
High single-digit CAGR until 2016
Go deep in existing countries
Selectively enter country white spots
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55 Henkel StrategyNovember 16, 2012
Henkel’s financial targets 2016Excellence in value creation
10EPS CAGR [%]*
* incl. continuous portfolio optimization (without major acquisitions & divestments); adjusted per preferred share
Balanced value creation through top & bottomline growth
Standardization & complexity reduction alongentire value chain to drive profitability
Continue strong cash orientation & financialdiscipline to maintain “A flat/A2”-rating
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56 Henkel StrategyNovember 16, 2012
Excellence in value creation
Cash-Return OptionsAcquisitionsOrganic Performance
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57 Henkel StrategyNovember 16, 2012
Excellence in value creation
Cash-Return OptionsAcquisitionsOrganic Performance
Invest in our businessesEnhance profitabilityFurther reduce NWC
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58 Henkel StrategyNovember 16, 2012
Increase capex spend by >40%* to ~2 bn €
Strong focus on IT with investment of ~140 m€
Structural shift to Emerging Markets
Strengthen top brands & innovations via higher
marketing investments
Invest in our businesses
* total 2013-2016 vs. 2009-2012
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59 Henkel StrategyNovember 16, 2012
Enhance profitability
Drive gross margin via innovation & pricing power
Further optimize manufacturing footprint by~20 locations
Expand shared services to >3,000 employees
Continue focus on leaner structures
LeversFuture Levers
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60 Henkel StrategyNovember 16, 2012
Further reduce NWC
Regional cross-divisional initiatives
in % of sales
-1,2pp6.6
2008
11.7
5.1
2016
~5.0~1.6
1-9 2012
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61 Henkel StrategyNovember 16, 2012
Organic performance resulting in higher cash flow
Holistic value creation focusincreases strategic options
NWC% sales
Effectivetax rate
Profitability
Invest
Freecash flow
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62 Henkel StrategyNovember 16, 2012
Excellence in value creation
Cash-Return OptionsAcquisitionsOrganic Performance
Accelerate growth potential
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63 Henkel StrategyNovember 16, 2012
Acquisitions
In Line with Strategy
Adhesives: TechnologyleadershipLaundry & Home Care/BeautyCare: Regions & categories
Restrictive evaluation andselection processCentralized decision andexecution
Integrated part of ouroverall strategyClear prioritization ofcategories and regions
Restrictive SelectionBoosting Growth
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64 Henkel StrategyNovember 16, 2012
Excellence in value creation
Cash-Return OptionsAcquisitionsOrganic Performance
Share buy-backDividend payout
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65 Henkel StrategyNovember 16, 2012
Excellence in value creation
Priority: Grow our business No change so far
Cash-Return OptionsAcquisitionsOrganic Performance
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66 Henkel StrategyNovember 16, 2012
Excellence in volatile environment
Henkel well prepared to achieve next level of targets
Euro crisisEM growth slowdownMarket cyclicalityFX volatilityCompetitive pressure
Excellencein valuecreation
Volatile Environment Performance Drivers
Organic focusOperational excellenceAcquisitions/divestments
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67 Henkel StrategyNovember 16, 2012
Agenda
Henkel Strategy2
3 Financial Targets 2016
Summary4
Achievements 2008 - 20121
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68 Henkel StrategyNovember 16, 2012
outperform
globalized
simplified
inspired
We will
as a
with
and a highly
our competition
company
operations
team!
Henkel strategy
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69 Henkel StrategyNovember 16, 2012
Strategy & financial targets 2016
20 bn € Sales
10 bn € EM Sales
10 % EPS CAGR
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70 Henkel StrategyNovember 16, 2012
Excellence is the result of always striving to do better
We transform our plans into concrete actions
We are passionate about achieving our targets
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71 Henkel StrategyNovember 16, 2012
Passionate to achieve our targets
Kasper RorstedCEO
Carsten KnobelCFO
Hans Van BylenBeauty Care
Kathrin MengesHuman Resources
Bruno PiacenzaLaundry &Home Care
Jan-Dirk AurisAdhesiveTechnologies
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72 Henkel StrategyNovember 16, 2012
Henkel – Strategic framework
A global leader in brands and technologies
Customers People Financials Sustainability FamilyValues
Vision
Targets 20 bn €SALES
10 bn €EM SALES
10 %EPS CAGR
Strategy Outperform Simplify InspireGlobalize
Vision
Values
Strategy
Targets
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73 Henkel StrategyNovember 16, 2012
Thank You!Thank You!