《Henkel’s (HENKY) CEO Kasper Rorsted on Q2 2014 Results – Earnings Call Transcript》：
Henkel (OTCPK:HENKY) Q2 2014 Earnings Conference Call August 12, 2014 4:30 AM ET
Operator
Good morning and welcome to the Henkel conference call. With us today are Kasper Rorsted, CEO, Carsten Knobel, CFO, and the Investor Relations team. For the duration of the call you will be on listen-only. (Operator Instructions). Today’s conference call is being recorded and the webcast is available at www.henkel.com/ir. At this time I’d like to turn the call over to Mr. Kasper Rorsted. Please go ahead sir.
Kasper Rorsted
Good morning ladies and gentlemen and welcome to our conference call. First I would like to focus on the key developments of the second quarter of 2014, then Carsten will provide you with the second quarter financials in greater details and after that I will close my presentation with a summary of Q2 and the outlook for 2014, and finally we’ll take your questions.
I’d like to begin by reminding everyone that the presentation, which contains the usual formal disclaimer to forward-looking statements within the meaning of relevant U.S. legislation, can be accessed via our website at Henkel.com.ir. The presentation and discussion are conducted subject to the disclaimer. We will not read the disclaimer but propose we take it as read into the records for the purpose of the conference call.
Let me start with the key developments of Q2 2014. We had an organic sales growth of 3.3% and adjusted EBIT margin of 16.3% and adjusted EPS growth of 8.4%, so high single digit, along with our guidance. Our sales share in the emerging markets was, despite a lower rate, come up to 45%. Net working capital as a percentage of sales 6% and our net financial position was €156 million, which is impacted by a number of items that Carsten will take you through in his section.
So on looking upon the overall quarter, we continued our profitable growth in all our business groups. We saw solid organic growth, driven by all business groups across the board. The emerging market remains with strong OSG and Western Europe was solid. We saw very strong improvement in the adjusted EBIT margin, again supported by all business groups, and as I said, we delivered high single-digit adjusted EPS growth.
At the same time we also put our balance sheet to work in the second quarter. In Western Europe we acquired the Spotless Group for laundry and homecare business. In North America we acquired a number of brands that will strengthen our professional hair care business in the U.S. and make us number three. In Latin America, more specific predominantly in Mexico, we acquired a small brand from P&G called Pert with a purchase price of €24 million. So three different acquisitions in the second quarter to strengthen the Company moving forward.
What were some of the challenges that we saw in the second quarter and I think we’ll continue to see moving forward? We continue to see very high pressure from an FX standpoint, the highest we’ve seen in the last four quarters, and we’ve now had four quarters with negative nominal growth. We’re seeing a very concerning political development in Russia and strong negative development in the Ukraine due to the crisis. We’ll come back and speak about the two countries in detail, but of course with Russia being our fourth largest country in the world and Ukraine being one of our top 10 emerging countries in the world, in particular the Ukraine business has been significantly impacted by the crisis and we don’t expect any short-term recovery.
We’re also seeing significant increase in the geopolitical tensions in the Middle East; you can see that also on television. And despite that, we continued to a very strong organic growth rate, but of course, partially due to the crisis, we are seeing a very weak currency. So despite very strong growth rates you do not see that in the nominal growth.
《Henkel’s (HENKY) CEO Kasper Rorsted on Q2 2014 Results – Earnings Call Transcript》：
Henkel (OTCPK:HENKY) Q2 2014 Earnings Conference Call August 12, 2014 4:30 AM ET
Operator
Good morning and welcome to the Henkel conference call. With us today are Kasper Rorsted, CEO, Carsten Knobel, CFO, and the Investor Relations team. For the duration of the call you will be on listen-only. (Operator Instructions). Today’s conference call is being recorded and the webcast is available at www.henkel.com/ir. At this time I’d like to turn the call over to Mr. Kasper Rorsted. Please go ahead sir.
Kasper Rorsted
Good morning ladies and gentlemen and welcome to our conference call. First I would like to focus on the key developments of the second quarter of 2014, then Carsten will provide you with the second quarter financials in greater details and after that I will close my presentation with a summary of Q2 and the outlook for 2014, and finally we’ll take your questions.
I’d like to begin by reminding everyone that the presentation, which contains the usual formal disclaimer to forward-looking statements within the meaning of relevant U.S. legislation, can be accessed via our website at Henkel.com.ir. The presentation and discussion are conducted subject to the disclaimer. We will not read the disclaimer but propose we take it as read into the records for the purpose of the conference call.
Let me start with the key developments of Q2 2014. We had an organic sales growth of 3.3% and adjusted EBIT margin of 16.3% and adjusted EPS growth of 8.4%, so high single digit, along with our guidance. Our sales share in the emerging markets was, despite a lower rate, come up to 45%. Net working capital as a percentage of sales 6% and our net financial position was €156 million, which is impacted by a number of items that Carsten will take you through in his section.
So on looking upon the overall quarter, we continued our profitable growth in all our business groups. We saw solid organic growth, driven by all business groups across the board. The emerging market remains with strong OSG and Western Europe was solid. We saw very strong improvement in the adjusted EBIT margin, again supported by all business groups, and as I said, we delivered high single-digit adjusted EPS growth.
At the same time we also put our balance sheet to work in the second quarter. In Western Europe we acquired the Spotless Group for laundry and homecare business. In North America we acquired a number of brands that will strengthen our professional hair care business in the U.S. and make us number three. In Latin America, more specific predominantly in Mexico, we acquired a small brand from P&G called Pert with a purchase price of €24 million. So three different acquisitions in the second quarter to strengthen the Company moving forward.
What were some of the challenges that we saw in the second quarter and I think we’ll continue to see moving forward? We continue to see very high pressure from an FX standpoint, the highest we’ve seen in the last four quarters, and we’ve now had four quarters with negative nominal growth. We’re seeing a very concerning political development in Russia and strong negative development in the Ukraine due to the crisis. We’ll come back and speak about the two countries in detail, but of course with Russia being our fourth largest country in the world and Ukraine being one of our top 10 emerging countries in the world, in particular the Ukraine business has been significantly impacted by the crisis and we don’t expect any short-term recovery.
We’re also seeing significant increase in the geopolitical tensions in the Middle East; you can see that also on television. And despite that, we continued to a very strong organic growth rate, but of course, partially due to the crisis, we are seeing a very weak currency. So despite very strong growth rates you do not see that in the nominal growth.