The following is a summary of the Henkel AG & Co. KGaA (HENKY) Q4 2023 Earnings Call Transcript:
Financial Performance:
Henkel reported strong organic sales growth of 4.2% and an improved volume development in Q4 2023.
Adjusted gross profit and EBIT margin increased by 340 and 150 basis points respectively.
Adjusted EPS grew at 20% at constant exchange rates in 2023.
The company achieved an all-time high free cash flow of €2.6 billion and proposed a stable dividend of €1.85.
Group sales in nominal terms were lower YoY, totalling €21.5 billion for 2023.
Adjusted earnings per preferred share increased by 11.5% YoY to €4.35.
For 2024, the company projects an organic sales growth of 2-4%, an adjusted EBIT margin of 12-13.5%, and a 5-20% increase in the adjusted earnings per preferred share.
They plan to further improve their gross margins in 2024 to support a 12-13.5% EBIT margin development.
Business Progress:
Henkel made significant investments in marketing and R&D examples include the Battery Engineering Center for Adhesive Technologies and the new R&D Center for Consumer Brands in Shanghai.
The firm made strategic resource allocation to achieve sustainable goals, reducing emissions by 61% since 2010 and increasing the share of recycled plastic in Consumer Packaging to 19%.
The merger of two consumer businesses resulted in savings and increased efficiency, with expected net savings of approximately €525 million by the end of 2024.
Significant improvements are expected in the volume of the Adhesives Technologies and Hair Care businesses.
The firm plans to invest more in marketing efforts to support HCB portfolio valorization and has reserved over €1.5 billion for acquisitions following the exit of a €1 billion business in Russia.
The firm's growth strategy includes investment in initiatives that can accelerate growth; more than €1 billion has already been invested in attractive M&A targets in the year.
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