Annual Report
2020
H e n k e l A n n u a l R e p o r t 2 0 2 0
Contents
1
The Company
2
Fiscal 2020 at a glance
6
13
20
22
Foreword
Report of the Supervisory Board
Our Management Board
Shaping our future
23
Shares and bonds
Corporate governance
31
Takeover-relevant information
Consolidated financial statements
171
Consolidated statement of financial position
173
174
175
176
178
274
275
Consolidated statement of income
Consolidated statement of comprehensive income
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Subsequent events
Recommendation for the approval of the annual
financial statements and the appropriation of the
profit of Henkel AG & Co. KGaA
35
Corporate governance statement
276
Corporate bodies of Henkel AG & Co. KGaA
53
77
Remuneration system
Remuneration report 2020
Combined management report
94
Fundamental principles of the Group
103
146
151
166
Economic report
Henkel AG & Co. KGaA
(condensed version according to the German
Commercial Code [HGB])
Risks and opportunities report
Forecast
Further information
281
Independent Auditor’s Report
290
291
Responsibility statement
Quarterly breakdown of sales
292 Multi-year summary
294
297
298
298
Glossary
Credits
Contacts
Financial calendar
Henkel Annual Report 2020 1Contents The Company 2 Fiscal 2020 at a glance 6 Foreword 13 Report of the Supervisory Board 20 Our Management Board 22 Shaping our future 23 Shares and bonds Corporate governance 31 Takeover-relevant information 35 Corporate governance statement 53 Remuneration system 77 Remuneration report 2020 Combined management report 94 Fundamental principles of the Group 103 Economic report 146 Henkel AG & Co. KGaA (condensed version according to the German Commercial Code [HGB]) 151 Risks and opportunities report 166 Forecast Consolidated financial statements 171 Consolidated statement of financial position 173 Consolidated statement of income 174 Consolidated statement of comprehensive income 175 Consolidated statement of changes in equity 176 Consolidated statement of cash flows 178 Notes to the consolidated financial statements 274 Subsequent events 275 Recommendation for the approval of the annual financial statements and the appropriation of the profit of Henkel AG & Co. KGaA 276 Corporate bodies of Henkel AG & Co. KGaA Further information 281 Independent Auditor’s Report 290 Responsibility statement 291 Quarterly breakdown of sales 292 Multi-year summary 294 Glossary 297 Credits 298 Contacts 298 Financial calendar Henkel Annual Report 2020 1Contents The Company 2 Fiscal 2020 at a glance 6 Foreword 13 Report of the Supervisory Board 20 Our Management Board 22 Shaping our future 23 Shares and bonds Corporate governance 31 Takeover-relevant information 35 Corporate governance statement 53 Remuneration system 77 Remuneration report 2020 Combined management report 94 Fundamental principles of the Group 103 Economic report 146 Henkel AG & Co. KGaA (condensed version according to the German Commercial Code [HGB]) 151 Risks and opportunities report 166 Forecast Consolidated financial statements 171 Consolidated statement of financial position 173 Consolidated statement of income 174 Consolidated statement of comprehensive income 175 Consolidated statement of changes in equity 176 Consolidated statement of cash flows 178 Notes to the consolidated financial statements 274 Subsequent events 275 Recommendation for the approval of the annual financial statements and the appropriation of the profit of Henkel AG & Co. KGaA 276 Corporate bodies of Henkel AG & Co. KGaA Further information 281 Independent Auditor’s Report 290 Responsibility statement 291 Quarterly breakdown of sales 292 Multi-year summary 294 Glossary 297 Credits 298 Contacts 298 Financial calendar Henkel Annual Report 2020 1Contents The Company 2 Fiscal 2020 at a glance 6 Foreword 13 Report of the Supervisory Board 20 Our Management Board 22 Shaping our future 23 Shares and bonds Corporate governance 31 Takeover-relevant information 35 Corporate governance statement 53 Remuneration system 77 Remuneration report 2020 Combined management report 94 Fundamental principles of the Group 103 Economic report 146 Henkel AG & Co. KGaA (condensed version according to the German Commercial Code [HGB]) 151 Risks and opportunities report 166 Forecast Consolidated financial statements 171 Consolidated statement of financial position 173 Consolidated statement of income 174 Consolidated statement of comprehensive income 175 Consolidated statement of changes in equity 176 Consolidated statement of cash flows 178 Notes to the consolidated financial statements 274 Subsequent events 275 Recommendation for the approval of the annual financial statements and the appropriation of the profit of Henkel AG & Co. KGaA 276 Corporate bodies of Henkel AG & Co. KGaA Further information 281 Independent Auditor’s Report 290 Responsibility statement 291 Quarterly breakdown of sales 292 Multi-year summary 294 Glossary 297 Credits 298 Contacts 298 Financial calendar
H e n k e l A n n u a l R e p o r t 2 0 2 0
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The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Fiscal 2020 at a glance
Key financials
in million euros
Sales
Operating profit (EBIT)
Adjusted1 operating profit (adjusted EBIT)
Return on sales (EBIT margin)
Adjusted1 return on sales (adjusted EBIT margin)
Net income
Attributable to non-controlling interests
Attributable to shareholders of Henkel AG & Co. KGaA
Earnings per preferred share (EPS)
Adjusted 1 earnings per preferred share (adjusted EPS)
Return on capital employed (ROCE)
Dividend per ordinary share
Dividend per preferred share
pp = percentage points
2016
18,714
2,775
3,172
14.8%
16.9%
2,093
40
2,053
4.74
5.36
17.5%
1.60
1.62
2017
20,029
3,055
3,461
15.3%
17.3%
2,541
22
2,519
5.81
5.85
16.3%
1.77
1.79
2018
19,899
3,116
3,496
15.7%
17.6%
2,330
16
2,314
5.34
6.01
15.5%
1.83
1.85
2019
20,114
2,899
3,220
14.4%
16.0%
2,103
18
2,085
4.81
5.43
13.5%
1.83
1.85
+/-
2019–2020
-4.3%
-30.4%
-19.9%
-3.9pp
-2.6pp
-32.3%
-11.3%
-32.5%
-32.4%
-21.5%
-3.9pp
–
–
2020
19,250
2,019
2,579
10.5%
13.4%
1,424
16
1,408
3.25
4.26
9.6%
1.832
1.852
in euros
in euros
in euros
in euros
Sales by business unit 2020
Sales by region 2020
Organic sales
growth
-0.7%
Adjusted1
EBIT margin
13.4%
Adjusted1
EPS
4.26€
Development of
adjusted1
EPS at constant
exchange rates
-17.9%
Dividend per
preferred share2
1.85€
1 Adjusted for one-time expenses and income, and for restructuring expenses.
2 Proposal to shareholders for the Annual General Meeting on April 16, 2021.
3 Sales and services not assignable to the individual business units.
4 Eastern Europe, Africa/Middle East, Latin America, Asia (excluding Japan).
Note: All individual figures in this report have been commercially rounded. Addition may result in deviations from the totals indicated.
3
Our top brands
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Combined management report
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Adhesive Technologies
Key financials
in million euros
Sales
Proportion of Henkel sales
Operating profit (EBIT)
Adjusted1 operating profit (adjusted EBIT)
Return on sales (EBIT margin)
Adjusted1 return on sales (adjusted EBIT margin)
Return on capital employed (ROCE)
Economic Value Added (EVA®)
1 Adjusted for one-time expenses and income, and for restructuring expenses.
pp = percentage points
2019
9,461
47%
1,631
1,712
17.2%
18.1%
17.2%
685
2020
8,684
45%
1,248
1,320
14.4%
15.2%
13.4%
410
+/-
-8.2%
–
-23.5%
-22.9%
-2.9pp
-2.9pp
-3.8pp
-40.1%
Sales Adhesive Technologies
in million euros
Organic sales growth
-4.2%
4
Our top brands
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Beauty Care
Key financials
in million euros
Sales
Proportion of Henkel sales
Operating profit (EBIT)
Adjusted1 operating profit (adjusted EBIT)
Return on sales (EBIT margin)
Adjusted1 return on sales (adjusted EBIT margin)
Return on capital employed (ROCE)
Economic Value Added (EVA®)
1 Adjusted for one-time expenses and income, and for restructuring expenses.
pp = percentage points
2019
3,877
19%
418
519
10.8%
13.4%
10.1%
88
2020
3,752
19%
246
377
6.6%
10.0%
6.2%
-47
+/-
-3.2%
–
-41.2%
-27.5%
-4.2pp
-3.4pp
-3.9pp
-154.2%
Sales Beauty Care
in million euros
Organic sales growth
-2.8%
5
Our top brands
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Laundry & Home Care
Key financials
in million euros
Sales
Proportion of Henkel sales
Operating profit (EBIT)
Adjusted1 operating profit (adjusted EBIT)
Return on sales (EBIT margin)
Adjusted1 return on sales (adjusted EBIT margin)
Return on capital employed (ROCE)
Economic Value Added (EVA®)
1 Adjusted for one-time expenses and income, and for restructuring expenses.
pp = percentage points
2019
6,656
33%
973
1,096
14.6%
16.5%
12.6%
356
2020
6,704
35%
688
1,004
10.3%
15.0%
9.3%
150
+/-
0.7%
–
-29.3%
-8.4%
-4.4pp
-1.5pp
-3.3pp
-57.7%
Sales Laundry & Home Care
in million euros
Organic sales growth
+5.6%
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“Our global team has what it
takes to shape our successful
future and deliver on our
Purposeful Growth agenda.”
CARSTEN KNOBEL
CHAIRMAN OF THE MANAGEMENT BOARD
When I wrote you my first letter as the newly appointed Chair-
man of the Management Board of Henkel in last yearʼs Annual
Report, the world looked very different from today. Over the
past 12 months, we have encountered fundamental changes to
the way we live, work and do business. People around the
world have gone through very challenging times, facing severe
risks to their health and the well-being of their loved ones. In
2020, over 75 million people went through a COVID-19 infection
and more than 1.5 million sadly lost their lives to the virus.
In addition, many had to deal with losing their jobs or their
business as a result of the crisis. Around the world, people
were confined to their homes, unable to connect with family
members or friends, and deprived of the social fabric of their
communities and work environment.
As a consequence of the pandemic, the global economy
encountered a sharp decline in demand and governments
around the world were confronted with rising expenditures for
emergency programs. However, the impact varied across indus-
tries. While some were affected severely, such as the automotive
sector, others saw rising demand for products and services, for
example in the fields of hygiene or medical supplies. According
to the OECD, global GDP declined by more than 4 percent in
2020. Despite hopes for a recovery in the course of 2021,
backed by the roll-out of vaccination campaigns, concerted
health policies and government financial support, many
economies are expected to record a GDP in 2021 still below
the pre-crisis level of 2019.
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“We care. And we act!”
When we were confronted with the first wave of infections
early last year, we had robust crisis management processes in
place. Our crisis teams around the world acted fast, decisively
and effectively, taking appropriate measures to ensure the
safety of our people, as well as the continuity of our businesses.
Thanks to a strong and scalable digital infrastructure and our
digital upskilling efforts in recent years, the majority of our
administration and non-production teams were able to work
from home – endorsing government guidance in many countries
to enable remote working whenever possible.
In one of my first messages to Henkel employees in March,
I assured them on behalf of the entire Management Board:
“Our priority in this crisis is and will always be to ensure
your health and safety! We care about you and your jobs, your
families, our business partners, our communities and society.
And we will take action to live up to this commitment. Of this
you can be sure: We care. And we act!”
Early in the year, we committed to ruling out layoffs and
furlough due to the pandemic. We did not make use of any
emergency aid program, such as government-backed credits
or loans. On the contrary, we continued to hire and fill open
positions. In total, more than 6,000 new employees joined
Henkel around the world in 2020. We also continued to invest
in our people’s skills and our training efforts. In Germany, for ex-
ample, we maintained our vocational training program at a
level unchanged from 2019.
2020 was far beyond anything we could have imagined when
we developed our Purposeful Growth agenda for Henkel at the
beginning of the year. But we were able to steer the company
through this unprecedented crisis, doing everything possible
to protect the health and safety of employees, ensuring our
business continuity, serving our customers and consumers,
and supporting communities around the world.
Despite the decline of the global economy, we delivered an
overall robust performance in 2020 across all business units –
thanks to our diversified portfolio, successful innovations,
financial strength and the outstanding commitment of our
employees around the world. For the full year, our results
were at the upper end of our guidance. We recorded sales of
19.3 billion euros, maintained a profitable business with an
adjusted1 EBIT margin of 13.4 percent, and generated a very
strong free cash flow in excess of 2.3 billion euros, almost at
the prior-year level. Based on these results, we will propose a
stable dividend to shareholders at our upcoming Annual
General Meeting.
At the same time, we were able to successfully launch and drive
the implementation of our strategic agenda across all pillars:
shaping a winning portfolio, creating competitive edge by
accelerating impactful innovations, by integrating sustainability
even more firmly in everything we do and by transforming
digital into a value creator, and developing future-ready oper-
ating models. But most important for me, we strengthened
our collaborative culture and created a strong momentum for
change that will enable us to deliver superior performance and
purposeful growth – for our customers and consumers, our
company, teams and shareholders, and for society and the
planet.
1 Adjusted for one-time expenses and income, and for restructuring expenses.
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In the course of 2020, more than 2,000 Henkel colleagues
globally went through a COVID-19 infection. Fortunately, the
vast majority recovered. But I regret to share with you that
some of our valued colleagues also lost their lives to the virus.
Our deepest sympathy, compassion and thoughts are with
their families and loved ones. We will always remember our
colleagues dearly.
Despite the disruption to global supply chains, temporary
mandatory site closures and increased complexity in our
procurement and production processes, we were able to serve
our customers. Even at the peak of the crisis during the second
quarter of 2020, we had more than 80 percent of our sites
operational, enabling us to meet the rising demand for hygiene-
related products in this crisis. This is testament to the perfor-
mance and dedication of our outstanding teams in production
and supply chain in these exceptional times.
We also took action in living up to our responsibility toward
society and supporting our communities. We donated millions
in financial aid to the World Health Organization, the United
Nations Foundation and other organizations dedicated to
fighting the pandemic. We donated 5 million units of our
products to those in need, predominantly personal hygiene
and household cleaning products. We converted production
lines to quickly produce more than 110,000 liters of hand sani-
tizers which we also donated to health authorities, hospitals
and communities. This was complemented by many individual
donations and initiatives by Henkel employees to support
their communities.
Delivering robust business performance in 2020
Overall, our business performance in 2020 remained robust. We
achieved sales of 19.3 billion euros. This is a slight decline in
organic terms of -0.7 percent compared to the prior year. While
organic growth in emerging markets was positive, reaching
3.0 percent, we recorded an organic development of -3.2 per-
cent in mature markets.
In the first quarter, the impact from the crisis was mostly
driven by the downturn in Asia, predominantly affecting our
Adhesive Technologies business. In the second quarter, with
the majority of Asian and European countries as well as North
America in a widespread shutdown, we faced a substantial
decline in sales, namely in specific industrial segments such
as in the automotive sector. But also, our Beauty Care Hair
Salon business was severely affected by the closure of salons
in many countries. Our Laundry & Home Care business, how-
ever, partially benefited from the rising demand for household
and cleaning products. In the third quarter, we recorded a re-
covery and returned to positive organic sales growth across all
business units. This was partly driven by catch-up effects from
the second quarter, but mostly by the underlying strength of
our businesses thanks to the flow of innovations supported by
increased investments in marketing and advertising. In the
fourth quarter we saw a continuation of this positive trend,
even though the onset of a second, more severe wave of
COVID-19 infections and related lockdowns in many coun-
tries again affected our business performance. Nevertheless, in
the second half of 2020, we were able to generate strong or-
ganic sales growth for Henkel with all business units reporting
positive numbers.
For the full year, our Adhesive Technologies business reported
sales below the prior-year level at -4.2 percent in organic terms,
reflecting the overall decline in industrial markets globally.
The organic sales development in our Beauty Care business
was also negative at -2.8 percent, strongly impacted by our
Hair Salon business due to enforced closures. Nevertheless,
our Retail business recorded good growth, driven by the suc-
cessful development of top brands, as well as new product
launches addressing key consumer trends. Our Laundry &
Home Care business achieved a strong organic sales growth of
5.6 percent, fueled both by the surge in demand for hygiene-
related products and by successful innovations addressing in
particular the increased demand for more sustainable products.
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At Group level, adjusted1 earnings before interest and taxes
(EBIT) decreased by 19.9 percent to 2.6 billion euros. Adjusted
return on sales (EBIT margin) was at 13.4 percent, 2.6 percent-
age points lower than in 2019. Adjusted earnings per preferred
share were at 4.26 euros, a decline of 17.9 percent at constant
exchange rates.
The development of our earnings reflects substantially in-
creased expenditures to strengthen brands, technologies and
innovations, as well as to accelerate our digital transformation.
Declining demand in key business segments during the
COVID-19 crisis also negatively affected our profitability. How-
ever, thanks to our successful cost management, continuous
efficiency improvements and the ongoing adaptation of
structures, we were able to partially mitigate the impact
from the crisis on our earnings.
Despite the pandemic, we were able to both deliver strong
improvements in net working capital and generate a free
cash flow of 2.3 billion euros in 2020, while our net financial
position substantially improved to -0.9 billion euros compared
to -2.0 billion at the end of 2019. Our solid financial foundation
enabled us to adhere to our investment priorities and navigate
our company through this crisis.
Our share price development reflects the impact of the COVID-19
crisis on the stock markets. The Henkel preferred share closed
2020 at 92.30 euros, a slight increase of 0.1 percent compared
to the prior year. Accounting for a reinvestment of our dividend
(prior to tax), which we held stable compared to 2019, total
shareholder return amounted to 2.3 percent. This compares to
a DAX performance of 3.5 percent over the same period.
Even though the global crisis impacted our businesses nega-
tively, we will propose to our shareholders at our Annual
General Meeting a stable dividend of 1.85 euros per preferred
share and 1.83 euros per ordinary share. This equals a payout
ratio of 43.7 percent and is thus above the higher end of our
target payout range of 30 to 40 percent. The proposal of a stable
dividend payout is possible thanks to our strong financial
situation, underpinned by the low net financial debt level and
the strong free cash flow achieved in fiscal 2020. Going forward,
our dividend policy of a target payout range of 30 to 40 percent
of adjusted net income after non-controlling interests remains
in place.
Implementing our strategic agenda – despite the crisis
2020 has shown us the fragility of the world we live in, and it
has made clear that the world is looking for new ideas, different
approaches and deeper meaning. I am therefore more convinced
than ever that the strategic agenda introduced last year is the
right one. Our aspiration for purposeful growth aims at
providing new solutions to our customers and consumers,
contributing to a more sustainable way of living, developing
our people and creating a sense of belonging for all of them.
This will allow us to unlock the full potential of our company
and enable us to be a force for good in this world.
Despite our focus on crisis management in 2020, we were able
to launch and start the implementation of our growth agenda.
We are fully committed to driving further progress in 2021 and
the following years.
1 Adjusted for one-time expenses and income, and for restructuring expenses.
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To actively manage our portfolio, we have identified brands
and categories with a total sales volume of more than one bil-
lion euros, predominantly in our consumer businesses, either
for an improved performance or exit. Around 50 percent of
this sales volume is earmarked to be divested or discontinued
by the end of 2021. To date, we have already agreed divestments
with a volume of around 100 million euros. And we are com-
mitted to executing the remainder of the divestments in 2021
as planned. At the same time, we are strengthening our portfolio
through M&A, leveraging our strong balance sheet. In 2020,
we agreed and closed two acquisitions with a total volume of
around 500 million euros in our Beauty Care and Adhesive
Technologies businesses.
In order to further strengthen our competitive edge, we are
accelerating impactful innovations, boosting sustainability as
a differentiating factor and transforming digital into a customer
and consumer value creator.
In 2020, we increased our investments by around 200 million
euros compared to 2019 to strengthen our brands, technologies
and innovations, as well as to accelerate our digital transfor-
mation. And we can see how these are already making a differ-
ence: We were able to further accelerate our innovation pro-
cesses and bring new products faster to market. This helped
us, for example, to respond quickly to the strong surge in
demand for hygiene, disinfecting and cleaning products with
“fast-track innovations.” We focused our efforts in particular
on key trends such as hygiene, more natural and sustainable
products and higher convenience. This resulted in rising
market share in many key markets and categories.
To accelerate innovation and develop new business models,
our consumer business units Beauty Care and Laundry & Home
Care have established internal incubator teams, combining
agile work approaches with the scale and expertise of a global
company: The “Fritz Beauty Lab,” inspired by our founder Fritz
Henkel, aims to identify niches with growth potential for
existing brands or white spots to create completely new
brands. Love Nature is the new sustainability idea factory of
our Laundry & Home Care business, focusing on sustainable
solutions starting in the field of laundry and homecare prod-
ucts. Our new innovation center for Adhesive Technologies at
our headquarters in Düsseldorf, with a total investment of
130 million euros, is nearing completion and will be operational
in the first half of 2021. Going forward, innovation will remain
a key driver to strengthen our competitiveness and win in
highly contested global markets.
Building on our strong track record, we aim to leverage sustain-
ability as a competitive differentiator. We have defined our
next milestones for three key topics which are highly relevant
for consumers, customers, business partners and society at
large: On the way to becoming climate-positive by 2040, we
want to reduce the carbon footprint of our production by
65 percent and save – together with consumers, customers and
suppliers – 100 million tons CO2 by 2025. We are also pursuing
ambitious packaging targets for 2025: 100 percent of our con-
sumer goods packaging will be recyclable or reusable and we aim
to reduce the use of fossil-based virgin plastics by 50 percent.
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In order to ensure future-ready operating models and improve
competitiveness and efficiency, we continuously adapt and
reshape processes and structures across the entire company.
In doing so, we aspire to enable new business models, to step
up customer and consumer proximity with faster decision-
making, and to further increase efficiency. In 2020, for example,
we established a new structure in our Adhesive Technologies
business unit to address and serve specific customer segments
and markets to even better effect. In our Beauty Care and
Laundry & Home Care business units, we further implemented
organizational changes to enable a stronger regional focus and
increase customer and consumer proximity.
A strong culture, shared values and a clear framework for
collaborating as one team form the foundation of our growth
agenda. In 2020 we took steps to foster a culture of collaboration
and empowerment, upskill employees for future capabilities
and enable our people to grow and develop – personally and
professionally. We conducted a global Organizational Health
Survey to identify strengths and areas for improvement, and to
design our cultural journey going forward, backed by a system-
atic 360-degree feedback process. Our efforts to continuously
adapt and evolve our culture and make Henkel an attractive
employer of choice were also reflected in marked improve-
ments in key employer reputation rankings and benchmarks.
In 2020, we were able to further anchor sustainability in every-
thing we do and drive progress along the entire value chain.
We launched new products addressing the rising consumer
expectations toward natural and sustainable products, such as
solid bars under our Beauty Care brands Nature Box and N.A.E.,
or in our Laundry & Home Care business by expanding our Pro
Nature product range and the successful introduction of Love
Nature, a cross-category sustainable brand. In Adhesive Tech-
nologies, we have developed a new technology under the Loctite
brand that allows us to replace polyethylene with paper for use
in food and non-food packaging. Beyond innovations for more
sustainable products, we entered into a virtual power purchase
agreement for energy from renewable sources, which will cover
the energy demand of all Henkel sites in North America. And
we were the first company to issue a plastic waste reduction
bond with a volume of around 100 million euros to finance
measures to reduce plastic waste across our value chain.
This year, Henkel publishes its 30th Sustainability Report
which provides more details, facts and figures on how we live
up to our commitment to sustainability. You can find it at:
www.henkel.com/sustainabilityreport. Based on this strong
foundation, we will drive meaningful change and progress in
sustainability in this decade and beyond.
Another key driver in strengthening our competitive edge is to
transform digital into a customer and consumer value creator
in both our consumer and industrial businesses. To enable
and accelerate this process, we created a new unit in 2020,
Henkel Digital Business, or Henkel dx for short, combining
digital, business process management and IT expertise in one
global organization. Henkel dx has opened its first innovation
hub in Berlin and plans to expand its global network with more
hubs in the future. In the course of 2020, the share of sales
across digital channels increased substantially, with all business
units benefiting.
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Looking back at my first year as Chairman of the Management
Board and my 25th year with Henkel, many thoughts and emo-
tions emerge. I am proud of the progress we have made with
the implementation of our strategic agenda while addressing a
global pandemic. I am impressed by the resilience of our busi-
ness, which has enabled us to achieve a robust business per-
formance and to further strengthen our financial foundation.
But the most important of these is the feeling of gratitude and
heartfelt respect for our employees at Henkel. The performance,
collaboration and positive attitude they showed over the past
year have touched and inspired me. I would like to thank all of
them for their invaluable contributions in this truly exceptional
year.
Looking ahead, I am more confident than ever that our global
team has what it takes to shape our successful future and deliver
on our Purposeful Growth agenda.
Düsseldorf, January 30, 2021
Carsten Knobel
Chairman of the Management Board
Our new strategic framework for purposeful growth is also
reflected in our mid- to long-term financial ambitions. We are
aiming for an organic sales growth of between 2 and 4 percent
and growth of adjusted1 earnings per preferred share in the
mid- to high single-digit percentage range at constant exchange
rates, while maintaining our focus on free cash flow expansion.
As we enter 2021, we still face a high level of uncertainty how
the pandemic will continue to evolve, how quickly the vac-
cination efforts will progress and how this will impact the
widespread restrictions in many countries. We expect that
industrial demand, as well as consumer segments which are
relevant for our company, in particular the Hair Salon business,
will recover. At the same time, we believe consumer demand
will return to normal levels in those categories which saw
higher demand due to the pandemic. In addition, we assume
that current restrictions in many key markets will be lifted in
the course of the first quarter and that there will be no wide-
spread shutdowns of retail and industrial businesses and
production facilities in the remainder of the year.
Based on these assumptions, we expect Henkel in fiscal 2021
to generate organic sales growth of 2.0 to 5.0 percent and
adjusted return on sales (EBIT margin) in the range of 13.5 to
14.5 percent. For adjusted earnings per preferred share (EPS) at
constant exchange rates, we expect an increase in the range of
5.0 to 15.0 percent.
Committed to delivering purposeful growth
On behalf of the Management Board, I would like to thank our
supervisory bodies for their support, as well as their valuable
advice in this challenging year. We would also like to thank
our customers and consumers around the world for their trust
in our company, our brands and technologies. In particular, I
would like to thank you, our shareholders, for your continued
confidence in our company, our strategy and our team in these
exceptional times.
1 Adjusted for one-time expenses and income, and for restructuring expenses.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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“We believe that Henkel is well
equipped for the future and are
confident that we will be able
to move the company further
forward.”
DR. SIMONE BAGEL-TRAH
CHAIRWOMAN OF THE SHAREHOLDERS’ COMMITTEE AND THE
SUPERVISORY BOARD
2020 was a very challenging year for Henkel. The COVID-19
pandemic has drastically changed all aspects of our lives over
the past months and has had a severely adverse effect on the
global economy. In this crisis, the health and safety of our em-
ployees, customers and business partners were and are of the
highest priority for us, prompting us to put a comprehensive
range of protective measures in place at an early stage.
We also focused on keeping our supply chains and production
up and running so that our customers and consumers can con-
tinue to depend on us in these difficult times.
Despite this difficult environment, we were able to generate
sales of 19.3 billion euros. We actively promoted the new Pur-
poseful Growth agenda developed by the Management Board
under Carsten Knobel’s leadership as new Chairman, and have
introduced specific changes that are already starting to show
success.
In light of the challenging conditions and the unusual stress to
which they have been exposed, I would like to thank all Henkel
employees most sincerely on behalf of the Supervisory Board
for their dedication and outstanding commitment over the
past year. My thanks are equally due to the members of the
Management Board who have steered the company with pru-
dence and foresight through these difficult times. I would also
like to express my gratitude to our employee representatives
and works councils for their constantly constructive support
and collaboration throughout this exceptional situation.
Last but not least, I extend my special thanks to you, our share-
holders, for your continued confidence in our company, its
management and employees, and our brands and technologies,
even in these unusual times.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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Ongoing dialog with the Management Board
We continued to diligently discharge in full our Supervisory
Board duties in fiscal 2020 in accordance with the legal statutes,
Articles of Association and rules of procedure governing our
actions. We consistently monitored the work of the Management
Board, advising and supporting it in its stewardship and in the
strategic development of the corporation, and discussing with
it business matters of major importance. In doing so, we were
able to ascertain that the Management Board’s performance of
its duties was legally compliant, fit for purpose, and proper at
all times.
The Management Board and Supervisory Board continued to
cooperate in 2020 through extensive dialog founded on mutual
trust and confidence. The Management Board kept us regularly
and extensively informed of all major issues affecting the cor-
poration’s business and our Group companies with prompt
written and oral reports. Specifically, the Management Board
reported on the business situation, operational development,
business policy, profitability issues, our short-term and long-
term corporate, financial and personnel plans, as well as capital
expenditures and organizational measures. We also discussed
the risk situation and dealt with compliance issues. Financial
reports focused on the sales and profits of the Henkel Group as
a whole, with further analysis by business unit and region. All
members of the Supervisory Board and the Audit Committee
consistently had sufficient opportunity to critically review and
address the issues raised by each of these reports and associated
explanations, and to provide their individual guidance.
Outside of Supervisory Board meetings, the Chairman of the
Audit Committee and I, as Chairwoman of the Supervisory
Board, remained in regular contact with individual members
of the Management Board or with the Management Board as
a whole. This procedure ensured that we were constantly
aware of current business developments and significant
events. The other members were informed of major issues no
later than by the next Supervisory Board or committee meeting.
There were no indications of conflicts of interest involving
Management Board or Supervisory Board members that might
have required immediate disclosure to the Supervisory Board
and reporting to the Annual General Meeting.
Supervisory Board meetings
The Supervisory Board and the Audit Committee each held
four regular meetings in the reporting year. Because of the
COVID-19 pandemic, most of these meetings were a mixture of
personal attendance and video/telephone conferences. Attend-
ance at the meetings of the Supervisory Board and the Audit
Committee – including participation by video/telephone
conference – was 95.4 percent. For details of individual Super-
visory Board members’ attendance at meetings, please refer to
the remuneration report.
In each of our meetings, we discussed the reports submitted
by the Management Board, conferring with it on the develop-
ment of the corporation and on strategic issues. We also re-
viewed the overall economic situation and Henkel’s business
performance. Similarly, we were regularly updated on the im-
pacts of the COVID-19 pandemic and the associated actions
taken to protect our employees.
As already discussed in our last Annual Report, our meeting on
March 3, 2020 focused on the annual and consolidated financial
statements for 2019, including the combined management
report for Henkel AG & Co. KGaA and the Group, together with
the risk report, corporate governance report and separate com-
bined non-financial statement for Henkel AG & Co. KGaA and
the Group, which was issued in the form of the Sustainability
Report. We also approved the declaration of compliance for
2020. In addition, we conferred in depth on the development
of the new corporate strategy, its focal areas and the actions
and activities involved.
In our meeting on April 20, 2020, we focused on the perfor-
mance of our business units in the first three months of the
fiscal year, the impacts of the COVID-19 pandemic and the
H e n k e l A n n u a l R e p o r t 2 0 2 0
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associated efforts to manage this crisis in terms of both assuring
the health of our employees and business partners, and the
analysis of various financial scenarios and associated actions.
We also reviewed the status of implementation of our strategic
priorities and the next steps to be taken. The position occupied
by our Adhesive Technologies business unit in its competitive
environment, the key success factors and the strategic develop-
ment of this business unit were likewise discussed. We also
approved our proposals for resolution by the Annual General
Meeting 2020, which was held online as a result of the COVID-19
pandemic.
In our meeting on September 18, 2020, we focused both on the
performance of our business units over the first eight months,
and on the progress achieved in implementing our strategic
priorities in the business units and functions. Aspects under
the headings “winning portfolio,” “innovation,” “sustainability,”
and “future-ready operating models” were specifically discussed.
We also talked about our sustainability initiatives with regard
to climate positivity, circular economy and social progress, in-
cluding the relevant voluntary engagement of our employees.
Our digitalization strategy and our new unit “Henkel dx” were
further focal areas of discussion, with in-depth examination of
the issues surrounding the creation of digital business value,
the structure of implementation components, and boosting
digital innovation. We likewise reviewed our objectives with
regard to strengthening our culture of collaboration and em-
powering our people.
Our meeting on December 11, 2020 focused on the expected
results for 2020 and our balance sheet and financial planning
for fiscal 2021. We also discussed in detail the budgets of our
business units on the basis of comprehensive documentation.
The intra-Group Finance and HR functions were also on the
agenda, with discussions of the respective organizational
structures, the key challenges, and the strategic priorities
and implementation of same.
Committees of the Supervisory Board
In order to enable us to efficiently comply with the duties
incumbent upon us according to legal statute and our Articles
of Association, we have established an Audit Committee and
a Nominations Committee. Prof. Dr. Theo Siegert and Prof. Dr.
Michael Kaschke, both of whom chaired the Audit Committee
in the year under review, comply with the statutory requirements
of impartiality and expertise in the fields of accounting or au-
diting, with both experienced in the application of accounting
principles and internal control procedures. For more details
on the responsibilities and composition of the committees,
please refer to the corporate governance statement (on pages
35 to 52) and the membership lists on page 277 of this Annual
Report.
Committee activities
Following the appointment of the external auditor by the
2020 Annual General Meeting, it was mandated by the Audit
Committee to audit the annual financial statements and the
consolidated financial statements, including the combined
management report for Henkel AG & Co. KGaA and the Group,
and to review the half-year financial report for fiscal 2020. The
audit fee was also established, and the key audit matters were
discussed. It was agreed that the auditor will notify the Super-
visory Board immediately of any findings or incidents discovered
or occurring during the audit that are material to the performance
of the Supervisory Board’s duties. Appropriate procedures for
the provision of non-audit-related services as permitted in the
relevant EU regulations were specified. The Audit Committee
also obtained the necessary validation of auditor independence
for the performance of these tasks. The Audit Committee like-
wise engaged the external auditor to review the content of the
separate, combined non-financial statement for Henkel AG &
Co. KGaA and the Group, which is compiled as a separate non-
financial report and made available in the public domain
through publication on our website.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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The Audit Committee met four times in the year under review.
The Chairman of the Audit Committee also remained in regular
contact with the auditor outside of the meetings. The meetings
and resolutions were prepared through the provision of reports
and other information by the Management Board. The heads of
the relevant Group functions also reported on individual
agenda items and were available to answer questions. The
Chairman of the Committee reported promptly and in full to
the plenary Supervisory Board on the content and results of
each of the Committee meetings.
The company and Group accounts, including the interim finan-
cial reports (quarterly statements and half-year financial report)
were discussed at all Audit Committee meetings, with all
matters arising being duly examined with the Management
Board. The three meetings at which we discussed and approved
the interim financial reports were attended by the auditor. The
latter reported on its findings with regard to the half-year finan-
cial report that it reviewed on behalf of the Supervisory Board,
on its findings with regard to the quarterly statements that it
reviewed on behalf of the Management Board, and on the main
issues and occurrences relevant to the work of the Audit
Committee. There were no objections raised in response to
these reports.
The Audit Committee also focused in great detail on the ac-
counting process and the efficacy and further development
of the Group-wide internal control and risk management
systems. The efficiency of the risk management system was
reviewed on the basis of the risk reports of previous years.
The report given by the General Counsel & Chief Compliance
Officer on material legal disputes and compliance within the
Group was also discussed, as was the status report submitted
by Internal Audit. The audit plan submitted by Internal Audit,
focusing on audits of the functional reliability and effectiveness
of the internal control system and the compliance organization,
was approved. The Audit Committee likewise discussed treas-
ury risks, their management, and the EMIR mandatory audit
pursuant to Section 32 of the Securities Trading Act [WpHG].
It also monitored the provision of non-audit-related services
by the auditor and adherence to the procedures specified for
same.
Related party transactions and the internal procedures adopted
by the corporation in this respect were also discussed.
At its meeting on February 25, 2021, attended by the auditor,
the Audit Committee discussed the annual and consolidated
financial statements, together with the combined management
report for Henkel AG & Co. KGaA and the Group, and also the
separate, combined non-financial report for Henkel AG & Co.
KGaA and the Group for fiscal 2020, as well as the audit reports
and auditor’s notes, the associated proposal for appropriation
of profit, and the risk report, and prepared the corresponding
resolutions for the Supervisory Board. As in previous years,
other members of the Supervisory Board took part as guests
in this specifically accounting-related meeting of the Audit
Committee.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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Corporate governance and declaration of compliance
The Supervisory Board again dealt with questions of corporate
governance in the reporting year. We particularly focused on
related party transactions, with delegation of responsibility to
the Audit Committee for issuing the requisite approvals. There
were no transactions that required approval or disclosure.
Details of Henkel’s corporate governance can be found in the
corporate governance statement (pages 35 to 52 of this Annual
Report), with which we fully acquiesce.
At our meeting on February 26, 2021, we discussed and approved
the joint declaration of compliance for 2021 to be submitted by
the Management Board, Shareholders’ Committee and Super-
visory Board, as specified in the German Corporate Governance
Code. The full wording of the current and previous declarations
of compliance can be accessed through the company website.
Annual and consolidated financial statements/Audit
In its capacity as auditor appointed for 2020 by the Annual
General Meeting, PricewaterhouseCoopers GmbH Wirtschafts-
prüfungsgesellschaft, Düsseldorf, (PwC) examined the annual
financial statements prepared by the Management Board,
and the consolidated financial statements, together with the
consolidated management report, which has been combined
with the management report for Henkel AG & Co. KGaA for
fiscal 2020. The annual financial statements and the combined
management report were prepared in accordance with German
statutory provisions. The consolidated financial statements
were prepared in accordance with International Financial
Reporting Standards (IFRSs) as endorsed by the EU, and in
accordance with the supplementary German statutory provi-
sions pursuant to Section 315e (1) German Commercial Code
[HGB]. The consolidated financial statements in their present
form exempt us from the requirement to prepare consolidated
financial statements in accordance with German law.
PwC conducted its audits in accordance with Section 317 HGB
and German generally accepted standards for the audit of
financial statements promulgated by the Institute of Public
Auditors in Germany [Institut der Wirtschaftsprüfer, IDW].
Unqualified audit opinions were issued for the annual and the
consolidated financial statements, as well as for the combined
management report.
PwC also reviewed the separate, combined non-financial state-
ment for Henkel AG & Co. KGaA and the Group for fiscal 2020
as compiled by the Management Board to ensure its content
included the disclosures required by law. The review was
based on the International Standard on Assurance Engage-
ments (ISAE) 3000 (Revised): “Assurance Engagements other
than Audits or Reviews of Historical Financial Information” as
published by the International Auditing and Assurance Standards
Board (IAASB) for the purpose of obtaining limited assurance.
Based on its review and the evidence obtained, the auditor is
not aware of any circumstances that might prompt it to believe
that the disclosures in the separate, combined non-financial
report for Henkel AG & Co. KGaA and the Group for fiscal 2020
have not been prepared in compliance with all material aspects
of commercial law provisions.
The annual financial statements, consolidated financial state-
ments, combined management report, and separate, combined
non-financial report for fiscal 2020 were presented in good
time to all members of the Supervisory Board, together with
the corresponding audit reports and relevant auditor’s notes
and the recommendations by the Management Board for the
appropriation of the profit made by Henkel AG & Co. KGaA. We
examined these documents and discussed them at our meeting
on February 26, 2021 in the presence of the auditor, which
reported on its main audit findings. We received and approved
the audit reports. The Chairman of the Audit Committee
provided the plenary session of the Supervisory Board with a
detailed account of the treatment of the annual financial state-
ments, the consolidated financial statements, the combined
management report and the separate, combined non-financial
report at the Audit Committee’s meeting on February 25, 2021.
Having received the final results of the review conducted by
H e n k e l A n n u a l R e p o r t 2 0 2 0
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the Audit Committee and concluded our own examination, we
see no reason for objection to the aforementioned documents.
We confirm the results of PwC’s audits. The assessment by the
Management Board of the position of the company and the
Group coincides with our own appraisal. At our meeting on
February 26, 2021, we concurred with the recommendations of
the Audit Committee and therefore approved the annual finan-
cial statements, the consolidated financial statements, the
combined management report and the separate, combined
non-financial report as prepared by the Management Board.
Additionally, we discussed and approved the proposal by the
Management Board to pay out of the unappropriated profit of
Henkel AG & Co. KGaA a dividend of 1.83 euros per ordinary
share and of 1.85 euros per preferred share, and to carry the
remainder and the amount attributable to the treasury shares
held by the corporation at the time of the Annual General
Meeting forward to the following year. This proposal takes
into account the financial and earnings position of the corpo-
ration, its medium-term financial and investment planning,
and the interests of our shareholders.
We also approved our proposals for resolution at the Annual
General Meeting at our meeting on February 26, 2021. Following
the recommendation of the Audit Committee, the Supervisory
Board proposes the engagement of PwC to audit the annual
and consolidated financial statements and to review the half-
year financial report for fiscal 2021.
Risk management
Risk management issues were examined by both the Audit
Committee and the plenary Supervisory Board, with emphasis
on the risk management system in place at Henkel and any
major individual risks of which we needed to be notified; there
were no identifiable risks that might jeopardize the continued
existence of the corporation as a going concern. The structure
and function of the risk early warning system were also integral
to the audit performed by PwC, which found no cause for
reservation. It is also our considered opinion that the risk
management system corresponds to the statutory requirements
and is fit for the purpose of early identification of developments
that could endanger the continuation of the corporation as a
going concern.
Changes in the Supervisory Board and Management Board
A number of changes occurred in the Supervisory Board and
Management Board, some of which were included in last
year’s Annual Report.
Following the routine election of new shareholder represent-
atives by the Annual General Meeting 2020, Dr. Kaspar von
Braun and Prof. Dr. Theo Siegert left the Supervisory Board.
Simone Menne and Lutz Bunnenberg were elected as new
members to the Supervisory Board; the other shareholder
representatives were re-elected.
During the constituent meeting, I was re-elected as Chair,
while Birgit Helten-Kindlein was confirmed as Vice Chair of
the Supervisory Board. Furthermore, new members were
elected to the Audit and Nominations Committees, with others
being re-elected.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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Following the election of new shareholder representatives, we
thanked the departing members of the Supervisory Board –
some of whom had been members for many years – for their
successful dedication to the interests of the company. We are
particularly grateful to Prof. Siegert for his many years of active
involvement on the Supervisory Board and as Chairman of the
Audit Committee.
Following his death on December 11, 2020, we remembered
Peter Emmerich, who had represented the employees on the
Supervisory Board since April 9, 2018. Michael Baumscheiper
joined the Supervisory Board as the elected replacement.
As already reported last year, Hans Van Bylen left the Manage-
ment Board by mutual agreement at the end of December 31,
2019. Carsten Knobel was appointed new Chairman of the
Management Board and Marco Swoboda as Chief Financial
Officer, both effective January 1, 2020.
Looking ahead to the new fiscal year, the COVID-19 pandemic
will continue to exert strong influence on our daily routines,
and on society and the economy as a whole and will thus
pose further challenges for all employees and managers of
the corporation. We must therefore remain very flexible in our
response to developments while at the same time adjusting to
the long-term impacts. We believe that Henkel is well equipped
for the future and are confident that we will continue to move
the company forward.
We thank you for your ongoing trust and support.
Düsseldorf, February 26, 2021
On behalf of the Supervisory Board
Dr. Simone Bagel-Trah
(Chairwoman)
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Our Management Board
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Carsten Knobel
Marco Swoboda
Chairman of the Management Board
Executive Vice President
Finance (CFO)/Purchasing/Global Business Solutions
Born in Marburg/Lahn, Germany,
on January 11, 1969;
with Henkel since 1995.
Born in Velbert, Germany,
on September 23, 1971;
with Henkel since 1997.
Sylvie Nicol
Executive Vice President
HR/Infrastructure Services
Born in Paris, France,
on February 28, 1973;
with Henkel since 1996.
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Jan-Dirk Auris
Executive Vice President
Adhesive Technologies
Born in Cologne, Germany,
on February 1, 1968;
with Henkel since 1984.
Jens-Martin Schwärzler
Executive Vice President
Beauty Care
Born in Ravensburg, Germany,
on August 23, 1963;
with Henkel since 1992.
Bruno Piacenza
Executive Vice President
Laundry & Home Care
Born in Paris, France,
on December 22, 1965;
with Henkel since 1990.
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Shaping our future
We shape our future on the basis of a long-term strategic
framework that builds on our purpose and our values.
With this strategic framework, we want to be successful in the
current decade – with a clear focus on purposeful growth. This
means, we aim to create superior value for customers and con-
sumers to outgrow our markets, to strengthen our leadership
in sustainability, and to enable our employees to grow both
professionally and personally at Henkel.
The key elements of our strategic framework are a winning
portfolio, clear competitive edge in the areas of innovation,
sustainability and digitalization, and future-ready operating
models – underpinned by a strong foundation of a collabora-
tive culture and empowered people.
WINNING
PORTFOLIO
PURPOSEFUL
GROWTH
COMPETITIVE EDGE
INNOVATION
SUSTAIN-
ABILITY
DIGITALI-
ZATION
COLLABORATIVE CULTURE &
EMPOWERED PEOPLE
FUTURE-
READY
OPERATING
MODELS
H e n k e l A n n u a l R e p o r t 2 0 2 0
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Shares and bonds
In a challenging market environment, Henkel shares held up
well overall in 2020. Henkel preferred shares closed the year
slightly up versus the end of 2019. Following a solid start to the
year, the price of Henkel shares initially dropped significantly
in the wake of the COVID-19 pandemic, the resulting major
decline in economic activity and the collapse of the stock
markets in March. By the end of the 1st quarter, the stock
market had already gradually started recovering, with share
prices rising successively as a result. The price of Henkel
shares also increased, not least thanks to robust performance
in the first three months of 2020 and despite withdrawal of
our guidance for the current fiscal year in April in light of the
uncertainty surrounding the overall economic situation. The
pre-release of our sales performance in the 3rd quarter and our
issuance of a new guidance for full year 2020 on October 9
were very well received. Thereafter, Henkel share prices ini-
tially rose back to the level of year-end 2019. As the pandemic
regained strength at the end of October, prompting predomi-
nantly regional lockdowns, share prices again dropped signifi-
cantly, although Henkel shares quickly recovered as the year
progressed.
Henkel preferred shares closed the year at 92.30 euros, up
slightly year on year (0.1 percent), while the ordinary shares
closed -6.1 percent down at 78.85 euros. Assuming reinvest-
ment of the dividend (before tax deduction) in the shares at
the time of payment, the preferred and ordinary shares gener-
ated a total return of 2.3 and -3.9 percent respectively. Henkel
preferred share performance therefore fell slightly short of
its DAX benchmark (3.5 percent), but was significantly better
than that of the STOXX® Europe 600, which dropped -4.0 percent
over the course of the year. Henkel preferred shares traded at an
average premium of 12.2 percent over the ordinary shares in
2020. The trading volume (Xetra) of preferred shares decreased
slightly in 2020 versus 2019. Each trading day saw an average
of around 604,000 preferred shares changing hands (2019:
657,000). By contrast, the average trading volume of our ordi-
nary shares increased marginally to around 121,000 shares
(2019: 117,000). The market capitalization of our ordinary and
preferred shares totaled 36.9 billion euros as of year-end 2020.
Key data on Henkel shares 2016 to 2020
in euros
Earnings per share
Ordinary share
Preferred share
Share price at year-end1
Ordinary share
Preferred share
High for the year1
Ordinary share
Preferred share
Low for the year1
Ordinary share
Preferred share
Dividend
Ordinary share
Preferred share
Market capitalization1
Ordinary shares
Preferred shares
2016
2017
2018
2019
2020
4.72
4.74
98.98
113.25
105.45
122.90
77.00
88.95
1.60
1.62
45.9
25.7
20.2
5.79
5.81
100.00
110.35
113.70
128.90
96.15
110.10
1.77
1.79
45.6
26.0
19.6
5.32
5.34
85.75
95.40
104.70
115.05
83.30
93.46
1.83
1.85
39.3
22.3
17.0
4.79
4.81
84.00
92.20
89.55
97.02
76.20
81.78
1.83
1.85
38.2
21.8
16.4
3.23
3.25
78.85
92.30
87.55
96.02
55.00
64.94
1.832
1.852
36.9
20.5
16.4
in bn euros
in bn euros
1 Closing share prices, Xetra trading system.
2 Proposal to shareholders for the Annual General Meeting on April 16, 2021.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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Henkel shares have proven to be a good investment for long-
term investors. Over the last ten years, Henkel preferred shares
have shown an average return of 8.8 percent per year (assuming
reinvestment of the dividend before tax deduction), which is
higher than the average DAX performance of 7.1 percent per
year for the same period. By contrast, Henkel preferred shares
have underperformed the DAX over the past five years with an
annual return of -0.5 percent per year for the period compared
to the average DAX increase of 5.0 percent per year.
Shareholders who invested the equivalent of 1,000 euros when
Henkel preferred shares were issued in 1985, and reinvested
the dividends received (before tax deduction) in the stock, had
a portfolio value of 33,056 euros at the end of 2020. This repre-
sents an increase in value of 3,206 percent or an average return
of 10.4 percent per year. Over the same period, the DAX provided
an annual return of 7.3 percent.
Performance of Henkel shares versus market
January through December 2020
in euros
H e n k e l A n n u a l R e p o r t 2 0 2 0
25
Performance of Henkel shares versus market
from 2011 through 2020
in euros
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
H e n k e l A n n u a l R e p o r t 2 0 2 0
26
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Henkel represented in all
major indices
Henkel shares are traded on the Frankfurt Stock Exchange,
predominantly on the Xetra electronic trading platform.
Henkel is also listed on all regional stock exchanges in Ger-
many. In the USA, investors are able to invest in Henkel pre-
ferred and ordinary shares by way of stock ownership certifi-
cates obtained through the Sponsored Level I ADR (American
Depositary Receipt) program. One share is equivalent to four
ADRs. The number of ADRs outstanding for ordinary and pre-
ferred shares at the end of the year increased significantly to
approximately 13.3 million (2019: 10.3 million).
The international importance of Henkel preferred shares derives
not least from their inclusion in many leading indices that
serve as important indicators for capital markets, and as bench-
marks for fund managers. Particularly noteworthy in this
respect are the STOXX® Europe 600, MSCI World and FTSE
World Europe indices. Henkel’s inclusion in the Dow Jones
Titans 30 Personal & Household Goods Index also makes it one
of the most important corporations in the personal and house-
hold goods sector worldwide. As a DAX stock, Henkel is one of
the 30 most significant exchange-listed companies in Germany.
At year-end 2020, Henkel ranked 22nd in terms of the market
capitalization of the preferred shares included in the DAX index
(2019: 19th) and 28th in terms of average trading volume (2019:
26th). Our DAX weighting decreased slightly to 1.49 percent
(2019: 1.53 percent).
Once again our advances in sustainable management earned
recognition from external experts in 2020. Our performance
with respect to non-financial indicators (environmental, social
and governance themes) was reflected in regular positive assess-
ments by various national and international rating agencies,
from which – among other things – sustainability indices are
derived.
Henkel has been represented in the ethics index FTSE4Good
since 2001, and in the STOXX® Global ESG Leaders index family
since its launch by Deutsche Börse in 2011. Our inclusion in
the Ethibel Pioneer Investment Register and the sustainability
indices Euronext Vigeo Europe 120 and Eurozone 120 was also
confirmed, as was our membership in the MSCI Global Sus-
tainability Index series. Henkel is, moreover, one of only
50 companies worldwide to be included in the Global Chal-
lenges Index.
Share data
Security code No.
ISIN code
Stock exch. symbol
Number of shares
Preferred shares Ordinary shares
604840
DE0006048408
HEN.ETR
259,795,875
604843
DE0006048432
HEN3.ETR
178,162,875
ADR data
CUSIP
ISIN code
ADR symbol
Ratio
Preferred shares Ordinary shares
42550U109
US42550U1097
HENKY
1 share : 4 ADRs
42550U208
US42550U2087
HENOY
1 share : 4 ADRs
H e n k e l A n n u a l R e p o r t 2 0 2 0
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The Company
Shares and bonds
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Combined management report
Consolidated financial statements
Further information
Credits
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Financial calendar
International shareholder structure
Compared to the ordinary shares, our preferred shares are the
significantly more liquid class of Henkel stock. Apart from the
treasury shares held, which amount to 2.07 percent, they are
entirely in free float. A large majority are owned by institutional
investors whose portfolios are, in most cases, broadly distrib-
uted internationally.
According to notices received by the company, members of the
Henkel family share-pooling agreement own a majority of the
ordinary shares amounting to 61.54 percent as of April 24, 2020.
We have received no other notices indicating that a shareholder
holds more than 3 percent of the voting rights (notifiable own-
ership).
As of December 31, 2020, treasury stock amounted to 3.7 million
preferred shares.
Shareholder structure:
Institutional investors holding Henkel shares
At November 30, 2020
Source: Investor Update
Shareholder structure:
Ordinary shares
At December 31, 2020
Source: Henkel
Employee share plan
Since 2001, Henkel has offered an employee share plan (ESP)
enabling its employees to acquire Henkel shares. For each
euro invested in 2020 by an employee (limited to 4 percent of
salary up to a maximum of 4,992 euros per year), Henkel added
33 eurocents. Around 12,400 employees in 58 countries pur-
chased Henkel preferred shares under this plan in 2020. At year-
end, some 17,500 employees held a total of around 2.7 million
shares in the ESP securities accounts, representing 1.5 percent
of total preferred shares outstanding. The lock-up period
for newly acquired ESP shares is three years.
Investing in Henkel shares through participation in our ESP
has proven to be very beneficial for our employees in the past.
Employees who invested 100 euros each month in Henkel
shares since the program was first launched held portfolios
valued at 85,900 euros at the end of 2020 (assuming reinvest-
ment of the dividend before tax deduction), which equates to
a total return of 63,100 euros or 377 percent of the cumulative
individual investment.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Henkel bonds
In January 2020, Henkel added a second tranche of 100 million
British pounds to its existing 400 million British pound bond.
The proceeds from the issue were used to further redeem
Henkel’s commercial paper liabilities. In April 2020, Henkel
successfully placed a 330 million Swiss franc bond on the
Swiss stock exchange. The proceeds from the issue were used
partly to refinance the maturing US dollar bond in June 2020
and partly as a liquidity buffer in critical COVID-19 times. In
addition, Henkel was the world’s first company to successfully
place a plastic waste reduction bond in July 2020. The bond is
comprised of two tranches – one of 70 million US dollars and
one of 25 million euros – and has a term of five years.
Bond data1
In 2019, Henkel successfully placed in the capital market two
bonds with a total volume of 750 million British pounds.
One bond was issued with a volume of 400 million British
pounds and a term of three years and another bond with a vol-
ume of 350 million British pounds and a term of seven years.
Issued in 2016, a further bond with a volume of 700 million
euros and a term of five years, and a 300 million British pound
bond with a term of six years, remain outstanding. Further
information can be found on the website:
www.henkel.com/creditor-relations
2016
EUR
700 million
0.00% p.a.
9/13/2021
100.00%
0.00% p.a.
Currency
Volume
Coupon
Maturity
Issue price
Issue yield
Day count convention Act/Act (ICMA) Act/Act (ICMA) Act/Act (ICMA) Act/Act (ICMA) Act/Act (ICMA) 30/360
Denomination
Security code No.
ISIN
1,000 EUR
A2BPAX
XS1488418960 XS1488419935 XS2057835717
GBP
300 million
0.875% p.a.
9/13/2022
99.59%
0.95% p.a.
GBP
350 million
1.25% p.a.
9/30/2026
99.99%
1.25% p.a.
CHF
330 million
0.2725% p.a.
4/28/2023
100.00%
0.2725% p.a.
100,000 GBP
A254YF
100,000 GBP
A2YN22
5,000 CHF
A289R9
1,000 GBP
A2BPAZ
2019
GBP
400 million
1.00% p.a.
9/30/2022
100.00%
1.00% p.a.
2020
GBP
100 million
1.00% p.a.
9/30/2022
100.22%
0.91% p.a.
USD
70 million
1.042% p.a.
7/7/2025
100.00%
1.042% p.a.
30/360
200,000 USD
A289QD
EUR
25 million
0.12% p.a.
7/10/2025
100.00%
0.12% p.a.
Act/Act (ICMA)
200,000 EUR
A289X0
100,000 GBP
A2YN23
XS2057835808 XS2108492468 CH0541537996 XS2198440260 XS2202774969
Listing
Regulated Market of the Luxembourg Stock Exchange
1 Bonds outstanding as of December 31, 2020.
SIX Swiss
Exchange Ltd.
not listed
not listed
H e n k e l A n n u a l R e p o r t 2 0 2 0
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Corporate governance
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Further information
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Contacts
Financial calendar
Pro-active capital market
communication
An active and open information policy ensuring prompt and
continuous communication is a major component of the
value-based management approach at Henkel. Hence, share-
holders, shareholder associations, participants in the capital
market, financial analysts, the media and the public at large
are kept informed of the current situation and major business
changes relating to the company. All stakeholders are treated
equally in this respect.
Up-to-date information is incorporated in the regular financial
reporting undertaken by the company. The dates of the major
recurring publications, and also the dates for the press confer-
ence on the preceding fiscal year and the Annual General
Meeting, are published together with all relevant information
www.henkel.com/ir. This also serves as the
on the internet at
portal for the live broadcast of telephone conferences and
parts of the Annual General Meeting (AGM). The COVID-19
pandemic posed special challenges; however, we were able to
successfully overcome these. Thanks to our comprehensive
commitment to digitalization, we were able to respond quickly
to the changing conditions and to switch our communication
to digital channels. Due to COVID-19 restrictions, our 2020
AGM was held exclusively online. Nevertheless, we made sure
all shareholders had the opportunity to directly obtain exten-
sive information about the company.
Shareholders, the media and the public at large are regularly
provided with comprehensive information through press
releases and information events – most of which took place
online in 2020 – while occurrences with the potential to mate-
rially affect the price of Henkel shares are communicated in the
form of ad hoc announcements. The company’s advancements
and targets in relation to the environment, safety, health and
social responsibility continue to be published annually in our
Sustainability Report.
Henkel is covered by numerous financial analysts at an inter-
national level. More than 25 equity analysts regularly publish
reports and commentaries on the current performance of the
company.
Analyst recommendations
At December 31, 2020
Basis: 26 equity analysts
Henkel places great importance on dialog with investors and
analysts. There were 29 virtual capital market conferences and
roadshows attended by people from Europe, North America
and Asia, through which institutional investors and financial
analysts had an opportunity to engage with representatives
of the company and, in many instances, directly with senior
management. In total, we exchanged views with more than
600 different institutional investors and financial analysts
around the globe in individual or group meetings and tele-
phone or video conferences.
The highlight of our Investor Relations diary was our Investor
and Analyst Conference on March 5, 2020, during which
Carsten Knobel (CEO) and Marco Swoboda (CFO) presented
Henkel’s new strategic framework for purposeful growth. The
conference was originally planned to be held in London. Due
to the COVID-19 pandemic and associated travel constraints,
however, the event was moved at short notice to our site
in Düsseldorf and took place online. Thanks to the innovative
event format, both participants and the interested general
public were able to access the conference digitally.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
The good quality of our capital market communication was
again acknowledged in 2020 by various independent rankings.
In this year’s Institutional Investor Europe Ranking, Henkel
ranked second in the category Best Investor Relations Team in
Household & Personal Care. The ranking is derived from eval-
uations by some 1,200 professional investors and analysts.
In addition, Henkel came first in the NetFederation IR Bench-
mark 2020, which analyzed the investor relations websites
and digital activities of the 50 DAX, MDAX, TecDAX and SDAX
companies with the highest capitalization.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Corporate governance
at Henkel AG & Co. KGaA
The following takeover-relevant information as required in
Sections 289a, 315a of the German Commercial Code [HGB]
and the corporate governance statement in compliance with
Sections 289f, 315d HGB, together with the relevant explanations,
form part of the externally audited and certified combined
management report for Henkel AG & Co. KGaA and the Group.
It should be noted that Section 317 (2) sentence 6 HGB stipulates
that the audit of the disclosures pursuant to Sections 289f (2),
315d HGB is limited to the question as to whether the requisite
information has been disclosed.
Takeover-relevant information
(Disclosures required per Sections 289a, 315a HGB, and
explanations)
Composition of issued capital/Shareholders’ rights
The capital stock of the corporation amounts to 437,958,750
euros. It is divided into a total of 437,958,750 bearer shares (of
no par value), with each share representing a nominal propor-
tion of the capital stock of 1 euro. Of this total, 259,795,875 are
ordinary shares (total nominal proportion of capital stock:
259,795,875 euros, representing 59.3 percent), and 178,162,875
are preferred shares without voting rights (total nominal
proportion of capital stock: 178,162,875 euros, representing
40.7 percent). All shares are fully paid in. Multiple share certif-
icates for shares may be issued. In accordance with Art. 6 (4) of
the Articles of Association, there is no right to individual share
certificates. Each ordinary share grants to its holder one vote
(Art. 21 (1) of the Articles of Association). The preferred shares
grant to their holders all shareholder rights apart from the right
to vote (Sections 139 (1) and 140 (1) German Stock Corporation
Act [AktG] in conjunction with Art. 6 (1) of the Articles of Asso-
ciation). The preferred shares carry the following preferential
right in the distribution of profit (Section 139 (1) AktG in con-
junction with Art. 35 (2) of the Articles of Association) unless
otherwise resolved by the Annual General Meeting:
The holders of preferred shares receive a preferred dividend
in the amount of 0.04 euros per preferred share. If the
profit to be distributed in a fiscal year is insufficient for
payment of a preferred dividend of 0.04 euros per preferred
share, the arrears are paid without interest from the profit
of the following years, with older arrears to be paid in full
before more recent arrears and the preferred dividend from
the profit of a particular fiscal year paid only after the clear-
ance of all arrears. The holders of ordinary shares then receive
a preliminary dividend from the remaining unappropriated
profit of 0.02 euros per ordinary share, with the residual
amount being distributed to the holders of ordinary and
preferred shares in accordance with the proportion of the
capital stock attributable to them.
If the preferred dividend is not paid out either in part or
in whole in a year, and the arrears are not paid off in the fol-
lowing year together with the full preferred share dividend
for that second year, the holders of preferred shares are ac-
corded voting rights until such arrears are paid (Section 140
(2) AktG). Cancellation or limitation of this preferred dividend
requires the consent of the holders of preferred shares (Sec-
tion 141 (1) AktG).
H e n k e l A n n u a l R e p o r t 2 0 2 0
3 2
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Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
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Financial calendar
The shareholders exercise their rights in the Annual General
Meeting per the relevant statutory provisions (especially
Sections 118 ff, 186 AktG) and the corporation’s Articles of
Association (especially Art. 18 ff). In particular, those holding
shares with voting rights may exercise their right to vote either
personally, by postal vote, through a legal representative or
through a proxyholder nominated by the corporation (Section
134 (3) and (4) AktG in conjunction with Art. 21 (2) and (3) of
the Articles of Association) and are also entitled to submit
motions on the resolution proposals of management, speak
on agenda items, and raise pertinent questions and propose
motions (Sections 126 (1) and 131 AktG in conjunction with
Art. 23 (2) of the Articles of Association). The ordinary Annual
General Meeting usually takes place within the first four
months of the fiscal year.
Shareholders whose shares jointly represent at least one twenti-
eth of the capital stock – corresponding to 21,897,938 ordinary or
preferred shares or a combination of both – may request that a
general meeting of shareholders be called. If their proportionate
amount of the capital stock jointly reaches 500,000 euros –
corresponding to 500,000 ordinary or preferred shares or a
combination of both – they may request that items be placed
on the agenda and published (Section 122 (1) and (2) AktG). In
addition, shareholders whose combined share of the capital
stock amounts to 100,000 euros or more – equivalent to
100,000 ordinary or preferred shares or a combination of the
two – may, subject to certain conditions, request that a special
auditor be appointed by the court to examine certain matters
(Section 142 (2) AktG).
Through the use of electronic communications, particularly
the internet, the corporation makes it easy for shareholders
to participate in the Annual General Meeting. It also enables
them to be represented by proxyholders for exercising their
voting rights. The reports, documents and information required
by law for the Annual General Meeting, including the financial
statements and annual reports, are made available on the in-
ternet, as are the agenda for the Annual General Meeting and
any countermotions or nominations for election by share-
holders that require publication.
Restrictions with respect to voting rights or
the transfer of shares
Generally, preferred shares do not convey any voting rights
(Sections 139 (1), 140 (1) AktG; please refer to the remarks above
for further details). Voting rights attached to treasury shares
held by the corporation (Section 71b AktG) and to ordinary
shares for which the statutory notification requirement has
not been met (Section 44 sentence 1 German Securities Trading
Act [WpHG]) may not be exercised. The voting rights attached
to ordinary shares are also excluded by law in the cases cited
in Section 136 AktG (conflicts of interest concerning ordinary
shares held by members of the Management Board, Supervisory
Board or Shareholders’ Committee).
A share-pooling agreement has been concluded between
members of the families of the descendants of company
founder Fritz Henkel, pursuant to which the members agree
on how to exercise the voting rights conveyed by their relevant
ordinary shares in Henkel AG & Co. KGaA and ensure their
voting rights are exercised consistently. The agreement also
contains restrictions with respect to transfers of the ordinary
shares covered (Art. 7 of the Articles of Association).
Henkel preferred shares acquired by employees through the
employee share plan, including bonus shares acquired with-
out additional payment, are subject to a company-imposed
contractual lock-up period of three years, which begins on the
first day of the respective participation period. The shares may
not be sold before expiration of this lock-up period. If employee
shares are sold during the lock-up period, the bonus shares are
forfeited.
Henkel preferred shares acquired by employees through the
Long Term Incentive (LTI) Plan 2020+ are also subject to a com-
pany-imposed contractual lock-up period and may not be sold
before expiration of the four-year term of each tranche.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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The Company
Shares and bonds
Corporate governance
Combined management report
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Further information
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Financial calendar
Contractual agreements also exist with members of the Manage-
ment Board governing lock-up periods for Henkel preferred
shares which they purchase out of part of their variable annual
cash remuneration (for additional information, please refer to
the description the remuneration system on pages 53 to 76).
Major shareholders
According to notifications received by the corporation, as of
April 24, 2020, a total of 61.54 percent of the voting rights are
held by members of the Henkel family share-pooling agree-
ment (for additional information, please see the disclosures
provided in the notes to the consolidated financial statements
under Note 42 on pages 271 and 272). No other direct or indirect
investment in capital stock exceeding 10 percent of the voting
rights has been reported to us or is known to us.
Shares with special rights
There are no shares carrying multiple voting rights, preference
voting rights, maximum voting rights or other special controlling
rights.
Statutory requirements and provisions in the Articles of
Association governing the appointment and dismissal
of members of the Management Board and amendment of
the Articles of Association
Decisions regarding the appointment and dismissal of personally
liable partners are taken by the Shareholders’ Committee of
Henkel AG & Co. KGaA and not by the Annual General Meeting
(Art. 26 of the Articles of Association). Henkel Management AG
is the sole Personally Liable Partner of the corporation (Art. 8 (1)
of the Articles of Association).
The Supervisory Board of Henkel Management AG is responsible
for the appointment and dismissal of members of the Manage-
ment Board of Henkel Management AG (Management Board).
The appointments are for a maximum tenure of five years,
although initial appointments tend to be for a period of three
years, in accordance with the recommendations of the German
Corporate Governance Code (GCGC). Reappointment or an
extension of tenure is permitted for a maximum period of five
years in each case (Section 84 (1) AktG). The Supervisory Board
may revoke the appointment as member of the Management
Board for good cause or reason, which may consist of gross
dereliction of management board duties or inability to properly
manage the company’s affairs (Section 84 (3) AktG). The Super-
visory Board exercises due discretion when appointing and
revoking appointments.
The Management Board is composed of at least two members in
accordance with Art. 7 (1) of the Articles of Association of Henkel
Management AG. The Supervisory Board of Henkel Management
AG is also responsible for determining the number of members
on the Management Board. The Supervisory Board can appoint a
member of the Management Board as Chairperson.
Unless otherwise mandated by statute or the Articles of Asso-
ciation, the resolutions of the Annual General Meeting of
Henkel AG & Co. KGaA are adopted by simple majority of
the votes cast. If a majority of capital is required by statute,
resolutions are adopted by simple majority of the voting capital
represented (Art. 24 of the Articles of Association). This also
applies to changes in the Articles of Association. However,
modifications to the object of the corporation require a three-
quarters’ majority (Section 179 (2) AktG). The Supervisory Board
and Shareholders’ Committee have the authority to resolve
purely formal modifications of and amendments to the Articles
of Association (Art. 34 of the Articles of Association). By
resolution of the Annual General Meeting, the Supervisory
Board is also authorized to amend Art. 5 and 6 of the Articles
of Association with respect to each use of the authorized
capital and upon expiration of the term of the authorization.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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Authorization of the Management Board to issue or
buy back shares
The resolution adopted by the Annual General Meeting on
April 13, 2015, authorizing the Personally Liable Partner, with
the approval of the Shareholders’ Committee and of the Super-
visory Board, to increase the capital of the corporation by up
to a nominal amount of 43,795,875 euros in total by issuing up
to 43,795,875 new non-voting preferred shares for cash and/or
in-kind consideration expired on April 12, 2020.
New authorized capital was created by resolution of the Annual
General Meeting on June 17, 2020 (Art. 6 (5) of our Articles of
Association). Under the new resolution, the Personally Liable
Partner is authorized, with the approval of the Shareholders’
Committee and of the Supervisory Board, to increase the capital
of the corporation at any time through to June 16, 2025, by up
to a nominal amount of 43,795,875 euros in total from the issu-
ance of up to 43,795,875 new non-voting preferred bearer shares
for cash consideration (Authorized Capital 2020). The new shares
have exactly the same rights as the preferred bearer shares
already in circulation in respect of eligibility for distribution
of profits or corporation assets. Existing shareholders must be
granted pre-emptive rights. Pursuant to Section 186 (5) sentence 1
AktG, the new shares can be acquired by one or more banks or
companies to be nominated by the Personally Liable Partner
on condition that they offer them for purchase to the shareholders.
The authorization may be utilized to the full extent allowed or
once or several times in installments. The new non-voting
preferred shares participate in profit distributions from the
beginning of the fiscal year in which they are issued. To the
extent permitted by law, the Personally Liable Partner may,
with the approval of the Shareholders' Committee and of the
Supervisory Board and in derogation from Section 60 (2) AktG,
determine that the new shares shall participate in profits from
the beginning of a fiscal year that has already elapsed and for
which, at the time of their issuance, no resolution has yet been
passed by the Annual General Meeting on the appropriation of
retained earnings.
In addition, the Personally Liable Partner is authorized to pur-
chase ordinary and/or preferred shares of the corporation at
any time until April 7, 2024 up to a maximum proportion of
10 percent of the capital stock existing at the time the resolution
is adopted by the Annual General Meeting or at the time the
authorization is exercised, whichever is lower. Equity derivatives
(put and/or call options and/or forward contracts or a combi-
nation of these) can also be used for such purchase. The
volume of any and all shares purchased using such derivatives
must not exceed 5 percent of the capital stock existing at the
time the resolution is adopted by the Annual General Meeting
or at the time the authorization is exercised, whichever is
lower. The terms of the derivatives must not exceed 18 months
in each case and shall be contracted such that, after April 7,
2024, it will not be possible to acquire treasury shares through
exercise of such derivatives.
This authorization to purchase treasury shares can be exercised
for any legal purpose. To the exclusion of the pre-emptive rights
of existing shareholders, treasury shares may, in particular, be
transferred to third parties for the purpose of acquiring entities
or participating interests in entities. Treasury shares may also
be sold to third parties against payment in cash, provided that
the selling price is not significantly below the quoted market
price at the time of share disposal. Treasury shares may also be
offered for purchase or transferred to members of the corpora-
tion’s staff or managers of affiliated companies, particularly in
connection with share-based payment plans, including the
Long Term Incentive (LTI) Plan 2020+. The shares may likewise
be used to satisfy warrants or conversion rights granted by the
corporation. The Personally Liable Partner is also authorized,
with the approval of the Shareholders’ Committee and of the
Supervisory Board, to cancel treasury shares without the need
for further resolution by the General Meeting.
Insofar as shares are issued or used to the exclusion of pre-
emptive rights, the proportion of capital stock represented by
such shares shall not exceed 10 percent.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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Combined management report
Consolidated financial statements
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Credits
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Financial calendar
Concerning the number of treasury shares and their use,
please refer to the disclosures provided in the notes to the
financial statements of Henkel AG & Co. KGaA, Note 10, on
pages 13 and 14, and in the notes to the consolidated financial
statements, Note 10, on pages 208 and 209.
Material agreements governed by a change of control, and
compensation agreements in the event of a takeover bid
The corporation has not entered into any material agreements
governed by a change of control in the wake of a takeover
bid, nor any compensation agreements with members of the
Management Board or individual employees in the event of
a takeover bid.
Corporate governance statement
(Disclosures required under Sections 289f, 315d HGB, and
explanations)
The following statement takes into account the relevant rec-
ommendations of the German Corporate Governance Code
(GCGC) as amended on December 16, 2019, and contains all
disclosures and explanations required according to Sections
289f and 315d (corporate governance statement) of the German
Commercial Code [HGB]. It should be noted that Section 317 (2)
sentence 6 HGB stipulates that the audit of the disclosures
pursuant to Sections 289f (2), 315d HGB is limited to the question
as to whether the requisite information has been disclosed.
The Management Board, the Shareholders’ Committee and the
Supervisory Board are committed to ensuring that the manage-
ment and stewardship of the corporation are conducted in a
responsible and transparent manner aligned to achieving a
long-term increase in shareholder value. With this in mind,
they have pledged allegiance to the following three principles:
Value creation as the foundation of our management
approach
Sustainability achieved through the application of
socially responsible management principles
Transparency supported by an active and open
information policy
The GCGC was introduced in order to promote confidence
among investors, customers, the workforce and the general
public in the management and oversight of listed German
corporations.
The aim of the GCGC is to make the German corporate govern-
ance system with its institutional segregation of management
(Management Board) and oversight (Supervisory Board) trans-
parent and comprehensible. The GCGC offers fundamental
principles, recommendations and suggestions with regard to
the management and oversight of German listed companies
that are recognized nationally and internationally as standards
of good and responsible corporate governance.
How Henkel applies the GCGC
The GCGC is substantially aligned to the statutory provisions
applicable to a German joint stock corporation (“Aktiengesell-
schaft” [AG]). It is applied analogously by Henkel AG & Co. KGaA
(the corporation). A description is provided below to enable a
better understanding of the principles underlying the manage-
ment and control structure of the corporation and the special
features distinguishing us from an AG which derive from our
specific legal form and our Articles of Association, with indi-
cation also of the primary rights accruing to the shareholders
of Henkel AG & Co. KGaA.
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The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Legal form/Special statutory features of
Henkel AG & Co. KGaA
Henkel is a “Kommanditgesellschaft auf Aktien” [KGaA]. A
KGaA is a company with a legal identity (legal entity) in which
at least one partner has unlimited liability with respect to the
company’s creditors (personally liable partner). The other
partners’ liability is limited to their shares in the capital stock
and they are thus not personally liable for the company’s debts
(limited partners per Section 278 (1) German Stock Corporation
Act [AktG]).
In terms of its legal structure, a KGaA is a mixture of a joint
stock corporation [AG] and a limited partnership [KG], with
a leaning toward stock corporation law. The differences with
respect to an AG are primarily as follows: The duties of the
executive board of an AG are performed at the corporation by
Henkel Management AG – acting through its Management
Board – as the sole Personally Liable Partner (Sections 278 (2)
and 283 AktG in conjunction with Art. 11 of our Articles of As-
sociation). The corporation is the sole shareholder of Henkel
Management AG.
The rights and duties of the supervisory board of a KGaA are
more limited compared to those of the supervisory board of
an AG. Specifically, the supervisory board of a KGaA is not
authorized to appoint personally liable partners, preside over
the partners’ contractual arrangements, impose procedural
rules on the management board, or rule on business transac-
tions. These duties are performed for the corporation by the
Shareholders’ Committee and by the Supervisory Board of
Henkel Management AG respectively. A KGaA is not required
to appoint a director of labor affairs, even if, like Henkel, the
company is bound to abide by Germany’s Codetermination
Act of 1976.
The general meeting of a KGaA essentially has the same rights
as the shareholders’ meeting of an AG. For example, it votes on
the appropriation of earnings, elects members of the super-
visory board (shareholder representatives) and formally approves
the supervisory board’s actions. It appoints the auditor and
also votes on amendments to the articles of association and
measures that change the company’s capital, which are imple-
mented by the management board. Additionally, as stipulated
by the legal form, it also votes on the adoption of the annual
financial statements of the company, formally approves the
actions of the personally liable partner (general partner), and
elects and approves the actions of the members of the share-
holders’ committee as established under the articles of asso-
ciation. Resolutions passed in general meeting require the
approval of the personally liable partner where they involve
matters which, in the case of a limited partnership, require the
authorization of the personally liable partners and that of the
limited partners (Section 285 (2) AktG) or relate to the adoption
of annual financial statements (Section 286 (1) AktG).
According to our Articles of Association, in addition to the Super-
visory Board, Henkel also has a standing Shareholders’ Com-
mittee comprising a minimum of five and a maximum of ten
members, all of whom are elected by the General Meeting
(Art. 27 of the Articles of Association). The Shareholders’
Committee is required in particular to perform the following
functions (Section 278 (2) AktG in conjunction with Sections
114 and 161 HGB, and Art. 8, 9 and 26 of the Articles of
Association):
It acts in place of the General Meeting in guiding the
business activities of the corporation.
It decides on the appointment and dismissal of the Person-
ally Liable Partners.
It holds both the power of representation and executive
powers over the legal relationships prevailing between the
corporation and Henkel Management AG, the Personally
Liable Partner.
It exercises the voting rights of the corporation in the Annual
General Meeting of Henkel Management AG, thereby
choosing its three-member Supervisory Board which, in
turn, appoints and dismisses the members of the Manage-
ment Board.
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It determines the rules of procedure for Henkel Manage-
ment AG and specifies which transactions are subject to its
approval.
There were no changes in the Group management and super-
visory structure in the year under review. The following chart
illustrates the structure of the corporation.
Structure of Henkel AG & Co. KGaA
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
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Contacts
Financial calendar
H e n k e l A n n u a l R e p o r t 2 0 2 0
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The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Application of the German Corporate Governance Code
(GCGC)
Where the GCGC offers recommendations concerning the
duties and responsibilities of a supervisory board that are
performed by the corporation’s Shareholders’ Committee or
the Supervisory Board of Henkel Management AG in compliance
with the Articles of Association, those recommendations have
been adopted accordingly for the Shareholders’ Committee and
the Supervisory Board of Henkel Management AG respectively.
Such recommendations by the GCGC relate to the composition
of the Management Board, succession planning, the length of
first terms in office, reappointment and specification of an age
limit, definition of a remuneration system and of total remu-
neration, specification of the amount of variable remunera-
tion to be paid to the Management Board and of the monetary
arrangements upon termination of a contract.
Taking into account the special features arising from our legal
form and Articles of Association, the corporation complies
with all recommendations (“shall” provisions) of the GCGC,
with the following exceptions:
According to Recommendation C.5 GCGC, management
board members of listed companies should not accept more
than two supervisory board appointments or comparable
offices in non-Group listed companies. Nor should they
chair a supervisory board of a non-Group listed company.
Whether the number of mandates held by members of the
management board remains appropriate is to be assessed
on a case-by-case basis as a more reasonable approach,
rather than by means of a rigid upper limit.
In derogation from Recommendation D.8 GCGC, individual
meeting attendance by Supervisory Board members is
disclosed together with individual meeting attendance by the
members of the Shareholders’ Committee in the remunera-
tion report and not in the report of the Supervisory Board.
According to Recommendation G.8 GCGC, any subsequent
change in performance targets or comparison parameters
should be precluded in the case of variable remuneration
components. Following modifications to the Management
Board remuneration since 2019 with regard to the Long
Term Incentive (LTI) tranches issued in 2017 and 2018 – of
which the three-year performance measurement periods end
on December 31, 2019 and December 31, 2020 respectively –
the method of performance measurement derogates from
this recommendation insofar as the related benchmark
parameters are determined pro rata temporis in accordance
with the previously valid conditions for the period up to
December 31, 2018, and for the period since January 1, 2019
in accordance with the conditions effective from 2019. This
will ensure a cogent and consistent incentive system of
Management Board compensation.
In keeping with Recommendation G.11 GCGC giving super-
visory boards the option of considering unusual develop-
ments, the Supervisory Board of Henkel Management AG
can, at its discretion, include reasonable consideration of
unusual developments – the effects of which are not appro-
priately reflected in the achievement of the targets – when
determining the targets for the Short Term Incentive (STI)
and for the LTI. This can result in both higher and lower
target achievement values and, therefore, corresponding
payout amounts.
According to Recommendation G.10 GCGC, the amount cor-
responding to the variable components of remuneration
awarded to the members of the Management Board should
be predominantly invested by them in company shares, or
be awarded in appropriately share-based form. Long-term
variable remuneration awards to Management Board mem-
bers should be subject to a four-year lock-up period.
In derogation from this recommendation, the portion of
the personal investment in Henkel preferred shares (share
deferral) to be made under the STI scheme in relation to the
at-target remuneration (target achievement, functional
factor 1) amounts to around 25 percent of the total variable
remuneration (comprising the STI and the LTI) and around
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The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
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Financial calendar
47 percent of the total long-term remuneration (comprising
the share deferral and the LTI).
The lock-up period for the Henkel preferred shares expires
in each case on December 31 of the fourth year following the
remuneration year. This share deferral ensures that the mem-
bers of the Management Board are required to accumulate a
significant share portfolio during the rolling lock-up period,
and that they participate in the long-term performance of
the corporation, whether this be positive or negative. This
share portfolio continues to grow due to the fact that shares
are sold, if at all, only in exceptional instances once the
respective lock-up period has expired.
The performance measurement period for the LTI is three
years. The LTI is paid in cash once the corporation’s annual
financial statements for the final year in the performance
measurement period have been approved by the Annual
General Meeting.
In keeping with the objectives of the Management Board
remuneration policy, this structure of the STI and LTI not
only rewards sustainably profitable growth and thus sup-
ports the long-term development of Henkel, but also aligns
the Management Board remuneration to the interests of the
corporation’s shareholders.
In derogation from Recommendation G.12 GCGC to refrain
from premature payment of variable remuneration compo-
nents in the event of termination of a Management Board
contract, all lock-up periods relating to investments in
Henkel preferred shares that are financed by the recipients
(share deferral) end if said recipient dies. By the same token,
LTI entitlements with regard to outstanding tranches are
settled on the basis of budget figures and paid to the heirs.
Notwithstanding the aforementioned exception and the
special features arising from its legal form, the corporation
has adopted the discretionary suggestions of the GCGC.
The corresponding declarations of compliance together with
the reasons for deviations from recommendations can be
found on our website: www.henkel.com/ir.
Remuneration report/Remuneration system
For details of the remuneration report for fiscal 2020, please
refer to the Annual Report 2020, which can be found on our
website www.henkel.com/ir. For details per Section 87a (1)
AktG of the remuneration system in place for the Management
Board, please refer to the notice of convocation of the Annual
General Meeting on June 17, 2020 and the corresponding
resolution, both of which are also available on the website
www.henkel.com/ir.
The remuneration of the members of the Supervisory Board
and of the Shareholders’ Committee is governed by Article 17
(Supervisory Board remuneration) and Article 33 (Shareholders’
Committee remuneration) of the Articles of Association of
Henkel AG & Co. KGaA. According to Section 113 (3) AktG, listed
companies must adopt resolutions governing the remuneration
of their supervisory boards at least every four years, whereby a
resolution simply confirming the status quo is permissible.
Such a resolution will be proposed for the first time at our
Annual General Meeting 2021.
Managers’ transactions
In accordance with Article 19 (1) of Regulation (EU) No. 596/2014
of the European Parliament and of the Council on Market
Abuse (Market Abuse Regulation), members of the Management
Board, the Supervisory Board and the Shareholders’ Commit-
tee, and parties related to same, are obliged by law to disclose
notifiable transactions involving shares in Henkel AG & Co.
KGaA or their derivative financial instruments where the value
of such transactions by the member, or a party related to the
member, attains or exceeds 20,000 euros in a calendar year.
The transactions reported to the corporation in the past fiscal
year were properly disclosed and can be seen on the website:
www.henkel.com/ir.
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The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
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Financial calendar
Principles of corporate governance/Compliance
The members of the Management Board conduct the corpora-
tion’s business with the care of a prudent and conscientious
business director in accordance with legal requirements, the
Articles of Association of Henkel Management AG and the
Articles of Association of Henkel AG & Co. KGaA, the rules of
procedure governing the actions of the Management Board,
the provisions contained in the individual contracts of employ-
ment of its members, and also the compliance guidelines and
resolutions adopted by and within the Management Board.
Corporate management principles which go beyond the statutory
requirements are derived from our purpose, our vision, our
mission and our values. For our corporation to be successful,
it is essential that we share a common approach to entrepre-
neurship. We have defined a clear strategic framework with a
long-term horizon. It guides us in making the right decisions
and helps us to concentrate on our strategic priorities and
focus resolutely on our ambition for the future.
We want to create value – for our customers and our consumers,
for our people, for our shareholders, as well as for the wider
society and communities in which we operate.
Our purpose:
Creating sustainable value.
Our vision:
Leading with our innovations, brands and technologies.
Our mission:
Serving our customers and consumers worldwide as the
most trusted partner with leading positions in all relevant
markets and categories – as a passionate team united by
shared values.
Our values:
We put our customers and consumers at the center of
what we do.
We value, challenge and reward our people.
We drive excellent sustainable financial performance.
We are committed to leadership in sustainability.
We shape our future with a strong entrepreneurial spirit
based on our family business tradition.
The corporate bodies of Henkel and our employees worldwide
are guided by this purpose, this vision, this mission, and these
values. They reaffirm our ambition to meet the highest ethical
standards in everything we do. And they guide our employees
in all the day-to-day decisions they make, providing a compass
for their conduct and actions.
Henkel is committed to ensuring that all business transactions
are conducted in an ethically irreproachable, legal fashion.
Consequently, Henkel expects all our employees not only to
respect the corporation’s internal rules and all relevant laws,
but also to avoid conflicts of interest, to protect Henkel’s assets
and to respect the social values of the countries and cultural
environments in which Henkel does business. The Manage-
ment Board has therefore issued a series of Group-wide codes
and standards with precepts that are binding worldwide. These
regulatory instruments are not static, but are periodically re-
viewed and amended as appropriate, evolving in step with the
changing legal and commercial conditions that affect Henkel
as a globally active corporation. The Code of Conduct supports
our employees in ethical and legal issues. The Leadership
Commitments define the principles of management conduct.
The Code of Corporate Sustainability describes the principles
that drive our sustainable, socially responsible approach to
business. This code also enables Henkel to meet the commit-
ments derived from the United Nations Global Compact.
Ensuring compliance with laws and regulations is an integral
component of our operating models and business processes.
Henkel has established a Group-wide compliance organization
with locally and regionally responsible compliance officers led
by a globally responsible General Counsel & Chief Compliance
Officer (CCO). The General Counsel & CCO, supported by the
Corporate Compliance Office and the interdisciplinary
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Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
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Contacts
Financial calendar
Compliance & Risk Committee, manages and controls compli-
ance-related activities undertaken at the corporate level, coor-
dinates training courses, oversees fulfillment of both inter-
nal and external regulations, and takes appropriate action in
the event of compliance violations.
The local and regional compliance officers are responsible for
organizing and overseeing the training activities and imple-
mentation measures tailored to the specific local and regional
requirements. They report to the Corporate Compliance Office.
The General Counsel & CCO reports regularly to the Manage-
ment Board and to the Audit Committee of the Supervisory
Board on identified compliance violations.
The issue of compliance is also a permanent item in the target
agreements signed by all managerial staff of Henkel. Due to
their position, it is particularly incumbent on them to set the
right example for their subordinates, to effectively communicate
the compliance rules and to ensure through the implementation
of suitable organizational measures that these are obeyed.
The procedures to be followed in the event of complaints or
suspicion of malpractice also constitute an important element
of the compliance policy. In addition to our internal reporting
system and complaint registration channels, employees and
third parties may also, for the purpose of reporting serious
violations to the Corporate Compliance Office, anonymously
use a compliance hotline operated by an external service pro-
vider. The Head of the Corporate Compliance Office is man-
dated to initiate the necessary follow-up procedures.
Our corporate compliance activities are focused on antitrust
law and the fight against corruption. In our Code of Conduct,
the corporate guidelines based upon it, and in other publica-
tions, the Management Board clearly expresses its rejection of
all infringements of the principles of compliance, particularly
antitrust violations and corruption. We do not tolerate such
violations in any way. For Henkel, bribery, anticompetitive
agreements, or any other violations of laws are no way to initiate
or conduct business.
A further compliance-relevant area relates to capital market
law. Supplementing the legal provisions, internal codes of
conduct have been put in place to regulate the treatment of
issues and information that have the potential to materially
affect share prices. The corporation has an Ad Hoc Committee
comprised of representatives from various departments. In
order to ensure that potential insider information is handled
as required by law, this Committee reviews occurrences for
their possible effect on share prices, determining the need to
issue reports to the capital markets on an ad hoc basis. The
ultimate authority to decide how to handle potential insider
information lies with the Management Board. There are also
rules that go beyond the legal requirements, governing the
behavior of the members of the Management Board, the Super-
visory Board and the Shareholders’ Committee, and also em-
ployees of the corporation who, due to their function or involve-
ment in projects, have access to potential insider information.
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The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
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Management and control structure
Management Board
The Management Board is composed of at least two members
in accordance with Art. 7 (1) of the Articles of Association of
Henkel Management AG. The Supervisory Board of Henkel
Management AG is also responsible for determining the number
of members on the Management Board; it can appoint a member
of the Management Board as Chairperson.
The members of the Management Board are segregated from
both the Supervisory Board and the Shareholders’ Committee
of Henkel AG & Co. KGaA and from the Supervisory Board of
Henkel Management AG; no member of the Management Board
may also sit on either of the aforementioned Supervisory
Boards nor the Shareholders’ Committee.
As the executive body of the Group, the Management Board
is bound to uphold the interests of the corporation and is re-
sponsible for ensuring a sustainable increase in shareholder
value. The members of the Management Board are responsible
for managing Henkel’s business operations in their entirety.
The individual Management Board members are assigned, in
accordance with a business distribution plan, areas of compe-
tence for which they bear lead responsibility. The members
of the Management Board cooperate closely as colleagues,
informing one another of all major occurrences within their
areas of competence and conferring on all actions that may
affect several such areas. Further details relating to coopera-
tion and the division of operational responsibilities within the
Management Board are regulated by the rules of procedure
issued by the Supervisory Board of Henkel Management AG.
It is the duty of the Management Board to prepare the annual
financial statements of Henkel AG & Co. KGaA, the consolidated
financial statements and combined management reports for
Henkel AG & Co. KGaA and the Group, and the interim financial
reports. The Management Board is responsible for management
of the overall business including planning, coordination,
allocation of resources, and control/risk management. It must
also ensure compliance with legal provisions, regulatory re-
quirements and internal company guidelines, and take steps
to ensure that Group companies also observe them. To this end,
the Management Board has put a comprehensive compliance
management system in place that also enables confidential
whistleblowing.
The Management Board adopts its resolutions in meetings held
at regular intervals or by written procedure. Decisions by the
Management Board are taken on the basis of detailed infor-
mation submitted by the business units and central functions
and – to the extent deemed necessary – by external consultants.
Wherever possible, Management Board resolutions are adopted
unanimously. In the absence of a unanimous vote, the major-
ity decides; in the event of a tie, the Chair of the Management
Board has the casting vote. If outvoted, the Chair has a veto
right. Exercising the veto right prompts renewed debate of the
resolution by the Management Board. If the veto right is exer-
cised again in response to the proposed adoption of a resolu-
tion, the matter is forwarded to the Shareholders’ Committee
for a final decision.
Supervisory Board and Shareholders’ Committee;
(sub)committees
CCoommppoossiittiioonn,, dduuttiieess
The corporation’s Supervisory Board is composed of equal
numbers of shareholder and employee representatives as
specified in Germany’s 1976 Codetermination Act, and is made
up of 16 members. In keeping with the 1976 Codetermination Act
and the relevant voting procedures, the eight employee repre-
sentatives are elected by the workforce and the eight shareholder
representatives by the General Meeting. All members of the
Supervisory Board are bound in equal measure to protect the
interests of the corporation. Members are appointed for five-
year terms unless otherwise specified at election. At the last
election of the shareholder representatives by the Annual Gen-
eral Meeting 2020, their term of office was set at four years.
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The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
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Financial calendar
It is the responsibility of the Supervisory Board to advise and
supervise the Management Board in the performance of its
business management duties. The Supervisory Board regularly
discusses business performance and planning with the Manage-
ment Board. It reviews the annual financial statements of
Henkel AG & Co. KGaA and the Group’s consolidated financial
statements together with the associated combined management
reports and the non-financial statement, taking into account
the reviews and audit reports submitted by the auditor. It also
votes on the proposal of the Management Board regarding
the appropriation of profit and submits to the Annual General
Meeting a proposal for the appointment of the external auditor.
As a general rule, the Supervisory Board meets four times per
year. If deemed necessary, the Management Board does not
participate in such meetings. The Supervisory Board reaches
its decisions by a simple majority of the votes cast. In the
event of a tie, the Chair has the casting vote. The Supervisory
Board has established an Audit Committee and a Nominations
Committee.
The Audit Committee is made up of three shareholder and
three employee representative members of the Supervisory
Board. Each member is elected by the Supervisory Board based
on nominations of their fellow shareholder or fellow employee
representatives on the Board. The Chair of the Audit Committee
is elected based on a proposal of the shareholder representative
members. As of December 31, 2020, the following were members
of the Audit Committee: Prof. Dr. Michael Kaschke (Chair),
Simone Menne (Vice Chair) and Dr. Simone Bagel-Trah as
shareholder representatives, and Birgit Helten-Kindlein, Edgar
Topsch and Michael Vassiliadis as employee representatives.
It is a statutory requirement that the Audit Committee includes
at least one independent member with expertise in the fields
of accounting or auditing; all members must be familiar with
the sector in which the corporation operates. Henkel’s Audit
Committee meets these requirements. Prof. Dr. Michael Kaschke,
current Chair of the Audit Committee, and Simone Menne
are both experts in the fields of accounting and auditing.
Prof. Kaschke, who is neither Chair of the Supervisory Board
nor a former member of the Management Board, is also in-
dependent from the controlling shareholder as defined in
Recommendation C.9 GCGC in that he neither is, nor was,
party to the Henkel family share-pooling agreement. The same
applies to Prof. Dr. Theo Siegert, who chaired the Audit Commit-
tee up until June 17, 2020, and also in equal measure to
Simone Menne.
As a general rule, the Audit Committee meets four times per
year. It prepares the proceedings and resolutions of the Super-
visory Board relating to the adoption of the annual financial
statements and the consolidated financial statements, the
review of the non-financial statement and also the auditor
appointment proposal to be made to the Annual General Meet-
ing. It issues audit mandates to the auditor and defines the
focal areas of the audit, as well as deciding on the fee for the
audit and other advisory services provided by the auditor. The
Audit Committee specifies a cap on the provision of other
advisory services, i.e., non-audit-related services as permitted
in the relevant EU regulations, and oversees adherence to
same. It also monitors the independence and qualifications
of the auditor, requiring the latter to submit a declaration of
independence, which it then evaluates. Furthermore, the Audit
Committee monitors the accounts and the accounting process
and assesses the effectiveness of the internal control system,
the risk management system and the internal auditing and
review system. It is likewise involved in compliance issues.
The Group’s Internal Audit function reports regularly to the
Audit Committee. Prior to the respective publication dates, it
discusses the quarterly statements and the financial report for
the half year with the Management Board in a meeting that is
also attended by the external auditor. The Audit Committee is
also responsible for approving related party transactions as
defined in Section 111b AktG.
The Nominations Committee comprises the Chair of the Super-
visory Board and two further shareholder representatives
elected by the Supervisory Board based on nominations of
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Corporate governance
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the shareholders’ representatives. The Chair of the Supervisory
Board is also Chair of the Nominations Committee. The Nomi-
nations Committee prepares the resolutions of the Supervisory
Board on election proposals to be presented to the Annual
General Meeting for the election of members to the Supervisory
Board (shareholder representatives). As of December 31, 2020,
the following were members of the Nominations Committee:
Dr. Simone Bagel-Trah (Chair), Benedikt-Richard Freiherr von
Herman and Barbara Kux.
According to our Articles of Association, in addition to the
Supervisory Board, Henkel also has a standing Shareholders’
Committee comprising a minimum of five and a maximum of
ten members, all of whom are elected by the General Meeting
(Art. 27 of the Articles of Association). Members are appointed
for five-year terms unless otherwise specified at election. At
the last election by the Annual General Meeting of 2020, the
term of office was set at four years. The Shareholders’ Committee
comprised ten members in the year under review.
As a general rule, the Shareholders’ Committee meets six times
per year. If deemed necessary, the Management Board does not
participate in such meetings. It also holds a joint conference
with the Management Board lasting several days. The Share-
holders’ Committee reaches its decisions by a simple majority
of the votes cast. It has established Finance and Human Re-
sources subcommittees that likewise meet six times per year,
as a rule. Each subcommittee comprises five of the members
of the Shareholders’ Committee.
The Finance Subcommittee deals primarily with financial
matters, questions of financial strategy, financial position and
structure, taxation and accounting policy, as well as risk manage-
ment within the corporation. It also performs the necessary
preparatory work for decisions to be made by the Shareholders’
Committee in matters for which decision authority has not
been delegated to it. As of December 31, 2020, the following
were members of the Finance Subcommittee: Dr. Christoph
Henkel (Chair), Konstantin von Unger (Vice Chair), Prof. Dr. Paul
Achleitner, Dr. Christoph Kneip and Prof. Dr. Ulrich Lehner.
The Human Resources Subcommittee deals primarily with
personnel matters relating to members of the Management
Board, with issues pertaining to human resources strategy,
and with remuneration. It performs the necessary preparatory
work for decisions to be made by the Shareholders’ Committee
in matters for which decision authority has not been delegated
to it. The Subcommittee also addresses issues concerned with
succession planning and management potential within the
individual business units, taking into account relevant diver-
sity aspects. As of December 31, 2020, the following were
members of the Human Resources Subcommittee: Dr. Simone
Bagel-Trah (Chair), Johann-Christoph Frey (Vice Chair),
Alexander Birken, Dr.-Ing. Norbert Reithofer and Jean-
François van Boxmeer.
Conflicts of interest must be disclosed in an appropriate
manner to the Supervisory Board or Shareholders’ Committee,
particularly those that may arise as the result of a consultancy
or committee function performed in the service of customers,
suppliers, lenders or other business partners. Members encoun-
tering material conflicts of interest that are not of a merely
temporary nature are required to resign their mandate.
In an onboarding procedure, newly elected members of the
Supervisory Board and Shareholders’ Committee are familiarized
with our corporate values, applicable codes and standards, the
basic organizational structure and strategy of the corporation
together with the main corresponding initiatives, the corpo-
ration’s operational performance and other current issues of
relevance, and members’ rights and obligations, taking into
account the special features arising from our legal form and
Articles of Association. Further, members take it upon them-
selves to seek the training needed to perform their duties;
these efforts are supported by the corporation.
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Some members of the Supervisory Board and of the Sharehold-
ers’ Committee are or were in past years holders of senior
managerial positions in other companies. If and when Henkel
pursues business activities with these companies, the same
arm’s length principles apply as those adopted in transactions
with and between unrelated third parties. In our view, such
transactions do not affect the impartiality of the members in
question.
AAccttiivviittiieess ooff tthhee SSuuppeerrvviissoorryy BBooaarrdd aanndd SShhaarreehhoollddeerrss’’
CCoommmmiitttteeee iinn tthhee yyeeaarr uunnddeerr rreevviieeww
For details of the activities of the Supervisory Board and its
committees in fiscal 2020, please refer to the Report of the
Supervisory Board (pages 13 to 19).
The Shareholders’ Committee continued to discharge its duties
diligently in fiscal 2020 in accordance with the legal statutes
and Articles of Association. In compliance with the Articles of
Association, the Shareholders’ Committee engaged in the
management of the corporation and carefully and regularly
monitored the work of the Management Board, advising and
supporting it in its stewardship and in the strategic develop-
ment of the corporation. It also discussed and ruled on those
transactions that required its approval.
Six scheduled meetings took place in the year under review,
together with one extraordinary meeting/video/telephone
conference and a conference with the Management Board of
several days’ duration. Likewise, the Human Resources and
Finance subcommittees each met six times. Due to the COVID-19
pandemic, most of the meetings were a mixture of personal
attendance and video/telephone conferences. Participation in
the meetings of the Shareholders’ Committee and its subcom-
mittees was 94.6 percent. For details of individual members’
attendance at meetings, please refer to the remuneration re-
port (page 92). Following the election by the Annual General
Meeting of Henkel AG & Co. KGaA on June 17, 2020, of new
members to the Shareholders’ Committee, the Chair and Vice
Chair were elected and the composition of the subcommittees
decided by written procedure.
At all meetings, the reports submitted by the Management Board
were discussed, and the general development of the corpora-
tion, the status of acquisitions and divestments, and other
matters of strategic importance were analyzed together with
the Management Board. The overall economic situation and
Henkel’s business performance were also discussed, together
with a report on how the corporation was dealing with the
COVID-19 pandemic and what actions had been taken to pro-
tect the workforce. Areas of particular focus included the new
strategic alignment of the corporation and its implementation
status, the status and strategic directions of the business units,
financial reporting, overall performance by the business units
and in the regions, capital expenditures and innovations,
sustainability, and the short- and mid-term plans of both the
Group and the individual business units.
Business transactions requiring the approval of the Shareholders’
Committee were discussed in detail together with the Manage-
ment Board and appropriate resolutions adopted, some of
which required preliminary consultation with the relevant
subcommittees. The issues involved focused mainly on strategy
and financial planning, major capital expenditures, acquisi-
tions and divestments, fundamental HR issues and Henkel’s
funding and financing strategy. The Shareholders’ Committee
and the Human Resources Subcommittee also submitted ap-
propriate recommendations with regard to Management Board
matters to the Supervisory Board of Henkel Management AG.
EEffffiicciieennccyy aauuddiitt
Every two years, the Supervisory Board and the Shareholders’
Committee hold an internal review to determine the efficiency
with which they and their committees/subcommittees carry
out their duties. This self-assessment is performed on the
basis of an extensive checklist focusing on meeting frequency,
duration, preparation and organization, minutes, committee
work and information disclosure, reports submitted by the
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Management Board, financial control and risk management
systems, requests for information, collaboration with the
auditor, corporate governance matters and improvement
opportunities.
Our vision and values, Code of Conduct, Code of Corporate
Sustainability and other codes and policies governing our
stewardship of the corporation can be found on our website
www.henkel.com.
The efficiency of the activities of the Supervisory Board and
Shareholders’ Committee and their respective (sub)commit-
tees, and the impartiality of their members, were confirmed
in the efficiency audit performed in 2019/2020. The next effi-
ciency audit is scheduled to take place in 2021/2022.
IInntteerraaccttiioonn bbeettwweeeenn MMaannaaggeemmeenntt BBooaarrdd,, SSuuppeerrvviissoorryy BBooaarrdd
aanndd SShhaarreehhoollddeerrss’’ CCoommmmiitttteeee
The Management Board, Supervisory Board and Shareholders’
Committee work in close cooperation for the benefit of the
corporation.
The Management Board agrees the strategic direction of the
corporation with the Shareholders’ Committee and discusses
with it the status of strategy implementation at regular intervals.
In keeping with the precepts of good corporate governance,
the Management Board informs the Supervisory Board and the
Shareholders’ Committee regularly, and in a timely and com-
prehensive fashion, of all relevant issues concerning business
policy, corporate planning, profitability, the business develop-
ment of the corporation and major affiliated companies, and
also matters relating to risk exposure and risk management.
For transactions of fundamental significance, the Shareholders’
Committee has established a right of veto in the procedural
rules governing the actions of Henkel Management AG in its
function as sole Personally Liable Partner (Art. 26 of the Arti-
cles of Association). This covers, in particular, decisions
or measures that materially change the net assets, financial
position or results of operations of the corporation. The
Management Board complies with these rights of consent of
the Shareholders’ Committee and also duly submits to the
decision authority of the corporation’s Annual General Meeting.
Supervisory Board of Henkel Management AG
The corporation holds all shares in Henkel Management AG.
The voting rights to which the corporation is entitled at the
general meetings of Henkel Management AG are exercised by
the Shareholders’ Committee, which therefore also elects the
members of the Supervisory Board of Henkel Management AG.
Members are appointed for five-year terms unless otherwise
specified at election. At the last election by the Annual General
Meeting 2020, the term of office was set at four years.
The Supervisory Board of Henkel Management AG consists of
three members who are also members of the Shareholders’
Committee. At December 31, 2020, the following were members
of the Supervisory Board: Dr. Simone Bagel-Trah (Chair),
Johann-Christoph Frey (Vice Chair) and Dr.-Ing. Norbert Reithofer.
Electing certain members to both corporate bodies ensures
that the Shareholders’ Committee not only appoints Henkel
Management AG as the Personally Liable Partner, but also
(through the members of the Supervisory Board of Henkel
Management AG) appoints its Management Board and there-
fore the individuals who are responsible for managing the
corporation. Effective control of management – i.e. of the
Management Board of Henkel Management AG – is therefore
also assured:
The Supervisory Board of Henkel Management AG
can over-
see and monitor the Management Board in accordance with
laws governing joint stock corporations.
Henkel Management AG as the Personally Liable Partner
and therefore (also) its Management Board can also be over-
seen and monitored
– by the Shareholders’ Committee which, in doing so,
exercises the powers of the corporation’s shareholders,
and
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In accordance with the legal requirements, the point of refer-
ence for the definition of the management levels was based
exclusively on Henkel AG & Co. KGaA and not the Henkel
Group – regardless of Henkel’s globally aligned management
organization. As a result, the figures include only employees
of Henkel AG & Co. KGaA with management responsibility
who report directly to the Management Board (management
level 1) and those who report to management level 1 (manage-
ment level 2).
Separately from the targets for the first two levels of manage-
ment below the Management Board of Henkel AG & Co. KGaA –
and mindful of our globally aligned management organization –
it is our goal to increase our ratio of women at all levels of
management at Henkel in the long term. In 2020, we were
again able to raise the proportion of women in management
worldwide – to 36.9 percent at December 31, 2020.
Statutory gender quota for Supervisory Board composition
Given Henkel’s position as a listed corporation subject to
Germany’s Codetermination Act of 1976, the Supervisory Board
of Henkel AG & Co. KGaA must consist of at least 30 percent
women and at least 30 percent men (Section 96 (2) AktG).
Throughout the entire year under review, the statutory mini-
mum quota of both women and men was represented among
both the shareholder representatives and the employee repre-
sentatives.
– by the Supervisory Board at KGaA level in accordance
with laws governing joint stock corporations.
Targets for the proportion of women on the Management
Board and in the first two management levels below the
Management Board
In accordance with Sections 76 (4) and 111 (5) AktG, targets
must be set for the proportion of women on the Management
Board and in the first two management levels below the Manage-
ment Board. If the proportion of women is below 30 percent at
the time the targets are set, the targets may not be below the
proportion already achieved. Deadlines for achievement of the
targets must be established at the same time and must not be
longer than five years in each case.
PPrrooppoorrttiioonn ooff wwoommeenn oonn tthhee MMaannaaggeemmeenntt BBooaarrdd
As part of its responsibility for Management Board composition,
the Supervisory Board of Henkel Management AG has established
a target, as recommended by the Shareholders’ Committee
and its Human Resources Subcommittee, for the proportion
of women on the Management Board of 17 percent, taking into
account the current composition and an appropriate Manage-
ment Board size for the corporation. This proportion will apply,
and the target will be met, in the period through to Decem-
ber 31, 2021.
The proportion of women on the Management Board at
December 31, 2020 was 17 percent.
PPrrooppoorrttiioonn ooff wwoommeenn iinn tthhee mmaannaaggeemmeenntt lleevveellss bbeellooww tthhee
MMaannaaggeemmeenntt BBooaarrdd
Based on the current personnel mix, the Management Board
has established the following targets for the first two levels of
management below the Management Board. These targets are
expected to be achieved by December 31, 2021:
First management level: Proportion of women 25 percent
Second management level: Proportion of women 30 percent
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Diversity considerations governing Management Board
composition/Succession planning
Notwithstanding the key requirements of qualification, com-
petence and professional excellence for the relevant areas of
responsibility on the Management Board, the Supervisory
Board of Henkel Management AG has specified the following
criteria – after consultation in the Shareholders’ Committee
and its Human Resources Subcommittee – that must be con-
sidered when making Management Board appointments to en-
sure as broad a spectrum as possible of knowledge, skills and
professional experience (diversity) on the Management Board:
Education/career experience
Overall, the members of the Management Board must
demonstrate knowledge, skills and professional experience
in the following areas in particular:
– Management/leadership experience: Experience with
managing globally operating entities, involvement of
employee representative bodies, leading and motivating
employees, succession planning.
– Understanding of the business: Knowledge of/experience
in industrial/consumer business areas and key markets,
including the social environment in which Henkel
operates, as well as knowledge of/experience in the
fields of marketing, selling and distribution, digitaliza-
tion/eCommerce, research and development, produc-
tion/engineering and sustainable management.
– Strategic expertise: Experience in developing and im-
plementing prospects and strategies for the future.
– Financial expertise: Experience in accounting, auditing
financial statements, issues surrounding funding and
capital markets.
– Financial control/risk management: Experience in the
fields of internal control and risk management systems,
as well as internal auditing systems.
– Governance/compliance/ethics: Experience with inter-
action among corporate bodies (governance) and in
compliance with statutory/in-house requirements;
modern understanding of corporate ethics and how to
implement them.
Internationality
The international activities of the corporation in both
emerging and mature markets should be appropriately
reflected in the composition of the Management Board.
Henkel therefore strives to ensure that several members of
different nationalities or with international backgrounds
(who have spent several years working abroad or supervising
foreign business activities, for example) are included on
the Management Board.
Gender
A reasonable proportion of women shall be represented in
the Management Board. Henkel therefore strives to ensure
that at least one woman is a member of the Management
Board.
Seniority
Change and continuity are two issues that must be taken
into reasonable account when composing the Management
Board. Henkel therefore aims to include members with
different levels of seniority on the Management Board. Irre-
spective of this requirement, members of the Management
Board should generally not be older than 63.
IImmpplleemmeennttaattiioonn pprrooggrreessss
We believe that the aforementioned requirements were met in
full in the reporting period.
Overall, the Management Board, which includes one woman,
has the knowledge, skills and professional experience needed
to properly and effectively perform its duties. Several members
of the Management Board have international business experi-
ence with both emerging and mature markets. No individual
on the Management Board exceeds the specified maximum age.
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SSuucccceessssiioonn ppllaannnniinngg
Together with the Management Board, the Shareholders’ Com-
mittee and the Supervisory Board of Henkel Management AG
ensure the long-term succession planning with regard to Man-
agement Board composition. Although both in-house and ex-
ternal candidates are considered for future appointment, every
effort is made to select candidates from within the organization
who have proven their aptitude for such duties.
Long-term succession planning takes account of the corporate
strategy and the aforementioned diversity considerations.
Key elements of the systematic management development
process include:
Early identification of suitable candidates
Systematic development of managers by giving them tasks
involving increasing levels of responsibility and in differ-
ent areas of the corporation, regions and functions, where
possible
Proven ambition to successfully shape strategy and opera-
tions; strong leadership skills
Role model in implementing our corporate values
Each year, the members of the first management level below
the Management Board undergo corresponding assessment,
during which the issue of potentially taking on Management
Board responsibility and measures to secure succession are
also considered. Management potential within the individual
business units is likewise discussed.
Diversity considerations/Objectives governing Supervisory
Board composition
Bearing in mind the recommendations of the GCGC, and taking
into account the specific situation and global reach of the
corporation’s activities in industrial and consumer business
areas, the Supervisory Board has specified the following objec-
tives governing its composition. When proposing candidates
to the Annual General Meeting for both routine re-election and
replacement election, the Supervisory Board considers these
objectives, whereby the particular regulations of Germany’s
1976 Codetermination Act must be observed with regard to the
employee representative candidates.
Education/career experience
Overall, the Supervisory Board must demonstrate
knowledge, skills and professional experience in the follow-
ing areas in particular:
– Management/leadership experience: Experience with
managing globally operating corporations/companies
and with employee management.
– Understanding of the business: Knowledge of/experience
in the fields of research and development, production/
engineering, marketing, selling and distribution, digi-
talization/eCommerce, as well as knowledge of/experi-
ence in industrial/consumer business areas, in the key
markets in which Henkel operates, and in sustainable
management.
– Financial expertise: Experience in the fields of account-
ing/accounting processes or with auditing financial
statements, knowledge of financial instruments and
funding strategies.
– Financial control/risk management: Experience in the
fields of internal control and risk management systems,
as well as internal auditing systems.
– Governance/compliance: Experience with interaction
among corporate bodies (governance) and in ensuring
compliance with statutory/in-house requirements.
Impartiality, integrity
To ensure the impartiality of its counseling activities and
supervision of the Management Board, the shareholder
representatives on the Supervisory Board must include what
they believe to be a reasonable number of independent mem-
bers, bearing in mind the corporation’s ownership structure.
According to Recommendation C.6 GCGC, a member of a
supervisory board is considered independent if they are in-
dependent from the corporation and its management board
and independent from a controlling shareholder.
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Pursuant to Recommendation C.7 GCGC, more than half the
shareholder representatives should be independent from
the corporation and the Management Board. Supervisory
Board members are considered independent from the
corporation and its Management Board if they have no
personal or business relationship with the corporation or
its Management Board that may cause a material – and not
merely temporary – conflict of interest.
Assessing the independence of shareholder representatives
from the company and its Management Board requires par-
ticular consideration of whether the respective Supervisory
Board member or a close family member
– was a member of the company’s Management Board in
the two years prior to appointment,
– is or was in the past three years a partner of or in the
employ of the present or previous external auditors of
the corporation,
– receives or has received over the past three years not
inconsiderable remuneration of any nature from
Henkel AG & Co. KGaA or one of its affiliates (excluding
remuneration for Supervisory Board or Shareholders’
Committee membership),
– is currently involved in, maintains, or has maintained
in the year prior to appointment by Henkel AG & Co. KGaA
or one of its affiliates, a material business relationship –
either directly or indirectly – as a partner, shareholder,
member of management or in a leading position of the
entity maintaining the business relationship (e.g. as
customer, supplier, lender or advisor),
– is a close family member of a member of the Manage-
ment Board or
– has been a member of the Supervisory Board for more
than 12 years.
If one or more of the aforementioned indicators apply and the
Supervisory Board member concerned is still considered inde-
pendent from the corporation and/or the Management Board,
the reasons for this assessment must be given in the corporate
governance statement.
In keeping with the ownership structure and the corporation’s
tradition as an open family business to which the Henkel family
has been committed ever since the company was founded in
1876, possession of a controlling interest or attribution of a
controlling interest due to membership in the Henkel family
share-pooling agreement is not viewed as a circumstance that
creates a substantial and not merely temporary conflict of in-
terest as indicated in the GCGC recommendations. Member-
ship of the Shareholders’ Committee or of the Supervisory
Board of Henkel Management AG is compatible with member-
ship of the corporation’s Supervisory Board. As a rule, how-
ever, three, but at least two, of the shareholder representatives
on the Supervisory Board or close members of their families
should be neither members of the share-pooling agreement
nor members of the Shareholders’ Committee nor members of
the Supervisory Board of Henkel Management AG, and they must
be named accordingly in the corporate governance statement.
Moreover, no more than two former members of the Manage-
ment Board should be elected to the Supervisory Board, nor
people
– who – if not members of a management board of a
listed company – exercise more than five supervisory
board mandates in total for non-Group listed companies
or for non-Group companies with similar require-
ments (chairing a supervisory board counts twice),
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– who – if members of a management board of a listed
company – exercise more than two supervisory board
mandates in total for non-Group listed companies or
for non-Group companies with similar requirements,
or chair the supervisory board of a non-Group listed
company,
– who perform management or advisory tasks for material
Consolidated financial statements
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Members of the Supervisory Board should, moreover, be capable
of duly upholding Henkel’s reputation in the public domain.
Availability
When proposing new candidates to the Annual General
Meeting for election to the Supervisory Board, the Super-
visory Board must make sure that the relevant candidates
can devote the anticipated time required to the task.
Internationality
The international activities of the corporation should be
appropriately reflected in the composition of the Supervisory
Board. Henkel therefore strives to ensure that several members
with international backgrounds (who have spent several
years working abroad or supervising foreign business activ-
ities, for example) are included on the Supervisory Board.
Gender
A reasonable proportion of women shall be appointed to
the Supervisory Board. The statutory minimum require-
ment of 30 percent is deemed to be reasonable. Henkel
strives to increase the proportion of women when new or
replacement members are elected.
Age
The Supervisory Board should appropriately include represent-
atives from different generations/age groups. Henkel there-
fore aims to include members from different generations/age
groups on the Supervisory Board. Irrespective of the afore-
mentioned, nobody should, as a rule, be proposed to the
Annual General Meeting for election to the Supervisory
Board who, at the time of the election, has already reached
their 70th birthday.
IImmpplleemmeennttaattiioonn pprrooggrreessss
In addition to the statutory minimum quota, the Supervisory
Board believes that these aforementioned requirements were
met in full in the reporting period. Among the 16 members of
the Supervisory Board are nine men and seven women. Share-
holder representatives consist of five men and three women,
while the employee representatives consist of four men and
four women. This represents an overall ratio on the Supervi-
sory Board of around 56 percent men and 44 percent women.
Overall, the Supervisory Board believes it has the knowledge,
skills and professional experience needed to properly and ef-
fectively perform its duties. In addition, several shareholder
representatives on the Supervisory Board offer international
business experience or other international expertise. No share-
holder representative exceeded the specified maximum age at
the time of their election.
The GCGC recommendations on impartiality have been
adopted. None of the shareholder representatives nor close
family members of a shareholder representative is a former
Management Board member, or performs board or committee
functions or acts as a consultant for major competitors, and
none are persons whose business or personal relationship
with the corporation or members of the Management Board
could give rise to material conflicts of interest that are not of a
merely temporary nature. Six out of eight shareholder repre-
sentatives had been on the Supervisory Board for fewer than
twelve years in the year under review. According to the precepts
of Recommendation C.7 GCGC, these shareholder representa-
tives are therefore independent from the corporation and the
Management Board.
Four of the eight shareholder representatives – Barbara Kux,
Simone Menne, Timotheus Höttges and Prof. Dr. Michael
Kaschke – are not party to the Henkel family share-pooling
agreement; under GCGC Recommendation C.9, they are there-
fore independent from the controlling shareholder. Apart
from Dr. Simone Bagel-Trah, none of the shareholder
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representatives in office is a member of the Shareholders’
Committee or the Supervisory Board of Henkel Management AG.
As such, the shareholder representatives on the Supervisory
Board include what they believe to be a reasonable number of
independent members as recommended by the GCGC.
For more details on the composition of the Management
Board, Supervisory Board and the Shareholders’ Committee or
the (sub)committees established by the Supervisory Board and
Shareholders’ Committee, please refer to pages 276 to 279.
Members’ vitae can be found on the website: www.henkel.com.
Details of the compensation of the Management Board, the
Supervisory Board and the Shareholders’ Committee can be
found in the remuneration report 2020.
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Remuneration system
The remuneration policy currently in place for the members of
the Management Board of Henkel Management AG, which is
the sole Personally Liable Partner of Henkel AG & Co. KGaA
(“Management Board”), was approved by the Annual General
Meeting of June 17, 2020 of Henkel AG & Co. KGaA by a majority
of around 98.9 percent. To reflect the outcome of discussions
on this topic with shareholders, shareholders’ representatives
and investors, the Supervisory Board of Henkel Management
AG has further refined the remuneration policy, made some
editorial changes and added more detailed explanations, as
well as deciding to implement the following adjustments,
starting in 2021:
Option to increase components of remuneration while up-
holding the specified caps for the respective total remuner-
ation (see Remuneration policy, 2 a) “Regulation, structure
and amounts”).
Share Ownership Guideline:
The obligation to purchase and hold shares is a key element
of Management Board remuneration policy. In addition to
the existing obligation of Management Board members to
purchase and hold shares, the revised policy plans to make
it mandatory for them in future to hold at least as many
shares acquired under the STI (share deferral) as equates to
100 percent of their basic remuneration, or 200 percent of
the annual basic remuneration in the case of the CEO, for
the duration of their tenure (see Remuneration policy 2 c)
“Performance-related components,” subsection “Share
Ownership Guideline”).
Consideration of unusual developments when determining
target achievement in respect of variable remuneration:
Consistent with Recommendation G.11 of the German Cor-
porate Governance Code (GCGC) as amended on Decem-
ber 16, 2019, the Supervisory Board of Henkel Management
AG has defined in more detail the former options for reason-
ably considering unusual developments when determining
variable remuneration payout amounts (see Remuneration
policy, 2 c) “Performance-related components," subsection
"Consideration of unusual developments when determin-
ing target achievement or specifying STI and LTI payout
amounts”).
Option to grant a lump-sum pension payout in order to
accumulate private pension entitlements instead of partic-
ipating in the company pension scheme (see Remuneration
policy, 2 g) “Pension benefits (retirement pensions and
survivors’ benefits)”).
Temporary deviations from the remuneration policy:
Consistent with the specifications of Section 87a (2) sen-
tence 2 AktG, a clause governing temporary deviation from
the remuneration policy has been incorporated (see Remu-
neration policy 2 k) “Temporary deviations from the remu-
neration policy”).
This revised remuneration policy for the members of the Man-
agement Board will be submitted for approval to the Annual
General Meeting 2021.
1. General objectives and principles
Henkel is committed to corporate governance that is responsible,
transparent and aligned to the sustainable and long-term
development of the corporation. We want to create sustainable
value – for our customers and consumers, for our people, for
our shareholders, as well as for the communities in which
we operate. We shape our future on the basis of a long-term
strategic framework that builds on our purpose and our values,
with a clear focus on purposeful growth.
Accordingly, the remuneration system for the Management
Board, the Supervisory Board and the Shareholders’ Committee
takes account of the relevant duties and responsibilities, and
is designed to drive implementation of our corporate strategy,
to offer incentives for successful and sustainable business
performance over the long term, and to avoid inappropriate
risk-taking. The following principles play a key role in defining
the remuneration:
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General:
Remuneration and its individual elements must be con-
sistent with regulatory/statutory requirements and the
principles of good corporate governance.
Remuneration must be consistent with market levels,
competitive, and commensurate with the size, complexity
and international nature of the corporation’s business, its
economic and financial position, its success, and its pro-
spects for the future.
Management Board:
Total remuneration is aligned to sustainable long-term
business performance and corresponding stakeholder targets.
Remuneration consists of non-performance-related com-
ponents and a substantial portion of variable, performance-
related components.
A large portion of the variable, performance-related remu-
neration is tied to future performance spanning several
years such that long-term variable target remuneration ac-
counts for a greater share of the total than short-term varia-
ble target remuneration.
For the variable, performance-related components of remu-
neration, challenging financial performance indicators –
related to the corporation’s objectives and in some cases
reflecting strategic objectives derived from the corporate
strategy – exist alongside non-financial individual targets.
The financial performance indicators are weighted more
heavily, and are based on quantitative criteria.
Reasonable account is taken of the remuneration and
employment policy applied to the corporation’s staff.
Reasonable account is taken of the relevant function-
specific duties and individual performance.
Overall remuneration is equitable; reasonable caps on vari-
able components of remuneration and maximum remuner-
ation payable to a Management Board member have been
defined.
The members of the Management Board invest a substantial
portion of their remuneration in Henkel preferred shares
(Share Ownership Guideline).
Supervisory Board/Shareholders’ Committee:
The remuneration strengthens the impartiality of the
members of these corporate bodies.
The remuneration is appropriate for the relevant duties of
the bodies.
Reasonable account is taken of the roles and functions
performed by the relevant members on the respective
corporate bodies and their (sub)committees.
2. Remuneration policy for members of the
Management Board
a) Regulation, structure and amounts
The legal form of Henkel AG & Co. KGaA as a “Kommanditge-
sellschaft auf Aktien” with Henkel Management AG as its sole
Personally Liable Partner means that, unlike in the case of
joint stock corporations, the Supervisory Board of Henkel
Management AG is responsible for appointing and dismissing
members of the Management Board, the drafting of their
contracts, assignment of their business duties, and their re-
muneration. Regarding Management Board remuneration, the
Supervisory Board of Henkel Management AG is responsible,
in particular, for:
Determining and reviewing remuneration policy
Specifying the non-performance-related and variable
performance-related components of remuneration
Defining individual targets each year, and measuring
performance with regard to same
Determining the extent to which financial targets have
been met each year and quantifying annual and multi-year
variable, performance-related remuneration
Approving the assumption of voluntary duties or supervisory
board, advisory board or similar mandates in other compa-
nies, as well as other ancillary professional activities
Approving loans and advances
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Corresponding resolutions are adopted by the Supervisory
Board of Henkel Management AG, which is comprised of three
members of the Shareholders’ Committee of Henkel AG & Co.
KGaA, after prior consultation in the Shareholders’ Committee’s
Human Resources Subcommittee. The general rules governing
the treatment of conflicts of interest are applied. Specifically,
members of the Management Board are excluded from such
consultations and resolutions to the extent necessary to avoid
conflicts of interest. The Supervisory Board of Henkel Manage-
ment AG is responsible for engaging external remuneration
experts to either develop or modify the remuneration system
or to assess whether Management Board remuneration is ap-
propriate. In doing so, it ensures the independence of remu-
neration experts from both the Management Board and the
corporation at large.
The structure and amounts of Management Board remuner-
ation are aligned to the size, complexity and international
activities of the corporation, its economic and financial posi-
tion, its performance and future prospects, the normal levels
of remuneration encountered in comparable companies, and
also the general compensation structure within the corporation.
The remuneration paid to Management Board members of
companies listed in the Deutscher Aktienindex (DAX 30 share
index) – excluding financial services companies and taking
account of concomitant market standing and complexity –
substantially represents the external benchmark used to assess
whether the remuneration structure is commonplace and
whether the target and maximum remuneration levels applied
are appropriate (horizontal comparison). In addition, the Super-
visory Board of Henkel Management AG considers the ratio of
Management Board remuneration to the compensation paid to
senior management (management levels 0 and 1 of the Henkel
Group) and to the workforce in Germany, in terms of both total
remuneration and progress over time (vertical comparison).
The compensation package is further determined on the basis
of the functions, responsibilities and personal performance of
the individual officers, and the performance of the Management
Board as a whole. The following criteria play a key role in
measuring individual performance:
The absolute and relative performance of the business unit
for which each officer is responsible compared to market/
competition performance
The personal contribution toward implementing the strategic
priorities and achieving the sustainability targets
Achievement of the relevant separate targets agreed with
each individual
The variable annual remuneration components take into ac-
count both positive and negative developments. The overall
remuneration is designed to be internationally competitive
while also providing an incentive for sustainable business
development and a sustainable increase in shareholder value
in a dynamic environment.
The Supervisory Board of Henkel Management AG regularly
reviews the compensation system, as well as the appropriate-
ness of the remuneration, based on the aforementioned crite-
ria, and adjusts it as necessary. The remuneration policy
must be submitted for approval to the Annual General Meeting
of Henkel AG & Co. KGaA if substantial changes are planned,
and in all cases every four years. If the Annual General Meet-
ing refuses to approve the remuneration policy, a revised com-
pensation system must be submitted for approval at the next
Annual General Meeting, at the latest.
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Members of the Management Board receive non-performance-
related components and performance-related components
consisting of the following three main elements:
Fixed basic remuneration
Variable annual remuneration (Short Term Incentive, STI)
Variable cash remuneration based on the long-term perfor-
mance of the company (Long Term Incentive, LTI)
Management Board members receive 65 percent of the STI as
short-term variable cash remuneration, and must invest the
remaining 35 percent long term in Henkel preferred shares
(Share Ownership Guideline, share deferral). Accordingly, the
performance-related, long-term, variable components are
made up of the share deferral and the LTI.
Fringe benefits (other emoluments) are also paid, as are pension
contributions. Rules that are consistent with market practice
also exist to govern the various components of remuneration
upon joining or leaving the Management Board.
The Supervisory Board of Henkel Management AG has capped
the maximum amounts payable both as individual variable
components of remuneration and as the total compensation
payable in any fiscal year – taking into account the other
emoluments and pension contributions. Insofar as the Annual
General Meeting adopts resolutions to lower the cap on re-
muneration that is specified in the remuneration policy, this
change is taken into account when entering into new, or ex-
tending existing Management Board contracts.
The Supervisory Board of Henkel Management AG is authorized
to apply reasonable caps to the variable components of remu-
neration in exceptional circumstances, such caps to then also
apply to ongoing tranches. In addition, in specific circumstances
it may withhold some or all of the variable remuneration or
demand the repayment, within specific limits and time periods,
of variable remuneration that has already been paid (malus
and clawback regulations).
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The overall structure of the remuneration system reads as follows:
Remuneration system overview
Non-performance-related
components
Basic remuneration
• Chairman of the Management Board: currently 1,200,000 euros p.a.
• Other Management Board members: 750,000 euros p.a.
Other emoluments
• Insurance, reimbursement of accommodation/relocation costs, home security
costs, provision of a company car, use of a car service, other in-kind benefits;
amounts vary dependent on personal needs
• Caps:
– Chairman of the Management Board: 250,000 euros p.a.
– Other Management Board members: 175,000 euros p.a.
Variable annual remuneration (Short Term Incentive, STI)
• Target remuneration if all targets are met, with application of the respective
functional factors:
– Chairman of the Management Board: currently 3,500,000 euros
– Other Management Board members: currently 1,800,000 to 2,200,000 euros
Performance-related
components
General objective and
strategic reference
• Assurance of equitable basic compensation
commensurate with market conditions and
the function performed
• Avoidance of incentives to take inappropriate
risks
• Inclusion of fringe benefits and benefits in
kind that are commensurate with market
conditions and directly related to, and
supportive of, Management Board activity
• Incentive to meet the corporate targets for
the current fiscal year
• Incentive for long-term purposeful growth
• Allowance for operational success relative
to benchmark group
• One-year performance measurement period: Amount dependent on
achievements in the fiscal year (remuneration year) with respect to:
– Business performance (financial targets, bonus): organic sales growth (OSG),
• Promoting implementation of the strategic
priorities and sustainability targets
• Differences in performance possible between
adjusted earnings per preferred share (EPS) at constant exchange rates versus
prior year (actual-to-actual comparison); each weighted 50 percent
– Individual performance: Individual multiplier ranging from 0.8 to 1.2 applied to
the bonus amount
• Cap: 150 percent of the respective target remuneration
• 65 percent freely disposable (short-term component, cash remuneration),
35 percent invested in Henkel preferred shares (long-term component; Share
Ownership Guideline, share deferral)
Management Board members
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Remuneration system overview
Performance-related
components
Share Ownership Guideline
• Obligation to purchase Henkel preferred shares
• Holding a minimum portfolio while on the Management Board
Long-term variable cash remuneration (Long Term Incentive, LTI)
• Target remuneration if all targets are met, with application of the respective
functional factors
– Chairman of the Management Board: currently 1,400,000 euros
– Other Management Board members: currently 720,000 to 880,000 euros
• Three-year prospective performance measurement period: The criterion is the
average target achievement of the adjusted return on capital employed (ROCE) in
a three-year performance measurement period (remuneration year and the two
subsequent fiscal years); target value is set for each year (three yearly tranches)
• Cap: 150 percent of the respective target remuneration
Functional factors
General objective and
strategic reference
• Aligning the interests of Management
Board and shareholders
• Incentive for long-term business
performance
• Incentives to raise shareholder value over
the long term
• Allowance for profitability
• General functional factors as multipliers for the STI and LTI payout amounts
based on target achievement
• Greater allowance for the different
requirements and complexity of the
business units/functions
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Remuneration system overview
Pension commitments/
Lump-sum pension payout
Defined contribution pension scheme
Other regulations governing
remuneration
• Superannuation lump sum comprised of the total annual contributions.
Annual allocation (lump-sum contribution):
– Chairman of the Management Board: 750,000 euros
(62.5 percent of basic remuneration)
– Other Management Board members: 450,000 euros
(60.0 percent of basic remuneration)
or, alternatively (starting in 2021)
• Lump-sum pension payout, payable annually:
– Chairman of the Management Board: currently 750,000 euros
(62.5 percent of basic remuneration)
– Other Management Board members: currently 450,000 euros
(60.0 percent of basic remuneration)
Malus and clawback regulations
• The Supervisory Board of Henkel Management AG is authorized – in specific
circumstances – to wholly or partially withhold variable remuneration (STI, LTI) or
to demand repayment, within specific limits, of variable remuneration that has
already been paid
Remuneration cap
• Caps on total remuneration (basic remuneration, other emoluments and pension
commitments/lump-sum pension payouts, and variable components of
remuneration):
– Chairman of the Management Board: 9,550,000 euros p.a.
– Other Management Board members: 5,155,000 to 5,995,000 euros p.a.
Severance cap
• Payment limited to maximum two years’ compensation but no more than due for
the remaining term of the contract
Post-contractual non-competition clause
• Two-year term; discretionary payment totaling 50 percent of the annual
compensation, payable in 24 monthly installments
• Severance pay credited against any discretionary payment for the same period
General objective and
strategic reference
• Granting of amounts enabling
accumulation of an equitable
company pension
• Granting of amounts enabling
accumulation of an equitable
company pension
• Assurance of equitability of variable
remuneration (STI, LTI)
• Ensuring compliance with essential
principles of corporate governance
• Avoidance of inappropriately high
payments
• Consistent with the German Corporate
Governance Code, specification of a cap
on payments and benefits in the event
of premature termination of Management
Board appointment
• Protecting Henkel’s interests
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Other emoluments are paid to all members of the Management
Board except the Chairman up to a maximum of 175,000 euros,
together with annual pension contributions of 450,000 euros.
Bearing in mind these amounts, and based on a functional factor
of 1 and 100-percent target achievement (“at target”), members
of the Management Board receive total annual remuneration
(remuneration plus other emoluments and pension bene-
fits) of up to 4,175,000 euros, of which around 33 percent
(= 1,375,000 euros) takes the form of basic remuneration plus
other emoluments and annual allocations to the pension
reserve, while some 67 percent (= 2,800,000 euros) represents
short-term and long-term variable remuneration (STI and LTI).
Other emoluments are paid to the Chairman of the Manage-
ment Board up to a maximum of 250,000 euros per year,
together with annual pension contributions of 750,000 euros.
Bearing in mind these amounts, the Chairman of the Manage-
ment Board, on achievement of all performance targets to the
tune of 100 percent (“at target”), receives total annual remu-
neration of up to 7,100,000 euros, of which around 31 percent
(= 2,200,000 euros) takes the form of basic remuneration plus
other emoluments and annual allocations to the pension reserve,
while some 69 percent (= 4,900,000 euros) represents short-
term and long-term variable remuneration (STI and LTI).
For all Management Board members except the Chairman, the
target remuneration (excluding other emoluments and pension
benefits) is derived from the functional factor ranging be-
tween 0.9 and 1.1 that particularly reflects the complexity and
importance of the respective business unit or function for
which that member is responsible (see 2c)) and is currently
within the annual range of 3,270,000 euros and 3,830,000 euros,
subject to 100 percent achievement of all success targets (“at
target”). At a functional factor of 1, the at-target remuneration
of all Management Board members except the Chairman is
3,550,000 euros. Of this figure, 750,000 euros is attributable
to basic remuneration (around 21 percent of target remuneration),
2,000,000 euros to the STI including share deferral (around
56 percent of target remuneration) and 800,000 euros to the
LTI (around 23 percent of target remuneration). Accordingly,
some 79 percent of the target remuneration (= 2,800,000 euros)
is therefore variable. Of this total, short-term variable target
remuneration (STI without share deferral) accounts for around
46 percent (= 1,300,000 euros) and long-term variable target
remuneration (share deferral and LTI) for around 54 percent
(= 1,500,000 euros).
The annual target remuneration for the Chairman of the Man-
agement Board (for a functional factor of 1.75) currently totals
6,100,000 euros: 1,200,000 euros basic remuneration (around
20 percent of target remuneration), 3,500,000 euros STI includ-
ing share deferral (around 57 percent of target remuneration)
and 1,400,000 euros LTI (around 23 percent of target remu-
neration). By resolution of the Supervisory Board of Henkel
Management AG, a functional factor of 1.625 was specified
for the Chairman of the Management Board for STI and LTI
for fiscal 2020.
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Remuneration structure (without other emoluments, pension benefits)
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The Supervisory Board of Henkel Management AG regularly
reviews the amounts of the individual components of remu-
neration and their ratio to one another and adjusts them if
deemed appropriate in light of the duties and performance of
a Management Board member, the state of the corporation, and
the need to maintain competitiveness. Any increase in the target
remuneration of an individual component of remuneration
and thus of the total target remuneration is capped at 5 percent
p.a. Such increase must not cause the caps, indicated below,
on respective total remuneration for a fiscal year to be exceeded.
Equally, the ratio of basic remuneration to the various variable
components of remuneration per the above overview must not
substantially change overall; care must also be taken to ensure
that a large portion of the variable, performance-related remu-
neration continues to be tied to future performance spanning
several years, and that long-term variable target remuneration
still accounts for a greater share of the total than short-term
variable target remuneration.
b) Non-performance-related components
BBaassiicc rreemmuunneerraattiioonn
The basic remuneration reflects market conditions and serves
as a basic salary to secure a decent income and thus help avoid
the urge to take inappropriate risks. It is paid out in monthly
installments and currently amounts to 1,200,000 euros per year
for the Chairman of the Management Board and 750,000 euros
per year for the other Management Board members.
OOtthheerr eemmoolluummeennttss
The members of the Management Board also receive other
emoluments, primarily in the form of costs associated with,
or the cash value of, in-kind benefits and other fringe benefits
such as standard commercial insurance policies, reimbursement
of accommodation/relocation costs and the cost of home secu-
rity installations, provision of a company car that they may
also use for private purposes or use of a car service, including
any taxes on same, and the costs of precautionary medical
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examinations. All members of the Management Board are
entitled, in principle, to the same emoluments, whereby the
amounts vary depending on personal situation. These emolu-
ments are recognized at cost or the equivalent cash value in
the case of benefits in kind.
A cap has been set on other emoluments, amounting to
250,000 euros per year for the Chairman of the Management
Board and 175,000 euros per year for the other Management
Board members.
The Supervisory Board of Henkel Management AG can, more-
over, award newly appointed Management Board members
one-off compensation if remuneration commitments of a former
employer are forfeited due to the move to Henkel Management
AG. Such compensation is capped at 200 percent of the basic
remuneration, which may result in higher maximum total
remuneration in the first year of appointment to the Man-
agement Board. Members of the Management Board who are
domiciled abroad may also be granted the usual tax reimburse-
ments and compensation for currency conversion losses.
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c) Performance-related components
VVaarriiaabbllee aannnnuuaall rreemmuunneerraattiioonn ((SShhoorrtt TTeerrmm IInncceennttiivvee,, SSTTII))
Overview STI
Components
Financial targets (bonus)
Basis for assessment/Parameters
Organic sales growth1 (OSG)
Weighting
50%
Lower threshold
Minimum OSG
Individual multiplier
Performance
measurement period
Cap3
50%
(50% OSG target amount)
80% of the prior-year figure
(50% EPS target amount)
Adjusted earnings
per preferred share (EPS)2
• Absolute and relative performance
of business unit compared to
market/competition
• Personal contribution to the
implementation of strategic priorities
and sustainability targets
• Achievement of personal targets
Fiscal year (remuneration year)
150% of the STI target amount (= 3,000,000 euros4)
1 Threshold/target figures derived annually from budgets.
2 At constant exchange rates, versus prior year (actual-to-actual comparison).
3 Including individual multiplier.
4 Remuneration for an ordinary member of the Management Board at a functional factor of 1.
100% target achievement
OSG target
(100% OSG target amount)
100% of the prior-year figure
(100% EPS target amount)
Upper threshold
Maximum OSG
(150% OSG target amount)
120% of the prior-year figure
(150% EPS target amount)
Multiplier ranging from 0.8 to 1.2
The variable annual remuneration (STI) represents a uniform
incentive to achieve the financial targets derived from the
budgets and the corporate strategy, and an incentive to achieve
non-financial targets aligned to sustainability; it thus contributes
toward implementation of the corporate strategy.
The benchmark parameters for the STI are the achieved
financial targets for each fiscal year (“remuneration year”) –
which determine the so-called bonus – and the individual
performance of each Management Board member, in respect
of which a multiplier ranging from 0.8 to 1.2 is applied.
The Henkel Group pursues a strategy of long-term, sustainable,
purposeful growth. This forms the basis for derivation of the
strategic financial target for organic sales growth (OSG) – i.e.
sales development adjusted for foreign exchange and acquisi-
tions/divestments – in the remuneration year, which is one
of the criteria (50-percent weighting) used to determine the
amount of the bonus. The other financial target (also weighted
at 50 percent) is earnings per preferred share (EPS) adjusted for
one-time expenses and income, for restructuring expenses,
and for foreign exchange. Both targets are linked additively, i.e.
the 50-percent-weighted OSG component of the bonus amount
is added to the EPS component, which is also weighted at
50 percent.
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The OSG target is derived from the budget for the relevant fiscal
year. It is set annually by the Supervisory Board of Henkel
Management AG. EPS performance is measured on the basis of
actual-to-actual comparison, i.e. the EPS at constant exchange
rates in the remuneration year is compared to the EPS from the
previous year.
The Supervisory Board of Henkel Management AG reserves the
right to exercise due discretion in determining a target value
that differs from the actual EPS in the previous year, rather
than basing EPS performance for a new remuneration year on
prior-year comparison. This is particularly applicable if early
expectations indicate that actual EPS in the remuneration year
is going to differ significantly from the prior-year figure.
An appropriate remuneration scale has been established
for both key financials. Thresholds have also been defined;
payment is withheld if the minimum targets are not met, and
capped if they are exceeded. The scale of payment amounts
attributable to the OSG target is always linear between the
lower threshold (minimum amount) and the at-target amount,
and between the at-target amount and the upper threshold
(cap). The scale of payment amounts attributable to the EPS
target is consistently linear between the lower and upper
thresholds. Exceeding the relevant maximum target does
not result in any further increase in the relevant OSG or EPS
bonus component above and beyond 150 percent of the at-target
remuneration.
Examples of the payout curves for the OSG and EPS targets are
shown below:
Key financial OSG
Remuneration for an ordinary member of the Management Board with an
individual multiplier of 1 and a functional factor of 1.
Key financial EPS
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Achievement of the OSG and EPS targets is determined on the
basis of the figures in the consolidated financial statements of
Henkel AG & Co. KGaA for the remuneration year as certified
without qualification and approved in each case.
Individual target achievement by each member of the Manage-
ment Board is reflected in the STI using an individual multiplier
applied to the total bonus amount assigned in respect of the
overall achievement of all financial targets. This individual
multiplier ranges from 0.8 to 1.2. STI caps may not, however,
be exceeded when applying said multiplier. If the bonus al-
ready equals the capped STI amount, any multiplier greater
than 1 will have no further effect on the remuneration total.
The following criteria play a key role in measuring individual
performance:
The absolute and relative performance of the business unit
for which each officer is responsible, compared to market/
competition performance
The personal contribution toward implementing the
strategic priorities and achieving the sustainability targets
Achievement of the relevant separate targets agreed with
each individual
The non-financial performance indicators are specified by the
Supervisory Board of Henkel Management AG each year and
published in the remuneration report.
The following benchmark group is used to measure the individ-
ual performance of the relevant business unit compared to the
market/competition:
Benchmark group
Adhesive Technologies Beauty Care
• Sika
• Procter & Gamble
Laundry & Home Care
• Procter & Gamble
• H.B. Fuller
• RPM
• 3M
(Fabric & Home Care)
• Reckitt Benckiser
(Hygiene Home)
• Unilever (Home Care)
(Beauty)
• Beiersdorf
(Consumer)
• Colgate-Palmolive
(Oral, Personal and
Home Care)
• L’Oréal (Group)
• KAO (Cosmetics, Skin
Care and Hair Care)
• Unilever (Beauty &
Personal Care)
• Coty (Group)
In the event of major changes among the relevant competitors,
the Supervisory Board of Henkel Management AG will appro-
priately reconsider the composition of the benchmark group
and/or the definition of the relevant competitor parameters.
At the end of a fiscal year, both the achievement of the financial
targets and the respective individual performance based on
appropriate target agreements will be decided by the Supervisory
Board of Henkel Management AG after prior consultation with
the Human Resources Subcommittee of the Shareholders’
Committee. It also decides whether and to what extent adjust-
ments of the key financials to reflect exceptional items are to
be taken into consideration when determining the bonus. In
determining the STI payout amount and/or individual target
achievement, the Supervisory Board of Henkel Management AG
also gives due consideration to the degree to which financial
success and Management Board performance are sustainable
beyond the end of a fiscal year.
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following payout, this bank invests the relevant amount on
behalf and for the account of the member of the Management
Board in Henkel preferred shares at the price prevailing at the
time of purchase on the stock exchange, and credits the acquired
shares to the blocked custody account. The lock-up period in
each case expires on December 31 of the fourth year following
the remuneration year.
The Share Ownership Guideline ensures that the members of
the Management Board are required to accumulate a significant
share portfolio during their tenure, and that they participate in
the long-term performance of the corporation, whether this be
positive or negative. Assuming the target for the STI is met, the
total (net) amount to be invested under the STI program in
shares over a four-year period is 2,450,000 euros for the Chair-
man of the Management Board and 1,400,000 euros for each of
the other Management Board members with a functional factor
of 1. As such, the amounts constitute a multiple of about 4
and 3.7 respectively of the annual (net) basic remuneration.
This share portfolio continues to grow due to the fact that
shares are sold, if at all, only in exceptional instances once the
respective four-year lock-up period for shares acquired above
and beyond the relevant minimum portfolio has expired. At
the same time, the share deferral (in addition to the LTI) com-
plies with German company law [AktG] and GCGC precepts re-
quiring a remuneration policy that focuses on long-term busi-
ness development.
The total payable STI amount (bonus times individual multiplier)
is capped at 150 percent of the target amount, bearing in mind
the respective functional factor.
SShhaarree OOwwnneerrsshhiipp GGuuiiddeelliinnee//SShhoorrtt-- aanndd lloonngg--tteerrmm
ccoommppoonneennttss ooff tthhee vvaarriiaabbllee aannnnuuaall rreemmuunneerraattiioonn
The obligation to purchase and hold shares (Share Ownership
Guideline) is a key element of Management Board remuneration
policy. The aim here is to promote a certain degree of alignment
in the interests of the Management Board members with those
of the shareholders while ensuring the sustainable and long-
term performance of the corporation. In accordance with
the following, Management Board members are obligated to
purchase Henkel preferred shares and (starting in 2021) to
hold at least as many shares as equates to 100 percent of their
annual basic remuneration, or 200 percent of the annual basic
remuneration in the case of the Chairman, for the duration of
their tenure (minimum portfolio). Even once they have acquired
the minimum portfolio, Management Board members must
still continue purchasing the specified volume of Henkel
preferred shares, which in turn are also subject to a lock-up
period. Management Board members must pay for these
shares from their after-tax net income.
The full amount of the STI is paid in cash once the annual
financial statements of Henkel AG & Co. KGaA for the remuner-
ation year have been approved by the Annual General Meeting
of Henkel AG & Co. KGaA. Recipients may only dispose of
around 65 percent of this payment as they wish (short-term
component, cash remuneration). In compliance with the
Share Ownership Guideline explained above, Management
Board members are obligated to invest around 35 percent of
the respective (net) payout amount in the purchase of Henkel
preferred shares (= long-term component, share deferral),
which are placed in a blocked custody account with a drawing
restriction. The company transfers the relevant investment
amount of each individual directly to the bank responsible
for settling the investment transactions and managing the
blocked custody account. On the first trading day of the month
H e n k e l A n n u a l R e p o r t 2 0 2 0
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The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
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LLoonngg--tteerrmm vvaarriiaabbllee ccaasshh rreemmuunneerraattiioonn ((LLoonngg TTeerrmm IInncceennttiivvee,, LLTTII))
Overview LTI
Basis for assessment/Parameters
Adjusted return on capital employed (ROCE), average target achievement
over the performance measurement period (three yearly tranches)
Performance measurement period
Cap
Lower threshold
Average target achievement 80%
(50% target remuneration)
Three-year period (remuneration year plus two subsequent fiscal years)
150% of the target amount (= 1,200,000 euros)2
Average target achievement 100%
(100% target remuneration)
100% target achievement1
Upper threshold
Average target achievement 120%
(150% target remuneration)
1 Respective 100% target derived from the budget.
2 Remuneration for an ordinary member of the Management Board at a functional factor of 1.
In addition to the Share Ownership Guideline explained above,
the long-term variable cash remuneration (LTI) provides incen-
tives to promote the long-term development of the corporation.
The LTI represents variable cash remuneration, the amount
of which is based on the long-term future performance of the
corporation and derived from the average return on capital
employed (ROCE) adjusted for one-time expenses and in-
come, and for restructuring expenses over a period of three
years (performance measurement period). The LTI is a rolling
program. As such, a new LTI tranche with a three-year perfor-
mance measurement period is issued every year. For each LTI
tranche, the adjusted ROCE is measured in the relevant remu-
neration year and the two subsequent years (three annual
values).
The ROCE targets are derived from our budget and are set for
each year of each three-year performance measurement period
by the Supervisory Board of Henkel Management AG at the start
of the relevant year. At the end of the respective year, target
achievement for the year in question is analyzed. The average
target achievement for the relevant performance measurement
period is then calculated on the basis of the three measurements
of relevance for the respective LTI tranche.
Target achievement with regard to adjusted ROCE figures is
determined on the basis of the consolidated financial statements
for the relevant fiscal years as certified without qualification
and approved in each case.
The LTI is paid in cash once the annual financial statements
of Henkel AG & Co. KGaA for the final year in the performance
measurement period have been approved by the Annual General
Meeting of Henkel AG & Co. KGaA.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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A remuneration scale has been defined for the LTI. A threshold
has also been established, below which payments are withheld.
The scale of payout amounts is consistently linear between the
upper and lower thresholds, as follows:
LTI remuneration scale
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Remuneration for an ordinary member of the Management Board at a
functional factor of 1.
The total payable LTI amount is capped at 150 percent of the
target amount, bearing in mind the respective functional factor.
To ensure cogent and consistent incentivization and efficacy in
the structure of Management Board remuneration following
the change (from adjusted EPS to adjusted ROCE) in the LTI per-
formance indicators in 2019, the performance values governing
the LTI tranches issued in 2017 and 2018, of which the three-
year performance measurement periods did not end until
December 31, 2019 and December 31, 2020 respectively, were
determined pro rata temporis in accordance with the previously
valid conditions for the periods up to December 31, 2018, while
for the periods from January 1, 2019 they will be determined in
accordance with the conditions that became effective as of 2019.
FFuunnccttiioonnaall ffaaccttoorrss ggoovveerrnniinngg vvaarriiaabbllee rreemmuunneerraattiioonn
In order to ensure consideration of the differing requirements
of the relevant areas of Management Board responsibility and
of the differing levels of complexity and importance of the
respective corporate functions and business units, the follow-
ing general functional factors were defined, starting in fiscal
2019, as multipliers for the STI and LTI payout amounts based
on target achievement:
Functional factors*
Area of responsibility/Business unit
CEO
Finance
HR/Infrastructure Services
Adhesive Technologies
Beauty Care
Laundry & Home Care
* Up until 2018, only the CEO qualified for a higher factor.
1 A functional factor of 1.625 was specified for fiscal 2020.
2 A functional factor of 1.0 was specified for fiscal 2020.
STI/LTI factor
1.751
1.102
0.90
1.10
0.90
1.00
A marginally lower factor for individual or all variable com-
ponents of remuneration may be set for newly appointed
Management Board members in their first year of office.
These functional factors are regularly reviewed and adjusted
if necessary, particularly if structural changes are made to
Management Board responsibilities.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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Overall, the STI and LTI are calculated as follows:
Calculation of STI and LTI
The Company
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1 Adjusted return on capital employed.
In keeping with the objectives of the Management Board
remuneration policy, this structure of the STI and LTI not only
rewards sustainable profitable growth and thus supports the
long-term development of the corporation, but also ensures
that Management Board remuneration is aligned to the inter-
ests of shareholders.
CCoonnssiiddeerraattiioonn ooff uunnuussuuaall ddeevveellooppmmeennttss wwhheenn ddeetteerrmmiinniinngg
ttaarrggeett aacchhiieevveemmeenntt oorr ssppeecciiffyyiinngg SSTTII aanndd LLTTII ppaayyoouutt aammoouunnttss
((ssttaarrttiinngg iinn 22002211))
Changes are not made to the benchmark parameters, nor to
the STI and LTI targets in the course of a fiscal year.
When determining the STI and LTI payout amounts, the Super-
visory Board of Henkel Management AG may, at its discretion,
consider unusual developments of which the effects were not
taken into reasonable account when setting the targets and the
target remuneration; this can result in both an increase or a
reduction of the target achievement and, accordingly, in the
corresponding payout amounts. In this context, unusual
developments are deemed to be circumstances that have oc-
curred or of which occurrence is highly likely, which were not
predicted or predictable at the time of setting the targets and
which significantly impact the total remuneration of the Man-
agement Board. Such circumstances may include, in particular,
substantial acquisitions, the sale of material parts of the cor-
poration, severe changes in applicable accounting standards or
tax regulations, natural catastrophes, pandemics or similar
occurrences. Market developments that turn out to be less
favorable than expected but deemed to be within the realms of
possibility when setting the targets do not justify such adjust-
ments. Specific target achievements and payout amounts are
published in the remuneration report, together with expla-
nations of, and the rationale behind any adjustments by the
Supervisory Board of Henkel Management AG.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
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Contacts
Financial calendar
Accordingly, the previous policy whereby the Supervisory
Board of Henkel Management AG could, at its discretion and
after due consideration, decide to adjust the target or could
determine a new reference value for measuring performance
in the following year if adjusted EPS in the remuneration year
was more than 20 percent above or below the comparable prior-
year figure as a result of extraordinary events, will no longer
apply from 2021 onward.
d) Special payments/bonuses
No authorization exists to allow the Supervisory Board of Henkel
Management AG to exercise its discretionary judgment to award
special payments for outstanding performance (known as the
“Mannesmann” clause).
e) Malus and clawback regulations
The Supervisory Board of Henkel Management AG is authorized
to wholly or partially withhold or refuse to pay a variable com-
ponent of remuneration (STI, LTI) that was awarded for a fiscal
year in which a Management Board member commits a severe
breach of duty (malus).
If variable components of remuneration have already been
paid, the Supervisory Board of Henkel Management AG can
demand their repayment (clawback) if (i) a severe breach of
duty is only discovered after the variable components of
remuneration have been paid, or (ii) a financial report is found
to contain a material misstatement that impacted the calculation
of the variable remuneration of the Management Board.
The Supervisory Board of Henkel Management AG decides at
its due discretion whether and which variable compensation
components are to be withheld or reclaimed, and in what
amount and for which years. Such decisions take account
of the severity and consequences of a breach, the degree to
which a Management Board member is at fault, the amount of
loss or reputational damage suffered by the corporation, and
the willingness of the Management Board member to assist in
the investigation.
In cases of material misstatements in financial reports, the
maximum amount that can be reclaimed is the difference
between the newly calculated figure based on corrected data
and the original payout amount; in all other instances, repay-
ment of a maximum of 50 percent of the payout amount can
be demanded.
Clawback is also possible if the tenure and/or employment of
the Management Board member has already ended by the time
the Supervisory Board of Henkel Management AG issues its
reclaim demand. Irrespective of the termination of tenure or
employment, the repayment obligation does not apply if more
than two years have passed between the payout and the re-
claim demand by the Supervisory Board of Henkel Manage-
ment AG. This regulation is without prejudice to the right to
assert further claims on grounds of personal misconduct by a
member of the Management Board, and especially to claim
damages under Section 93 AktG.
f) Ancillary activities
After consultation with the Supervisory Board of Henkel Man-
agement AG, members of the Management Board may accept
supervisory board mandates and similar offices in companies
in which Henkel AG & Co. KGaA holds a direct or indirect par-
ticipating interest, or may engage in activities in associations
and similar organizations to which Henkel AG & Co. KGaA
belongs by virtue of its business activities. Any other paid or
unpaid ancillary activities must be approved in advance by the
Supervisory Board of Henkel Management AG. The remuneration
received for offices assumed on behalf of other companies in
the Henkel Group is offset against the Management Board re-
muneration. When accepting other offices, particularly seats
on statutory supervisory boards and comparable oversight
bodies of non-Group companies in Germany or abroad, the
Supervisory Board of Henkel Management AG decides on a
case-by-case basis whether and to what extent any compensation
paid for the non-Group board activity is to be offset against the
Management Board remuneration.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
g) Pension benefits (retirement pensions and
survivors’ benefits)
The corporation has been operating a company pension
scheme with purely defined contributions since January 1, 2015.
Accordingly, members of the Management Board now receive
a superannuation lump-sum payment comprised, at least, of
the total annual non-interest-bearing (lump-sum) contributions
to the plan during their time in office. The lump-sum contri-
butions are added to the special fund set up for company pension
purposes; Management Board members are entitled to any sur-
plus return, albeit not guaranteed, from investing the lump-sum
contributions. The lump-sum contributions – based on a full
fiscal year – are currently 750,000 euros for the Chairman and
450,000 euros each for the other members of the Management
Board.
An entitlement to pension benefits arises on retirement upon
reaching the age of 63, on termination of the employment rela-
tionship on or after attainment of the statutory retirement age,
in the event of death, or in the event of permanent complete
incapacity for work. If a member of the Management Board
has received no pension benefits prior to their death, the super-
annuation lump sum accumulated up to time of death is paid
out to the surviving spouse or to surviving children eligible
for orphan benefits.
Instead of granting a company pension in accordance with the
defined contribution pension scheme described above, from
2021 onward, Management Board members may also be granted
a so-called pension payout in the form of an earmarked lump
sum to be transferred directly to the Management Board
members each year. The amount of annual pension payout is
equivalent to the aforementioned lump-sum contributions. As
a result, Management Board members become solely responsible
for funding their pensions, which lessens the administrative
workload for the corporation accordingly.
If a Management Board member opts for the lump-sum pension
payout route, they cannot switch/return to the company’s defined
contribution pension scheme.
h) Continued payment of salaries in the event of illness
In the event of illness, payment of the basic remuneration
continues for the duration of the statutory period of continued
payment of wages. If the illness persists beyond this period,
the corporation pays the difference between the sick pay awarded
by the statutory health insurance and the appropriate net basic
remuneration for the duration of the illness, but over a period
no longer than 72 weeks in duration or up until termination of
the employment relationship.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
i) Caps on total remuneration
After allowing for the aforementioned functional factors and
caps for the variable, performance-related components of remu-
neration as well as for other emoluments and pension benefits
(lump-sum contribution), the Supervisory Board of Henkel
Management AG has specified the following caps on total remu-
neration for a full fiscal year:
Further information
Caps on annual total remuneration
Credits
Contacts
Financial calendar
in euros
Chairman of the
Management Board
(Functional factor STI/LTI 1.75)
Ordinary member of the
Management Board
(Functional factor STI/LTI 0.9)
Ordinary member of the
Management Board
(Functional factor STI/LTI 1.0)
Ordinary member of the
Management Board
(Functional factor STI/LTI 1.1)
Basic
remuneration
Other
emoluments
Variable annual
remuneration
(short term,
cash)
Variable annual
remuneration
(long term, share
deferral)
Conditional
entitlement to
long-term
incentive
Pension
lump-sum
contribution/
Pension
remuneration
Minimum total
remuneration
Maximum total
remuneration
1,200,000
0 to 250,000
0 to 3,412,500
0 to 1,837,500
0 to 2,100,000
750,000
1,950,000
9,550,000
750,000
0 to 175,000
0 to 1,755,000
0 to 945,000
0 to 1,080,000
450,000
1,200,000
5,155,000
750,000
0 to 175,000
0 to 1,950,000
0 to 1,050,000
0 to 1,200,000
450,000
1,200,000
5,575,000
750,000
0 to 175,000
0 to 2,145,000
0 to 1,155,000
0 to 1,320,000
450,000
1,200,000
5,995,000
H e n k e l A n n u a l R e p o r t 2 0 2 0
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The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
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While this remuneration policy is in place, the amounts of the
individual components of remuneration may increase in line
with the principles explained above, but without affecting the
aforementioned caps on total remuneration.
j) Remuneration-related legal transactions; provisions
governing termination of position on the Management Board
EExxeeccuuttiivvee ccoonnttrraaccttss
The basic provisions governing appointment to the Manage-
ment Board, including remuneration, are agreed with Manage-
ment Board members in executive contracts. Subject to prior
change by mutual agreement, the term of such a contract is
equivalent to the term of office. If the member is re-appointed
to the Management Board at the end of the term of office, the
employment contract is extended for the duration of the new
tenure. Initial appointment to the Management Board is gen-
erally for a term of three years. Any extension of an executive
contract or re-appointment to the Management Board is for a
period of no longer than five years.
RReessiiggnnaattiioonn ffrroomm tthhee MMaannaaggeemmeenntt BBooaarrdd//OOtthheerr pprreemmaattuurree
tteerrmmiinnaattiioonn ooff eexxeeccuuttiivvee ccoonnttrraaccttss
In accordance with company law, the executive contracts do
not provide for ordinary resignation from the Management
Board other than at the end of the appointment period. If the
appointment of a member of the Management Board ends
prematurely – for whatever reason –, either party to the con-
tract is entitled to give notice to terminate the executive con-
tract effective from the end of the period stipulated in Section
622 (1) and (2) German Civil Code [Bürgerliches Gesetzbuch,
BGB], without prejudice to any right to terminate for good
cause or reason. The entire time of office on the corporation’s
Management Board is relevant for the calculation of all periods
as are any prior periods spent working for Henkel AG & Co.
KGaA or any of its affiliated companies if and insofar as they
immediately preceded the appointment to the corporation’s
Management Board. The aforementioned is without prejudice
to the right of either party to terminate for good cause or
reason without the need to give notice. Equally, an executive
contract can be terminated by mutual agreement.
In the event of remuneration being reduced in accordance
with Section 87 (2) AktG, the Management Board member is
entitled to give notice of six weeks to terminate the executive
contract to the end of the next calendar quarter.
In addition, an executive contract ends without the need for
separate notice at the end of the month in which that Manage-
ment Board member becomes permanently incapacitated
for work, in which case they qualify for pension benefits for
reduced earning capacity.
CCoommppeennssaattiioonn ppaayymmeenntt
In the event that appointment to Management Board is
terminated prematurely and due notice is given to terminate
the executive contract effective from the end of the period
stipulated in Section 622 (1) and (2) BGB, the executive
contracts provide for a compensation settlement amounting
to the remuneration for the remaining term of the contract
(basic remuneration plus variable remuneration for single and
multiple years). This compensation is limited to a maximum
of two years’ remuneration (basic remuneration plus variable
remuneration for single and multiple years) (“severance pay-
ment cap”) and may not extend over a period that exceeds the
remaining term of the executive contract. Members of the Man-
agement Board are not entitled to compensation, however, if the
premature termination of their tenure is prompted by circum-
stances that would have entitled the corporation to terminate
the executive contract without notice for good cause or reason
for which the Management Board member is responsible. The
Supervisory Board of Henkel Management AG is authorized
to reduce the compensation settlement to the reasonable
amount in application of Section 87 (2) AktG.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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Shares and bonds
Corporate governance
Combined management report
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Further information
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Contacts
Financial calendar
In the event that the sphere of responsibility/executive function
is altered or restricted against the wishes of the relevant Man-
agement Board member to such an extent that it is no longer
comparable to the position prior to the change or restriction,
that member is entitled to resign from office and request prem-
ature termination of their executive contract. In such cases,
members are entitled to compensation payments amounting to
not more than two years’ remuneration.
No entitlements exist in the event of premature termination
of executive duties resulting from a change in control.
PPaayymmeenntt//ffoorrffeeiittuurree ooff vvaarriiaabbllee ccoommppoonneennttss ooff rreemmuunneerraattiioonn
When a member leaves the Management Board, the STI is
calculated pro rata temporis and paid out on the contractually
agreed due dates; personal investment from these amounts in
Henkel preferred shares (share deferral) is no longer required.
Unless otherwise agreed individually, LTI entitlements are
calculated at the end of the relevant performance measurement
period and paid out on the contractually agreed due dates. How-
ever, entitlements from any tranche of which the performance
measurement period has not yet ended at the date of departure
are forfeited without replacement if the departure is based on
good cause or reason that would have justified revocation of
the appointment or termination of the executive contract.
Special provisions apply in the case of death: All lock-up periods
relating to investments in Henkel preferred shares that are
financed by the recipients (share deferral) shall end. By the same
token, LTI entitlements with regard to outstanding tranches are
settled on the basis of budget figures and paid to the heirs.
PPoosstt--ccoonnttrraaccttuuaall nnoonn--ccoommppeettiittiioonn ccllaauussee
Management Board executive contracts include a post-con-
tractual non-competition clause with a term of two years.
Members of the Management Board are entitled to a discre-
tionary payment totaling 50 percent of the annual remunera-
tion (basic remuneration plus variable remuneration for single
and multiple years), which is payable in 24 monthly install-
ments unless the Supervisory Board of Henkel Management
AG waives the non-competition clause. This discretionary pay-
ment is based on the average annual remuneration awarded to
the Management Board member for the three full fiscal years
leading up to the termination of their executive activity, but is
equivalent to no less than 150 percent of the annual basic re-
muneration awarded in the final full fiscal year prior to termi-
nation of their tenure on the Management Board. Any com-
pensation settlements for equivalent periods are offset against
the discretionary payment. The same applies to any income
that the Management Board member earns – or desists from
earning without compelling reason – during the non-com-
petition period from any new activity elsewhere if and insofar
as this income and the discretionary payment together exceed
the (total) remuneration applicable to the relevant period.
MMiisscceellllaanneeoouuss
The corporation can take out directors and officers insurance
(D&O insurance) that also covers members of the corporate
bodies. For members of the Management Board, a deductible
amounting to 10 percent per loss event is applied in such
cases, subject to a maximum for the fiscal year of one and a
half times their annual basic remuneration. The corporation
may also, at its expense, insure Management Board members
against risks associated with their professional activity, in
which case the Supervisory Board of Henkel Management AG
may specify a reasonable deductible in the absence of any
statutory deductible. The corporation insures its Management
Board members against accidents, including private risks, for
the duration of their executive contracts.
The company does not grant any loans or advances to members
of the Management Board.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
k) Temporary deviations from the remuneration policy
(starting in 2021)
The Supervisory Board of Henkel Management AG may tempo-
rarily deviate from individual elements of this remuneration
policy if deemed necessary in the interests of the corporation’s
long-term good. Such necessity may occur, in particular, in
situations that could adversely affect the long-term survival
and profitability of the corporation. These situations may arise
due to the circumstances in the economy as a whole or excep-
tional occurrences in the corporation itself. The STI and LTI,
and their ratio to each other, the basis for calculation, the rules
governing the specification of their targets and the determina-
tion of target achievement, or the determination of the payout
amounts and timing are elements of the remuneration system
from which deviations are permissible in exceptional circum-
stances. Changes during the course of a year to targets and
benchmarks that have already been specified for variable perfor-
mance-related components of remuneration are not permitted.
Deviations from the remuneration system should not extend
over more than three years. Such temporary deviation from
the remuneration policy described above is conditional on the
Supervisory Board of Henkel Management AG unanimously
adopting a resolution ascertaining the occurrence of a situation
necessitating temporary deviation from the remuneration
policy in the interests of the long-term good of the corporation
and, by the same token, unanimously deciding on the specific
deviations that it believes are necessary. Insofar as executive
contract provisions permit unilateral amendment of the relevant
remuneration rules, the Supervisory Board of Henkel Manage-
ment AG will unilaterally implement the deviations it believes
to be necessary; otherwise it will make every effort to reach
appropriate contractual agreement with the affected member(s)
of the Management Board.
Notwithstanding the aforementioned, the Supervisory Board
of Henkel Management AG may reduce remuneration to the
reasonable amount calculated in application of the strict rules
of Section 87 (2) AktG if the situation of the Henkel Group deteri-
orates to such an extent that to continue awarding the remuner-
ation would be untenable for the corporation.
3. Remuneration policy for members of the Supervisory Board
and of the Shareholders’ Committee of Henkel AG & Co. KGaA
RReegguullaattiioonn,, ssttrruuccttuurree aanndd aammoouunnttss
The Annual General Meeting has defined the remuneration
for the Supervisory Board and the Shareholders’ Committee in
provisions contained in Art. 17 and 33 of the Articles of Associ-
ation.
Remuneration is of a purely fixed nature to strengthen im-
partiality and to avoid conflicts of interest for corporate body
members performing their supervisory function. In accordance
with GCGC recommendations, remuneration is increased or
additional remuneration paid to take account of the responsi-
bility and scope of duties associated with being Chair, Vice
Chair or member of a (sub)committee.
The components in detail:
Each member of the Supervisory Board and of the Share-
holders’ Committee receives a fixed fee of 70,000 euros and
100,000 euros per year respectively. The Chairwoman of the Su-
pervisory Board and the Shareholders’ Committee receives
double, and the Vice Chair in each case one and a half times
the aforementioned amounts.
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Members of the Supervisory Board who are also members of
one or more committees each receive additional remuneration
of 35,000 euros; if they chair one or more committees, they
receive 70,000 euros. Activity in the Nominations Committee
is not remunerated separately.
Members of the Shareholders’ Committee who are also members
of one or more subcommittees of the Shareholders’ Committee
each receive additional remuneration of 100,000 euros; if they
chair one or more subcommittees, they receive 200,000 euros.
The higher remuneration allocated to the members of the
Shareholders’ Committee as compared to the Supervisory
Board reflects the fact that, under the Articles of Association,
the Shareholders’ Committee participates in the management
of the corporation.
MMiisscceellllaanneeoouuss
The members of the Supervisory Board or a committee receive
an attendance fee amounting to 1,000 euros for each meeting
in which they participate. If several meetings take place on
one day, the attendance fee is only paid once. In addition, the
members of the Supervisory Board and of the Shareholders’
Committee are reimbursed expenses incurred in connection
with their positions. The members of the Supervisory Board
are also reimbursed the value-added tax (VAT) payable on
their total remunerations and defrayed expenses.
The corporation can take out directors and officers insurance
(D&O insurance) that also covers members of the corporate
bodies. For members of the Supervisory Board and Shareholders’
Committee, a deductible amounting to 10 percent per loss event
is applied in such cases, subject to a maximum for the fiscal
year of one and a half times their annual fixed remuneration.
The corporation provides the members of the Supervisory
Board and Shareholders’ Committee with technical support,
equipment and benefits in kind to an extent that is appropriate
for them to exercise their office. The Chairwoman of the Su-
pervisory Board and of the Shareholders’ Committee is pro-
vided with an office and secretarial support to enable her to
perform these duties.
The corporation does not grant any loans or advances to mem-
bers of the Supervisory Board or the Shareholders’ Committee.
4. Remuneration of Henkel Management AG
for assumption of personal liability, and reimbursement of
expenses to same
For assumption of personal liability and management respon-
sibility, Henkel Management AG in its function as Personally
Liable Partner receives an annual payment of 50,000 euros
(= 5 percent of its capital stock) plus any value-added tax (VAT)
due, said fee being payable irrespective of any profit or loss made.
Henkel Management AG may also claim reimbursement
from or payment by the corporation of all expenses incurred in
connection with the management of the corporation’s business,
including the remuneration and pensions paid to its corporate
bodies.
5. Remuneration of the members of the Supervisory Board
of Henkel Management AG
According to Art. 14 of the Articles of Association of Henkel
Management AG, the members of the Supervisory Board of
Henkel Management AG are each entitled to receive annual
remuneration of 10,000 euros. However, those members of
said Supervisory Board who are also and simultaneously mem-
bers of the Supervisory Board or the Shareholders’ Committee
of Henkel AG & Co. KGaA do not receive this remuneration.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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Remuneration report 2020
This remuneration report describes the remuneration policy
for the Management Board of Henkel Management AG as the
sole Personally Liable Partner of Henkel AG & Co. KGaA
(Management Board), the Supervisory Board and Shareholders’
Committee of Henkel AG & Co. KGaA and the remuneration of
Henkel Management AG as the Personally Liable Partner and
its Supervisory Board for fiscal 2020.
The report contains all disclosures and explanations pursuant
to the provisions of the German Commercial Code [HGB] and
the concomitant principles of German Accounting Standard
No. 17 [DRS 17]. It also includes the tables detailing Manage-
ment Board remuneration (payments/awards) as recommended
by the German Corporate Governance Code as amended on
February 7, 2017 (GCGC 2017), and is in part already compliant
with the requirements of the German Act Implementing the
Second Shareholders’ Rights Directive [Gesetz zur Umsetzung
der zweiten Aktionärsrechterichtlinie, ARUG II]. The remuner-
ation report forms part of the combined management report
for Henkel AG & Co. KGaA and the Group, which has been
audited by the external auditor; the associated individualized
information has not been additionally disclosed in the notes to
the consolidated financial statements (Sections 289a (2), 315a (2)
HGB as applicable to the annual financial statements 2020).
1. Remuneration of members of the Management Board
for fiscal 2020
OObbjjeeccttiivveess//ssppeecciiffiiccaattiioonn ooff rreemmuunneerraattiioonn ppoolliiccyy
Henkel is committed to corporate governance that is responsible,
transparent and aligned to the sustainable and long-term
development of the corporation. We want to create sustainable
value – for our customers and consumers, for our people, for
our shareholders, as well as for the communities in which we
operate. We shape our future on the basis of a long-term strategic
framework that builds on our purpose and our values, with a
clear focus on purposeful growth.
The legal form of Henkel AG & Co. KGaA means that the Super-
visory Board of Henkel Management AG is responsible for
appointing and dismissing members of the Management
Board, the drafting of their contracts, assignment of their
business duties, and their remuneration. Regarding Manage-
ment Board remuneration, the Supervisory Board of Henkel
Management AG is responsible, in particular, for:
Determining and reviewing remuneration policy
Specifying the non-performance-related and variable
performance-related components of remuneration
Defining individual targets each year, and measuring
performance with regard to same
Determining the extent to which financial targets have
been met each year and quantifying annual and multi-year
variable, performance-related remuneration
Approving the assumption of voluntary duties or supervi-
sory board, advisory board or similar mandates in other
companies, as well as other ancillary professional activities
Approving loans and advances
The remuneration system takes account of the relevant duties
and responsibilities, and is designed to drive implementation
of our corporate strategy, to offer incentives for successful and
sustainable business performance over the long term, and to
avoid inappropriate risk-taking. Members of the Management
Board receive non-performance-related components and
variable, performance-related components consisting of the
following three elements:
Fixed basic remuneration to assure a reasonable basic salary
Variable annual remuneration (Short Term Incentive, STI)
Variable cash remuneration based on the long-term perfor-
mance of the company (Long Term Incentive, LTI)
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The benchmark parameters for the STI are the achieved financial
targets for each fiscal year – which determine the so-called
bonus – and the individual performance of each Management
Board member, specifically their personal contribution to-
ward implementing the strategic priorities and sustainability
targets. In keeping with our corporate strategy for purposeful
growth, one financial target specified for the STI is organic
sales growth (OSG) – i.e. sales development adjusted for for-
eign exchange and acquisitions/divestments – in the remu-
neration year, which is one of the criteria (50-percent
weighting) used to determine the amount of the bonus. The
other financial target (also weighted at 50 percent) is earnings
per preferred share (EPS) adjusted for one-time expenses and
income, for restructuring expenses, and for foreign exchange.
The STI is paid out in full in cash. Recipients may only
dispose of around 65 percent of this payment as they wish
(short-term component, cash remuneration). Members of the
Management Board must invest 35 percent of the respective STI
(net) payment amount long term in Henkel preferred shares
(long-term component, Share Ownership Guideline/share
deferral). The aim here is to promote a certain degree of align-
ment in the interests of the Management Board members with
those of the shareholders while ensuring the sustainable and
long-term performance of the corporation.
The LTI amount is derived from the average return on capital
employed (ROCE) over a period of three years, adjusted for
one-time expenses and income, and for restructuring expenses,
and – like the Share Ownership Guideline described above –
serves also as an incentive to promote the long-term develop-
ment of the corporation.
Ancillary benefits (other emoluments) and pension contribu-
tions are awarded in addition to the fixed basic remuneration
and variable remuneration. Rules that are consistent with
market practice also exist to govern the various components
of remuneration upon joining or leaving the Management Board.
The Supervisory Board of Henkel Management AG has capped
the maximum amounts payable both as individual variable
components of remuneration and as the total compensation
payable in any fiscal year – taking into account the other emolu-
ments and pension contributions. In specific circumstances,
the Supervisory Board of Henkel Management AG may with-
hold some or all of the variable remuneration or demand the
repayment, within specific limits and time periods, of variable
remuneration that has already been paid (malus and clawback
regulations).
For further details of the remuneration policy in place for 2020,
please refer to the discussions above and to the remuneration
system approved by the Annual General Meeting 2020.
RReemmuunneerraattiioonn 22002200
Excluding pension commitments, the total remuneration paid
to members of the Management Board serving in 2020 for the
performance of their duties for and on behalf of Henkel AG &
Co. KGaA and its subsidiaries during the year under review
amounted to 15,880,397 euros (previous year: 17,247,891 euros).
Basic remuneration accounted for 4,950,000 euros (previous
year: 4,950,000 euros), other emoluments for 444,057 euros
(previous year: 431,024 euros), the short-term component of
annual variable remuneration for 5,918,029 euros (previous
year: 6,993,808 euros), the long-term component of annual
variable remuneration – share deferral – for 3,186,631 euros
(previous year: 2,043,252 euros), and the 2018 LTI tranche – for
which the plan term of three years ended at the end of the fis-
cal year – for 1,381,680 euros (previous year: 2017 LTI tranche,
2,829,807 euros). In addition, members of the Management
Board serving in 2020 were granted an LTI tranche for 2020
(term: 1/1/2020
term of three years in 2023, subject to achievement of certain
performance targets.
12/31/2022) that will be paid out after the plan
–
The basis for assessment/parameters and the target achieve-
ment/remuneration for the 2020 STI and the 2019 and 2020
LTI tranches are listed in the following tables:
H e n k e l A n n u a l R e p o r t 2 0 2 0
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Calculation of target achievement/STI remuneration 2020
Target parameter
Weighting
Combined management report
Consolidated financial statements
Financial
targets (bonus)
Further information
Personal targets
Credits
Contacts
Financial calendar
Organic sales
growth (OSG)
Adjusted earnings
per preferred
share (EPS)3
50%
50%
100% target
achievement
1.0%
Actual 2020
Target achievement1 Bonus amount2
-0.7%
71.5%
5.43 euros
4.46 euros
55.4%
1,268,500 euros
• Absolute and relative performance
compared to market/competition
• Personal contribution to the implementation of strategic priorities
Personal target achievement/
Bonus multiplier:
Range 0.8 – 1.2
and sustainability targets
• Achievement of personal targets (focus topics)
Focus topics 2020:
• Implementation of strategic objectives
• Financial management, scenario plans and measures
• Digitalization, new business models, higher digital sales
• Growth initiatives, portfolio management
• Sustainability, contribution toward prioritized climate
positivity and circular economy
• Succession planning, leadership team development,
empowerment, diversity
• Management of the COVID-19 pandemic, employee protection,
business continuity
1 Percentage of the relevant bonus target amount.
2 Bonus amount, given a personal multiplier and functional factor of 1 in each case.
3 Year-on-year comparison of actual figures at constant exchange rates.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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At the start of the year, the Supervisory Board specified the
individual targets for the members of the Management Board,
and evaluated their individual performance at the end of the
year after consultation in the Human Resources Subcommittee
of the Shareholders’ Committee. For all members of the Manage-
ment Board, the individual target achievement factor in the
form of the individual bonus multiplier was set at 1.1, which
in particular takes into consideration successful management
of the COVID-19 pandemic.
The Company
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Corporate governance
Combined management report
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Financial calendar
STI target parameters (bonus)
The organic sales growth figure representing 100-percent target
achievement was 1.0 percent in 2020. The lower and upper
thresholds were -2.0 percent and 2.0 percent respectively.
The adjusted EPS figure that is of relevance for the actual-to-
actual comparison for remuneration purposes and which
represents 100-percent target achievement was 5.43 euros in
2020. The lower and upper thresholds were 4.34 euros and
6.52 euros.
Individual target achievement/Bonus multiplier
The following criteria play a key role in measuring individual
performance:
The absolute and relative performance of the business unit
for which each officer is responsible, compared to market/
competition performance
The contribution toward implementing the strategic priorities
and achieving the sustainability targets
Achievement of the relevant separate targets agreed with
each individual (focal areas)
Calculation of target achievement/LTI remuneration
LTI tranche
LTI tranche 2019
LTI tranche 2020
Performance
year
100% target
Actual
Target
Adjusted ROCE
(%)
Adjusted ROCE
(%)
achievement
(%)
1. (2019)
2. (2020)
3. (2021)
1. (2020)
2. (2021)
3. (2022)
16.9%
14.1%
–
14.1%
–
–
15.0%
12.1%
–
12.1%
–
–
88.9%
85.6%
–
85.6%
–
–
Remuneration
for respective
LTI tranche1
Average target
achievement
over three-year
performance
measurement
period (%)
–
–
–
–
1 Remuneration for an ordinary member of the Management Board at a functional factor of 1.
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LTI target parameters
The adjusted ROCE figure representing 100-percent target
achievement was 14.13 percent in 2020. The resulting target
achievement for the yearly tranche 2020 is 85.6 percent.
To ensure cogent and consistent incentivization and efficacy
in the structure of Management Board remuneration following
the change (from adjusted EPS to adjusted ROCE) in the LTI
performance indicators in 2019, the performance values gov-
erning the LTI tranches issued in 2017 and 2018, of which the
three-year performance measurement periods did not end
until December 31, 2019 and December 31, 2020 respectively,
were determined pro rata temporis in accordance with the
previously valid conditions for the periods up to December 31,
2018, while for the periods from January 1, 2019, they will be
determined in accordance with the conditions that became
effective as of 2019. The resulting target achievement for the
LTI tranche 2018 for performance year 2018 (based on adjusted
EPS as the performance indicator) was 0 percent. Average
target achievement for performance years 2019 and 2020
(based on adjusted ROCE as the performance indicator) was
87.3 percent for this period. At a functional factor of 1, this
resulted in a payout amount of 363,600.00 euros.
Individual remuneration
The individual amounts in these and the following tables are
rounded up or down to full euros. As a result, rounded figures
in some of the lines in the tables may not add up to the indicated
total. The same applies for percentage figures.
The following table shows the remuneration per HGB/DRS 17
paid/awarded individually to the members of the Management
Board who served in 2020 – broken down into basic remunera-
tion, other emoluments, short-term and long-term components
of variable annual remuneration (STI), LTI and the cost of
the pension benefits for each member. The table shows the
components of remuneration for fiscal 2020 that have already
been paid (basic remuneration, other emoluments) and those
that have been awarded but not yet paid (STI and LTI with
plan term expiry in the year under review) and contains all the
information regarding remuneration paid or awarded but not
yet paid for fiscal 2020 in line with GCGC 2017.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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Remuneration of Management Board members who served in 2020
1. Basic
remuneration1
2. Other
emoluments1
2020
1,200,000
167,863
3. Annual
variable
remuneration
(short term,
cash)2
1,473,838
Single-year
remuneration
(Total of
1 to 3)
2,841,701
4. Annual
variable
remuneration
(long term,
share deferral)
793,605
5. Long Term
Incentive3
Multi-year
remuneration
(Total of
4 and 5)
Total
remuneration
(Total of
1 to 5)
6. Payroll cost
of pension
benefits
Total
remuneration
(Total of
1 to 6)
363,600
1,157,205
3,998,907
756,040
4,754,947
2019
2020
2019
2020
2019
25.2%
750,000
23.4%
750,000
23.7%
750,000
24.2%
750,000
30.0%
545,455
30.6%
3.5%
158,666
4.9%
64,624
2.0%
55,317
1.8%
43,236
1.7%
33,613
1.9%
31.0%
882,909
27.5%
997,675
31.5%
882,909
28.5%
816,280
59.8%
1,791,575
55.9%
1,812,299
57.2%
1,688,226
54.4%
1,609,516
32.7%
541,785
64.4%
1,120,853
30.4%
62.9%
16.7%
475,413
14.8%
537,210
17.0%
475,413
15.3%
439,535
17.6%
291,731
16.4%
7.6%
480,987
15.0%
363,600
11.5%
480,987
15.5%
0
0.0%
0
0.0%
24.3%
956,400
29.8%
900,810
28.4%
956,400
30.8%
439,535
17.6%
291,731
16.4%
84.1%
2,747,975
85.7%
2,713,109
85.6%
2,644,626
85.2%
2,049,051
15.9%
458,206
14.3%
454,935
100.0%
3,206,181
100.0%
3,168,044
14.4%
457,722
100.0%
3,102,348
14.8%
450,702
100.0%
2,499,753
82.0%
1,412,584
18.0%
369,748
100.0%
1,782,332
79.3%
20.7%
100.0%
in euros
Carsten Knobel
(Chairman of
the Manage-
ment Board)
(since 1/1/2020)
Board member
since 7/1/2012
Jan-Dirk Auris
(Adhesive
Technologies)
Board member
since 1/1/2011
Sylvie Nicol
(Human
Resources)
Board member
since 4/9/2019
TABLE CONTINUED ON NEXT PAGE
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Remuneration of Management Board members who served in 2020
in euros
Bruno Piacenza
(Laundry &
Home Care)
Board member
since 1/1/2011
Jens-Martin
Schwärzler
(Beauty Care)
Board member
since 11/1/2017
Marco Swoboda
(Finance)
Board member
since 1/1/2020
Total4
1. Basic
remuneration1
2. Other
emoluments1
2020
750,000
50,098
2019
2020
2019
2020
2019
2020
2019
24.9%
750,000
25.2%
750,000
26.6%
750,000
31.4%
750,000
28.2%
–
–
4,950,000
26.2%
3,545,455
26.4%
1.7%
49,707
1.7%
58,256
2.1%
59,861
2.5%
59,980
2.3%
–
–
444,057
2.3%
357,164
2.7%
3. Annual
variable
remuneration
(short term,
cash)2
906,978
30.1%
802,645
27.0%
816,280
28.9%
684,360
28.6%
906,978
34.1%
–
–
5,918,029
31.3%
3,794,608
28.2%
Single-year
remuneration
(Total of
1 to 3)
1,707,076
56.7%
1,602,352
53.9%
1,624,536
57.6%
1,494,221
62.5%
1,716,958
64.6%
–
–
11,312,086
59.8%
7,697,227
57.2%
4. Annual
variable
remuneration
(long term,
share deferral)
488,373
5. Long Term
Incentive3
Multi-year
remuneration
(Total of
4 and 5)
Total
remuneration
(Total of
1 to 5)
6. Payroll cost
of pension
benefits
Total
remuneration
(Total of
1 to 6)
363,600
851,973
2,559,048
453,616
3,012,664
16.2%
432,193
14.5%
439,535
15.6%
368,502
15.4%
488,373
18.4%
–
–
3,186,631
16.9%
2,043,252
15.2%
12.1%
480,987
16.2%
290,880
10.3%
64,132
2.7%
0
0.0%
–
28.3%
913,180
30.7%
730,415
25.9%
432,634
18.1%
488,373
18.4%
–
84.9%
2,515,532
84.7%
2,354,951
83.5%
1,926,855
80.6%
2,205,331
83.0%
–
15.1%
456,090
15.3%
465,332
16.5%
465,040
19.4%
450,697
17.0%
–
–
1,381,680
7.3%
1,507,093
11.2%
–
4,568,311
24.2%
3,550,345
26.4%
–
15,880,397
84.0%
11,247,572
83.6%
–
3,031,322
16.0%
2,206,806
16.4%
100.0%
2,971,622
100.0%
2,820,283
100.0%
2,391,895
100.0%
2,656,028
100.0%
–
–
18,911,719
100.0%
13,454,378
100.0%
1 Payout in the relevant fiscal year.
2 Payout in the relevant following fiscal year.
3 Amount paid at relevant fiscal year-end for LTI tranches upon expiry of their respective three-year terms; term of LTI tranche 2018: 1/1/2018 – 12/31/2020; term of LTI tranche 2017:
1/1/2017 – 12/31/2019, payout in the relevant following fiscal year.
4 The totals for 2019 only relate to prior-year remuneration paid to members of the Management Board who also served in 2020, but not those who left in 2019.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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SShhaarree OOwwnneerrsshhiipp GGuuiiddeelliinnee//OOwwnn iinnvveessttmmeenntt uunnddeerr tthhee SSTTII
22001199 pprrooggrraamm ((sshhaarree ddeeffeerrrraall))
The net amounts to be invested by the members of the Man-
agement Board in office at December 31, 2020 in Henkel pre-
ferred shares under the STI 2020 program (share deferral) are
shown in the following table, together with the Henkel pre-
ferred shares already held as of December 31, 2020 which were
acquired under the Share Ownership Guideline in earlier years.
Further information
Credits
Contacts
Financial calendar
Shareholdings and own investments/Share deferral under the STI program
MMaannaaggeemmeenntt BBooaarrdd mmeemmbbeerr
Carsten Knobel
Jan-Dirk Auris
Sylvie Nicol
Bruno Piacenza
Jens-Martin Schwärzler
Marco Swoboda
Number of shares already
purchased as of Dec. 31, 2020
35,573
46,658
1,760
46,313
5,590
–
Total value of
existing share portfolio1
3,283,387.90 EUR
4,306,533.40 EUR
162,448.00 EUR
4,274,689.90 EUR
515,957.00 EUR
–
Amount invested under
STI 20202
396,802.67 EUR
268,604.88 EUR
219,767.63 EUR
244,186.26 EUR
219,767.63 EUR
244,186.26 EUR
1 92.30 euros per share, Xetra closing price on December 30, 2020.
2 Net amounts.
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PPeennssiioonn bbeenneeffiittss
The corporation has been operating a purely defined contribu-
tion system since January 1, 2015. Accordingly, members of the
Management Board now receive a superannuation lump-sum
payment comprised, at least, of the total annual non-interest-
bearing (lump-sum) contributions to the plan during their
time in office. The lump-sum contributions are added to the
special fund set up for company pension purposes; Manage-
ment Board members are entitled to any surplus return, albeit
not guaranteed, from investing the lump-sum contributions.
The lump-sum contributions – based on a full fiscal year – are
currently 750,000 euros for the Chairman and 450,000 euros
each for the other members of the Management Board.
The figures calculated in accordance with the German Com-
mercial Code [HGB] and International Accounting Standard
(IAS 19) for payroll cost and service cost for total benefit enti-
tlements acquired in the reporting year, and the present value
of total pension benefits accruing to the end of the fiscal
year, are shown in the following table:
Cost/Present value of pension benefits
in euros
Carsten Knobel
Jan-Dirk Auris
Sylvie Nicol
Bruno Piacenza
Jens-Martin Schwärzler
Marco Swoboda1
(since 1/1/2020)
Total
HGB
IAS
Payroll cost of
pension benefits in
the reporting year
755,264
457,468
454,632
457,428
450,649
369,748
453,569
456,047
461,865
461,791
450,664
–
3,026,643
2,202,482
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
Present value of
pension benefits
as of December 31
5,315,537
4,312,944
5,780,806
5,062,931
1,194,492
669,355
5,013,704
4,347,510
2,860,608
2,263,214
1,326,353
–
21,491,500
16,655,954
Service cost for
pension benefits in
the reporting year
756,040
458,206
454,935
457,722
450,702
369,748
453,616
456,090
465,332
465,040
450,697
–
3,031,322
2,206,806
Present value of
pension benefits
as of December 31
5,423,389
4,420,293
5,898,252
5,180,131
1,196,560
671,517
5,018,404
4,352,193
2,962,033
2,364,673
1,353,512
–
21,852,150
16,988,807
1 Including amounts vested prior to appointment to the Management Board.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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Additional disclosures
The following table lists the benefits granted in line with
GCGC 2017 for fiscal 2020, together with the maximum/mini-
mum potential amounts for variable remuneration components.
Variable remuneration is disclosed at the amount that would
be payable upon 100-percent target achievement rather than
the payout amount, together with the maximum/minimum
potential amounts. For details of payments made and amounts
awarded but not yet paid in fiscal 2020 in line with the recom-
mendations of GCGC 2017, please refer to the table entitled
“Remuneration of Management Board members who served in
2020” on pages 82 and 83.
Pursuant to GCGC*, payments/benefits granted for the reporting year to members of the Management Board serving in 2020
1. Basic
remuneration1
2. Other
emoluments1
Total (1 and 2)
3. Annual
variable
remuneration
(short term,
cash)2
4. Annual
variable
remuneration
(long term,
share deferral)2
5. Long Term
Incentive2
Total (1 to 5) 6. Payroll cost
of pension
benefits
2020
2020 (min)
2020 (max)
2019
2020
2020 (min)
2020 (max)
2019
2020
2020 (min)
2020 (max)
2019
1,200,000
1,200,000
1,200,000
750,000
750,000
750,000
750,000
750,000
750,000
750,000
750,000
545,455
167,863
167,863
167,863
158,666
64,624
64,624
64,624
55,317
43,236
43,236
43,236
33,613
1,367,863
1,367,863
1,367,863
908,666
814,624
814,624
814,624
805,317
793,236
793,236
793,236
579,068
2,112,500
0
3,168,750
1,430,000
1,430,000
0
2,145,000
1,430,000
1,170,000
0
1,755,000
877,500
1,137,500
0
1,706,250
770,000
770,000
0
1,155,000
770,000
630,000
0
945,000
472,500
1,300,000
0
1,950,000
880,000
880,000
0
1,320,000
880,000
720,000
0
1,080,000
540,000
5,917,863
1,367,863
8,192,863
3,988,666
3,894,624
814,624
5,434,624
3,885,317
3,313,236
793,236
4,573,236
2,469,068
756,040
756,040
756,040
458,206
454,935
454,935
454,935
457,722
450,702
450,702
450,702
369,748
Total
remuneration
pursuant to
GCGC
(Total 1 to 6)
6,673,903
2,123,903
8,948,903
4,446,872
4,349,559
1,269,559
5,889,559
4,343,039
3,763,938
1,243,938
5,023,938
2,838,816
in euros
Carsten Knobel
(Chairman)
(since 1/1/2020)
Board member
since 7/1/2012
Jan-Dirk Auris
(Adhesive Technologies)
Board member
since 1/1/2011
Sylvie Nicol
(Human Resources)
Board member
since 4/9/2019
TABLE CONTINUED ON NEXT PAGE
H e n k e l A n n u a l R e p o r t 2 0 2 0
The Company
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Corporate governance
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Financial calendar
Pursuant to GCGC*, payments/benefits granted for the reporting year to members of the Management Board serving in 2020
1. Basic
remuneration1
2. Other
emoluments1
Total (1 and 2)
in euros
Bruno Piacenza
(Laundry & Home Care)
Board member
since 1/1/2011
Jens-Martin Schwärzler
(Beauty Care)
Board member
since 11/1/2017
Marco Swoboda
(Finance)
Board member
since 1/1/2020
2020
2020 (min)
2020 (max)
2019
2020
2020 (min)
2020 (max)
2019
2020
2020 (min)
2020 (max)
2019
750,000
750,000
750,000
750,000
750,000
750,000
750,000
750,000
750,000
750,000
750,000
–
50,098
50,098
50,098
49,707
58,256
58,256
58,256
59,861
59,980
59,980
59,980
–
800,098
800,098
800,098
799,707
808,256
808,256
808,256
809,861
809,980
809,980
809,980
–
3. Annual
variable
remuneration
(short term,
cash)2
1,300,000
0
1,950,000
1,300,000
1,170,000
0
1,755,000
1,170,000
1,300,000
0
1,950,000
–
4. Annual
variable
remuneration
(long term,
share deferral)2
700,000
0
1,050,000
700,000
630,000
0
945,000
630,000
700,000
0
1,050,000
–
5. Long Term
Incentive2
Total (1 to 5) 6. Payroll cost
of pension
benefits
800,000
0
1,200,000
800,000
720,000
0
1,080,000
720,000
800,000
0
1,200,000
–
3,600,098
800,098
5,000,098
3,599,707
3,328,256
808,256
4,588,256
3,329,861
3,609,980
809,980
5,009,980
–
453,616
453,616
453,616
456,090
465,332
465,332
465,332
465,040
450,697
450,697
450,697
–
* Granted pursuant to GCGC 2017.
1 Payout in the relevant fiscal year.
2 Figures for 2020 reflect the target amounts payable upon 100-percent target achievement/LTI tranche 2020: 1/1/2020 – 12/31/2022; payout in 2023/LTI tranche 2019:
1/1/2019 – 12/31/2021; payout in 2022. Target amount applies to yearly tranches from 2020 onward.
8 7
Total
remuneration
pursuant to
GCGC
(Total 1 to 6)
4,053,714
1,253,714
5,453,714
4,055,797
3,793,588
1,273,588
5,053,588
3,794,901
4,060,677
1,260,677
5,460,677
–
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Other benefits/Clawback/Caps
In the year under review, no member of the Management
Board was granted non-standard benefits by the company in
connection with premature termination of their tenure, nor
were any such entitlements or arrangements modified. No
member of the Management Board was pledged payments
from third parties in respect of their duties as executives of
the corporation, nor were any such payments granted in the
reporting period.
No use was made of the option to demand repayment of varia-
ble components of remuneration (clawback) in the year under
review.
When determining the variable components of remuneration
(STI and LTI) and awarding other emoluments, the Supervisory
Board of Henkel Management AG observed the relevant caps in
the remuneration policy. The caps in the remuneration policy
applicable to the total remuneration of the individual mem-
bers of the Management Board were also observed in respect of
the variable components of remuneration and pension contri-
butions (lump-sum contributions), and other emoluments.
2. Remuneration of members of the Supervisory Board and
of the Shareholders’ Committee for fiscal 2020
The Annual General Meeting has defined the remuneration for
the Supervisory Board and the Shareholders’ Committee in
provisions contained in Art. 17 and 33 of the Articles of Associ-
ation. Remuneration is of a purely fixed nature to strengthen
impartiality and to avoid conflicts of interest for corporate
body members performing their oversight function. In ac-
cordance with GCGC recommendations, remuneration is in-
creased or additional remuneration paid to take account of
the responsibility and scope of duties associated with being
Chair, Vice Chair or member of a (sub)committee:
Each member of the Supervisory Board and of the Share-
holders’ Committee receives a fixed fee of 70,000 euros and
100,000 euros per year respectively. The Chairwoman of
the Supervisory Board and the Shareholders’ Committee re-
ceives double, and the Vice Chair in each case one and a
half times the aforementioned amounts.
Members of the Supervisory Board who are also members of
one or more committees each receive additional remunera-
tion of 35,000 euros; if they chair one or more committees,
they receive 70,000 euros. Activity in the Nominations
Committee is not remunerated separately.
Members of the Shareholders’ Committee who are also
members of one or more subcommittees of the Sharehold-
ers’ Committee each receive additional remuneration of
100,000 euros; if they chair one or more subcommittees, they
receive 200,000 euros.
Total remuneration paid to the members of the Supervisory
Board for the year under review (fixed fee, attendance fee, re-
muneration for committee activity) amounted to 1,562,000
euros plus VAT (previous year: 1,565,000 euros plus VAT). Of
this amount, fixed fees accounted for 1,225,000 euros, attendance
fees for 92,000 euros, and remuneration for committee activ-
ity (including associated attendance fees) for 245,000 euros.
Total remuneration paid to the members of the Sharehold-
ers’ Committee for the year under review (fixed fee and re-
muneration for subcommittee activity) amounted to 2,350,000
euros (previous year: 2,350,000 euros) respectively. Of this
amount, fixed fees were 1,150,000 euros and remuneration for
subcommittee activity 1,200,000 euros.
In the year under review, no compensation or benefits were
paid or granted for personally performed services, including in
particular advisory, brokerage or (inter)mediation services.
H e n k e l A n n u a l R e p o r t 2 0 2 0
8 9
The Company
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Corporate governance
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Further information
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The remuneration of the individual members of the
Supervisory Board and of the Shareholders’ Committee,
broken down according to the above-mentioned components,
is presented in the tables on the following pages:
Supervisory Board remuneration 2020
Fixed remuneration
(share of total remuneration in %)
2019
in %
2020
in %
140,000
105,000
–
70,000
70,000
–
70,000
70,000
70,000
70,000
70,000
–
70,000
70,000
70,000
77
71
–
93
93
–
93
93
93
63
93
–
93
93
93
140,000
105,000
3,825
70,000
32,322
37,678
66,175
70,000
70,000
70,000
70,000
37,678
70,000
70,000
70,000
70,000
70,000
70,000
70,000
1,225,000
32,322
47
70,000
95
70,000
62
63
70,000
78 1,225,000
77
71
100
95
92
95
94
93
95
54
93
63
93
93
93
47
93
62
62
78
in euros
Dr. Simone Bagel-Trah
(Chair)²
Birgit Helten-Kindlein
(Vice Chair)²
Michael Baumscheiper
(since 12/11/2020)
Jutta Bernicke
Dr. Kaspar von Braun
(until 6/17/2020)
Lutz Bunnenberg
(since 6/17/2020)
Peter Emmerich
(until 12/11/2020)
Benedikt-Richard
Freiherr von Herman
Timotheus Höttges
Prof. Dr. Michael
Kaschke2
Barbara Kux
Simone Menne2
(since 6/17/2020)
Andrea Pichottka
Philipp Scholz
Dr. Martina Seiler
Prof. Dr. Theo Siegert2
(until 6/17/2020)
Dirk Thiede
Edgar Topsch2
Michael Vassiliadis2
Total
Components of total remuneration
Remuneration for
Audit Committee membership
(share of total remuneration in %)
2019
in %
2020
Attendance fee*
(share of total remuneration in %)
Total remuneration1
in %
2019
in %
2020
in %
2019
2020
35,000
35,000
19
24
35,000
35,000
19
24
35,000
–
70,000
35,000
35,000
245,000
31
–
47
31
31
16
53,839
18,839
32,322
35,000
35,000
245,000
41
32
47
31
31
16
8,000
8,000
–
5,000
5,000
–
5,000
5,000
5,000
7,000
5,000
–
5,000
5,000
5,000
8,000
4,000
8,000
7,000
95,000
4
5
–
7
7
–
7
7
7
6
7
–
7
7
7
5
5
7
6
6
8,000
8,000
–
4,000
3,000
2,000
4,000
5,000
4,000
6,000
5,000
3,000
5,000
5,000
5,000
4,000
5,000
8,000
8,000
92,000
4
5
–
5
8
5
6
7
5
5
7
5
7
7
7
183,000
183,000
148,000
148,000
–
75,000
3,825
74,000
75,000
35,322
–
39,678
75,000
70,175
75,000
75,000
75,000
74,000
112,000
75,000
129,839
75,000
–
75,000
75,000
75,000
59,516
75,000
75,000
75,000
148,000
74,000
113,000
112,000
68,645
6
75,000
7
113,000
7
7
113,000
6 1,565,000 1,562,000
* Including attendance at the Audit Committee’s meeting to discuss the annual financial statements, which may also be attended by members of the Supervisory Board who are not members of
the Audit Committee.
1 Figures do not include VAT.
2 Member of the Audit Committee. Audit Committee Chair: Prof. Dr. Theo Siegert until 6/17/2020; Prof. Dr. Michael Kaschke since 6/17/2020.
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Credits
Contacts
Financial calendar
Individual meeting attendance Supervisory Board 2020
Supervisory Board
member
Dr. Simone Bagel-Trah
(Chair)
Birgit Helten-Kindlein
(Vice Chair)
Michael Baumscheiper
(since 12/11/2020)
Jutta Bernicke
Dr. Kaspar von Braun
(until 6/17/2020)
Lutz Bunnenberg
(since 6/17/2020)
Peter Emmerich
(until 12/11/2020)
Benedikt-Richard
Freiherr von Herman
Timotheus Höttges
Prof. Dr. Michael Kaschke
Barbara Kux
Simone Menne
(since 6/17/2020)
Andrea Pichottka
Philipp Scholz
Dr. Martina Seiler
Prof. Dr. Theo Siegert
(until 6/17/2020)
Dirk Thiede
Edgar Topsch
Michael Vassiliadis
Attendance
Presence
Supervisory
Board and
Audit
Committee
meetings1
8
8
–
4
2
2
3
4
4
8
4
4
4
4
4
4
4
8
8
8
8
–
3
2
2
3
4
4
6
4
3
4
4
4
4
4
8
8
100%
100%
–
75%
100%
100%
100%
100%
100%
75%
100%
75%
100%
100%
100%
100%
100%
100%
100%
1 Number of meetings of relevance for the respective member, i.e. excluding
attendance at the Audit Committee’s meeting to discuss the annual financial
statements by members of the Supervisory Board who are not members of the
Audit Committee.
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Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Shareholders’ Committee remuneration 2020
in euros
Dr. Simone Bagel-Trah,
Chair (Chair Human Resources Subcommittee)
Dr. Christoph Henkel,
Vice Chair
(Chair Finance Subcommittee)
Prof. Dr. Paul Achleitner
(Member Finance Subcommittee)
Alexander Birken (since 6/17/2020)
(Member HR Subcommittee since 6/17/2020)
Johann-Christoph Frey
(Member HR Subcommittee;
Vice Chair since 6/17/2020)
Stefan Hamelmann (until 6/17/2020)
(Vice Chair Finance Subcommittee until
6/17/2020)
Dr. Christoph Kneip (since 6/17/2020)
(Member Finance Subcommittee since
6/17/2020)
Prof. Dr. Ulrich Lehner
(Member Finance Subcommittee)
Dr. Norbert Reithofer
(Member Finance Subcommittee
until 6/17/2020,
Member HR Subcommittee since 6/17/2020)
Konstantin von Unger
(Vice Chair HR Subcommittee until 6/17/2020,
Vice Chair Finance Subcommittee since
6/17/2020)
Jean-François van Boxmeer
(Member HR Subcommittee)
Werner Wenning (until 6/17/2020)
(Member HR Subcommittee until 6/17/2020)
Total
Components of total remuneration
Fixed remuneration
(share of total remuneration in %)
Fee for subcommittee activity
(share of total remuneration in %)
Total remuneration
2019
in %
2020
in %
2019
in %
2020
in %
2019
2020
200,000
50
200,000
50
200,000
50
200,000
50
400,000
400,000
150,000
100,000
–
43
50
–
150,000
100,000
53,825
43
50
50
200,000
100,000
–
57
50
–
200,000
100,000
53,825
57
50
50
350,000
350,000
200,000
200,000
–
107,650
100,000
50
100,000
50
100,000
50
100,000
50
200,000
200,000
100,000
–
100,000
50
–
50
46,175
50
100,000
53,825
100,000
50
50
–
100,000
50
–
50
46,175
50
200,000
92,350
53,825
100,000
50
50
–
107,650
200,000
200,000
100,000
50
100,000
50
100,000
50
100,000
50
200,000
200,000
100,000
100,000
100,000
1,150,000
50
50
50
49
100,000
100,000
46,175
1,150,000
50
50
50
49
100,000
100,000
100,000
1,200,000
50
50
50
51
100,000
100,000
46,175
1,200,000
50
50
50
51
200,000
200,000
200,000
200,000
200,000
2,350,000
92,350
2,350,000
H e n k e l A n n u a l R e p o r t 2 0 2 0
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Corporate governance
Combined management report
Consolidated financial statements
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Contacts
Financial calendar
Individual meeting attendance Shareholders’ Committee 2020
Member of Shareholders’
Committee
Dr. Simone Bagel-Trah
(Chair)
Dr. Christoph Henkel
(Vice Chair)
Prof. Dr. Paul Achleitner
Alexander Birken
(since 6/17/2020)
Johann-Christoph Frey
Stefan Hamelmann
(until 6/17/2020)
Dr. Christoph Kneip
(since 6/17/2020)
Prof. Dr. Ulrich Lehner
Dr. Norbert Reithofer
Konstantin von Unger
Jean-François van Boxmeer
Werner Wenning
(until 6/17/2020)
Atten-
dance
Presence
Meetings of the
Shareholders’
Committee and
of the Finance
and Human
Resources
Subcommittees1
13
13
13
8
13
5
8
13
13
13
13
5
13
13
13
6
13
5
8
13
11
13
10
5
100%
100%
100%
75%
100%
100%
100%
100%
85%
100%
77%
100%
1 Number of meetings of relevance for the respective member.
3. Remuneration of Henkel Management AG for assumption
of personal liability, and reimbursement of expenses for
fiscal 2020
For assumption of personal liability and management respon-
sibility, Henkel Management AG in its function as Personally
Liable Partner received, as in previous years, an annual pay-
ment of 50,000 euros (= 5 percent of its capital stock) plus any
value-added tax (VAT) due, said fee being payable irrespective
of any profit or loss made.
Henkel Management AG may also claim reimbursement from
or payment by the corporation of all expenses incurred in con-
nection with the management of the corporation’s business,
including the remuneration and pensions paid to its corporate
bodies.
4. Remuneration of members of the Supervisory Board of
Henkel Management AG for fiscal 2020
According to Art. 14 of the Articles of Association of Henkel
Management AG, members of the Supervisory Board or Share-
holders’ Committee of Henkel AG & Co. KGaA do not receive
remuneration for serving on the Supervisory Board of Henkel
Management AG. As the Supervisory Board of Henkel Manage-
ment AG is only comprised of members who also belong to the
Shareholders’ Committee, as was also the case in previous
years, no remuneration was paid in respect of this Supervisory
Board in the year under review.
H e n k e l A n n u a l R e p o r t 2 0 2 0
93
Combined
management report
94
94
Fundamental principles of the Group
Operational activities
94 Overview
94 Organization and business units
112
Results of operations of the business units
112 Adhesive Technologies
115
118
Beauty Care
Laundry & Home Care
96
Strategic framework for purposeful growth
121
Net assets and financial position
96 Our mid- to long-term financial ambitions
121 Acquisitions and divestments
96 Our strategic framework
98
Progress in fiscal 2020
101 Management system and performance indicators
102
102
Cost of capital
Takeover-relevant information, corporate
governance statement, remuneration report
102
Separate non-financial report
Economic report
103
103 Macroeconomic development
104
105
105
Development by sector
Review of overall business performance
Results of operations of the Group
105 Sales
107 Operating profit
108 Expense items
109 Other operating income and expenses
109 Financial result
109 Net income and earnings per share (EPS)
109 Dividend
110 Return on capital employed (ROCE)
110
Economic Value Added (EVA®)
110 Comparison between actual business
performance and guidance
121
Capital expenditures
122 Right-of-use assets
122 Net assets
125
126
Financial position
Financing and capital management
127 Key financial ratios
128
132
134
136
Employees
Procurement
Production
Research and development
141 Marketing and distribution
146 Henkel AG & Co. KGaA
(condensed version according to the German
Commercial Code [HGB])
151
151
151
Risks and opportunities report
Risks and opportunities
Risk management system
154 Major risk categories
164 Major opportunity categories
165
Risks and opportunities in summary
Forecast
166
166 Macroeconomic development
166
167
Development by sector
Outlook for the Henkel Group in 2021
Henkel Annual Report 2020 1Contents The Company 2 Fiscal 2020 at a glance 6 Foreword 13 Report of the Supervisory Board 20 Our Management Board 22 Shaping our future 23 Shares and bonds Corporate governance 31 Takeover-relevant information 35 Corporate governance statement 53 Remuneration system 77 Remuneration report 2020 Combined management report 94 Fundamental principles of the Group 103 Economic report 146 Henkel AG & Co. KGaA (condensed version according to the German Commercial Code [HGB]) 151 Risks and opportunities report 166 Forecast Consolidated financial statements 171 Consolidated statement of financial position 173 Consolidated statement of income 174 Consolidated statement of comprehensive income 175 Consolidated statement of changes in equity 176 Consolidated statement of cash flows 178 Notes to the consolidated financial statements 274 Subsequent events 275 Recommendation for the approval of the annual financial statements and the appropriation of the profit of Henkel AG & Co. KGaA 276 Corporate bodies of Henkel AG & Co. KGaA Further information 281 Independent Auditor’s Report 290 Responsibility statement 291 Quarterly breakdown of sales 292 Multi-year summary 294 Glossary 297 Credits 298 Contacts 298 Financial calendar Henkel Annual Report 2020 1Contents The Company 2 Fiscal 2020 at a glance 6 Foreword 13 Report of the Supervisory Board 20 Our Management Board 22 Shaping our future 23 Shares and bonds Corporate governance 31 Takeover-relevant information 35 Corporate governance statement 53 Remuneration system 77 Remuneration report 2020 Combined management report 94 Fundamental principles of the Group 103 Economic report 146 Henkel AG & Co. KGaA (condensed version according to the German Commercial Code [HGB]) 151 Risks and opportunities report 166 Forecast Consolidated financial statements 171 Consolidated statement of financial position 173 Consolidated statement of income 174 Consolidated statement of comprehensive income 175 Consolidated statement of changes in equity 176 Consolidated statement of cash flows 178 Notes to the consolidated financial statements 274 Subsequent events 275 Recommendation for the approval of the annual financial statements and the appropriation of the profit of Henkel AG & Co. KGaA 276 Corporate bodies of Henkel AG & Co. KGaA Further information 281 Independent Auditor’s Report 290 Responsibility statement 291 Quarterly breakdown of sales 292 Multi-year summary 294 Glossary 297 Credits 298 Contacts 298 Financial calendar Henkel Annual Report 2020 1Contents The Company 2 Fiscal 2020 at a glance 6 Foreword 13 Report of the Supervisory Board 20 Our Management Board 22 Shaping our future 23 Shares and bonds Corporate governance 31 Takeover-relevant information 35 Corporate governance statement 53 Remuneration system 77 Remuneration report 2020 Combined management report 94 Fundamental principles of the Group 103 Economic report 146 Henkel AG & Co. KGaA (condensed version according to the German Commercial Code [HGB]) 151 Risks and opportunities report 166 Forecast Consolidated financial statements 171 Consolidated statement of financial position 173 Consolidated statement of income 174 Consolidated statement of comprehensive income 175 Consolidated statement of changes in equity 176 Consolidated statement of cash flows 178 Notes to the consolidated financial statements 274 Subsequent events 275 Recommendation for the approval of the annual financial statements and the appropriation of the profit of Henkel AG & Co. KGaA 276 Corporate bodies of Henkel AG & Co. KGaA Further information 281 Independent Auditor’s Report 290 Responsibility statement 291 Quarterly breakdown of sales 292 Multi-year summary 294 Glossary 297 Credits 298 Contacts 298 Financial calendar
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1876
Year of foundation
Fundamental principles of the Group
Operational activities
Overview
Henkel was founded in 1876. Therefore, the year under review
marks the 144th in our corporate history. At the end of 2020,
Henkel’s workforce worldwide numbered around 52,950. We
hold globally leading market positions in our consumer and
industrial businesses.
Our purpose is to create sustainable value – for our customers
and consumers, for our people and for our shareholders, as well
as for the wider society and communities in which we operate.
Organization and business units
Henkel AG & Co. KGaA is operationally active as well as being
the parent company of the Henkel Group. As such it is respon-
sible for defining and pursuing Henkel’s corporate objectives
and also for the management, control and monitoring of
Group-wide activities, including risk management and the
allocation of resources. Henkel AG & Co. KGaA performs its
tasks within the legal scope afforded to it as part of the Henkel
Group, with the affiliated companies otherwise operating as
legally independent entities.
Operational management and control is the responsibility of
the Management Board of Henkel Management AG in its
function as sole Personally Liable Partner. The Management
Board is supported in this by the central, corporate functions.
Henkel is organized into three operational business units:
Adhesive Technologies, Beauty Care and Laundry & Home
Care. The Adhesive Technologies business unit is global market
leader in the field of adhesives. In our Beauty Care and Laundry
& Home Care consumer businesses, we also hold top positions
in numerous markets and categories.
Adhesive Technologies offers a broad and globally leading
portfolio of high-impact solutions in adhesives, sealants and
functional coatings. The business unit is composed of four
business areas: Automotive & Metals, Packaging & Consumer
Goods, Electronics & Industrials, and Craftsmen, Construction
& Professional.
In our Automotive & Metals business area, we supply our
global customers in the automotive and metal processing
industries with tailor-made, high-impact and future-oriented
system solutions along the value chain, a comprehensive tech-
nology portfolio and specialized technical services.
Our Packaging & Consumer Goods business area serves both
small and medium-sized branded goods manufacturers, as
well as major international companies operating in the con-
sumer goods, packaging and furniture industries. We lead the
way in developing innovative solutions addressing global con-
sumer trends, such as the growing demand for more sustaina-
ble products, and actively foster a circular economy.
In our Electronics & Industrials business area, we hold global
leadership, offering major customers a specialized portfolio of
innovative high-technology adhesives, materials for the man-
ufacture of microchips and electronic assemblies, as well as
for industrial fabrication. Building on our strong technical
knowledge and extensive research expertise, we support our
customers to realize innovative designs for products that are
world-renowned. Our solutions are also deployed in the ex-
pansion of digital infrastructures.
In our Craftsmen, Construction & Professional business area,
we distribute a comprehensive range of branded products for
private consumers, DIYers, craftsmen and retailers, as well as
serving maintenance and installation experts in more than
800 different industry branches. We supply our customers and
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consumers with adhesives and sealants for home use, with
adhesive, sealant and insulating systems and building materials
for use in construction, and with a comprehensive portfolio of
high-impact solutions for machinery assembly and mainte-
nance.
The Beauty Care business unit is globally active in the
Branded Consumer Goods business area – in the Hair Cosmetics,
Body Care, Skin Care and Oral Care categories – as well as in
the professional Hair Salon business. In both business areas,
we hold top positions in numerous markets and categories.
Both our Branded Consumer Goods and Hair Salon businesses
offer focused brand portfolios featuring consumer-relevant
innovations that create added value for our customers and
consumers. We distribute our products through brick-and-mor-
tar stores, hair salons, third-party online platforms and direct-
to-consumer channels.
The Laundry & Home Care business unit occupies leading
market positions in both its Laundry Care and Home Care
business areas. Our strong brands and consumer-relevant
innovations – such as our Persil 4-in-1 Discs – play a key role
in the everyday lives of our consumers. Our product portfolio
ranges from heavy-duty and specialty detergents, laundry
additives, dishwashing products, hard surface and WC cleaners,
to air fresheners and insect control products. Our products are
sold mainly in brick-and-mortar stores, but also increasingly via
online and TV-based retailing.
Henkel around the world: Regional Centers
The business activities of our three business units are sup-
ported by the central functions of Henkel AG & Co. KGaA, our
Global Supply Chain organization and our Global Business
Solutions organization with its Shared Service Centers, thus
enabling optimum utilization of corporate network synergies.
Implementation of the business activities at the country and
regional level is the responsibility of the national affiliated
companies whose operations are supported and coordinated
by Regional Centers. The executive bodies of these national
affiliates manage their businesses in line with the relevant
statutory regulations, supplemented by their own articles of
association, internal procedural rules and the principles in-
corporated in our globally applicable management standards,
codes and guidelines.
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Strategic framework for
purposeful growth
We shape our future on the basis of a long-term strategic
framework that builds on our purpose and our values.
Our strategic framework
The key elements of our strategic framework are a winning
portfolio, clear competitive edge in the areas of innovation,
sustainability and digitalization, and future-ready operating
models – underpinned by a strong foundation of a collabora-
tive culture and empowered people.
With this strategic framework, we want to be successful in the
current decade – with a clear focus on purposeful growth. This
means, we aim to create superior value for customers and con-
sumers to outgrow our markets, to strengthen our leadership
in sustainability, and to enable our employees to grow both
professionally and personally at Henkel.
Our mid- to long-term financial ambitions
The implementation of our growth agenda supports us in the
achievement of our mid- to long-term financial ambitions:
We are aiming to achieve organic sales growth of 2 to
4 percent.
For adjusted earnings per preferred share at constant
exchange rates we are targeting growth in the mid- to high
single-digit percentage range.
We are aiming to further expand our free cash flow.
We also want to pursue compelling growth opportunities
while maintaining our focus on strict cost discipline and
margin development.
WINNING
PORTFOLIO
PURPOSEFUL
GROWTH
COMPETITIVE EDGE
INNOVATION
SUSTAIN-
ABILITY
DIGITALI-
ZATION
COLLABORATIVE CULTURE &
EMPOWERED PEOPLE
FUTURE-
READY
OPERATING
MODELS
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A key element of our growth agenda is active portfolio manage-
ment. With emphasis on our consumer businesses, we have
identified brands and categories with a total annual sales vol-
ume of more than one billion euros for portfolio measures
that include turnaround strategies, as well as the divestment or
discontinuation of brands or categories. We plan to divest or
discontinue around 50 percent of the identified sales volume
by the end of 2021.
In addition, M&A activities remain an integral part of Henkel’s
strategy, supported by our strong balance sheet. Our assessment
of potential acquisitions is based on whether the targets are
available, fit Henkel’s strategy, and are financially attractive. In
the Adhesive Technologies business unit, we aim to advance
our technology leadership, whereas in our Beauty Care and
Laundry & Home Care business units, we are focusing on
strengthening our categories in the respective countries, on
“white spots” – regions or segments in which we are not active
– as well as on new business models.
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iinnvveessttmmeennttss
We aim to accelerate impactful innovations with increased in-
vestments. This includes an enhanced innovation approach,
for example by utilizing digital applications and data to gain
faster and better insights into consumer behavior, and identify-
ing key market trends. Decision-making across the organization
is to take place closer to the market. We want to leverage the
potential of open innovation and idea crowdsourcing, increas-
ingly use agile methods, and continue investing in incuba-
tors and innovation centers. In doing so, we want to speed up
the development of impactful innovations in all three busi-
ness units. Innovations and brands in core categories and re-
gions will be supported with consistent investments.
Hence, we announced that we would step up our investments
in marketing, advertising, digitalization and IT by 350 million eu-
ros in 2020 compared to 2018 and by 200 million euros in 2020
versus 2019.
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Commitment to sustainability is an integral part of our corporate
culture. As reflected in our corporate values, we are determined
to continuously expand our leadership in sustainability. As
leaders, we aim to pioneer new solutions while continuing to
shape our business responsibly and increasing our economic
success. We want to create more value – while at the same
time reducing our environmental footprint. Our sustainability
strategy provides a clear framework for this aim and reflects
the high expectations of our stakeholders.
We concentrate our activities along the value chain on six
focal areas. They reflect the challenges and opportunities of
sustainable development as they relate to our operations. Three
focal areas – social progress, performance, and safety and
health – describe how we want to create more value for our
customers and consumers, our employees and our share-
holders, and for society in general. In the other three focal ar-
eas – energy and climate, materials and waste, and water and
wastewater – we want to reduce our environmental footprint,
for example by using less energy and producing less waste.
Building on our strong track record and progress in implement-
ing our sustainability strategy along the value chain, we want
to boost sustainability as a competitive differentiator. There-
fore, we have defined three areas which are of particular rele-
vance for consumers, customers, business partners and soci-
ety at large and in which we want to accelerate our efforts to
drive sustainable development: becoming climate-positive by
2040, driving a circular economy, and contributing to social
progress.
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At the same time, we want to anchor sustainability even more
firmly in all our activities at Henkel. Sustainability is a central
pillar in the innovation strategies of our Beauty Care and
Laundry & Home Care business units, both of which are advanc-
ing their product portfolios with a particular focus on sustainable
packaging solutions and are driving the further roll-out of
sustainable products and brands with purpose. Also in the
Adhesive Technologies business unit, sustainability is a key
driver of innovation in all our markets. Here, we plan to fur-
ther leverage our potential with products and technologies
that set industry standards.
More details and background reading can be found in our
Sustainability Report: www.henkel.com/sustainabilityreport
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vvaalluuee ccrreeaattoorr
We aim to use digitalization to increase the value added for
our customers and consumers. In our consumer businesses,
we want to boost direct interaction with our consumers and
to increase our digital sales. To achieve this, we are expanding
existing digital consumer platforms and establishing new
ones. We want to drive customer-centric digitalization in our
industrial business in order to develop new businesses and
further enhance the customer experience. We also plan to
expand our end-to-end data integration to enable, for exam-
ple, innovative and customized solutions based on artificial
intelligence. Moreover, we will be investing more in digital tal-
ents – especially data specialists with extensive technological in-
dustry knowledge. Finally, we want to strengthen our digital
business focus and increase efficiency. In this context, we are
reorganizing our digital organization under the roof of the dig-
ital unit “Henkel dx.”
We are merging the digital and IT teams as part of Henkel dx
under the Chief Digital & Information Officer (CDIO) position,
which was newly created at the end of 2019. The CDIO reports
directly to the Chairman of the Management Board. Henkel dx
is responsible both for the continuous optimization of business
processes and IT systems, and for market-oriented incubation
and innovation, for which we are, for example, opening
new digital innovation hubs and engaging in venture capital
activities.
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We are reshaping our operating models across the entire
company to be lean, fast and simple, while continuously im-
proving the competitiveness of our processes and structures.
We want to step up customer and consumer proximity and
establish faster decision-making processes. We are also further
striving for continuous efficiency improvements.
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A strong culture, shared values and a clear framework for
collaborating as one team are key to Henkel’s future success.
We started by introducing new Leadership Commitments for
all Henkel employees around the globe in 2019. Building on
this first step, we plan to accelerate this cultural change and
establish a culture of collaboration and empowerment, foster
the upskilling of our employees on future capabilities and enable
them to constantly develop further.
Progress in fiscal 2020
In March 2020, we presented our new strategic framework and
started implementing the announced measures. The further
course of the year was to a large extent characterized by the
COVID-19 pandemic. In spite of these challenging conditions,
we adhered to our agenda and were able to achieve good pro-
gress in implementing the newly launched strategic frame-
work.
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We pushed ahead with the announced review of our portfolio,
despite the difficult market environment. We have so far
signed divestment contracts, completed the divestment or dis-
continued businesses representing annual sales of more than
100 million euros. At the same time, we strengthened our
portfolio with the addition of two acquisitions offering prom-
ising growth opportunities. In its Beauty Care business unit,
Henkel expanded its digital direct-to-consumer (D2C) activi-
ties by acquiring a majority stake in a business comprising the
three premium brands HelloBody, Mermaid+Me and Banana
Beauty. In its Adhesive Technologies business unit, Henkel ex-
panded its position in adhesives and sealants for consumers
and craftsmen in North America by acquiring an attractive
portfolio of consumer sealants marketed under the licensed
GE brand. Together, the two acquired businesses generated
proforma sales for the year as a whole of 212 million euros in
fiscal 2020.
We also made progress in the area of impactful innovations.
We were able to further accelerate our innovation processes
and speed up the time-to-market of new products. This enabled
us, for example, to very quickly respond to the pandemic-driven
increased demand for hygiene, disinfectant and cleaning
products with corresponding product innovations. In our
Beauty Care and Laundry & Home Care business units, we
established new internal idea factories and incubator teams.
The “Fritz Beauty Lab” aims to identify attractive niches with
growth potential for existing and new categories or “white
spots” to create new brands. The “Love Nature” team particu-
larly focuses on sustainable solutions – starting in the field of
laundry and home care products, but also embracing new
technologies and business models that go beyond the core
business. In the Adhesive Technologies business unit, we con-
tinued to invest in our state-of-the-art innovation center in
Düsseldorf.
Acquisitions in fiscal 2020
Business
Key
countries
Contract
signed on
Completion on
Purchase price
in million euros
7/28/2020
9/1/2020
299
8/1/2020
11/2/2020
153
121, 182-183
For further
information,
see pages
121, 123, 143,
182-183, 225
Purchase of 75 percent of the shares in a business comprising
the three premium direct-to-consumer brands HelloBody,
Mermaid+Me and Banana Beauty
Purchase of a portfolio of consumer sealants marketed under
the GE1 brand
Germany, France,
Italy, Austria,
Switzerland
USA, Canada
1 GE is a trademark of General Electric Company, used under license.
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We launched many innovations successfully onto the market
in 2020. In our Beauty Care business unit, these included
extensive relaunches of our Hair Care brands Nature Box,
Gliss Kur and Syoss, and the market introduction of hair color-
ant innovations. In Laundry & Home Care, for example, we
introduced Pril 5+ with self-degreasing power, and added
further variants to our Persil 4-in-1 Discs portfolio. Innovations
in Henkel’s Adhesive Technologies business unit include
novel solutions developed for smart phones and the 5G infra-
structure, and the development and market roll-out of new
solutions for electric vehicles.
To strengthen our innovations, we increased our investments
in marketing, advertising, digitalization and IT in 2020, as
announced, by around 350 million euros compared to 2018
and by around 200 million euros compared to 2019, despite
the challenging macroeconomic environment.
In 2020, we further anchored sustainability in our activities,
with distinct advancements in the areas of climate protection,
circular economy and social progress. In September, for example,
we entered into a comprehensive virtual power purchase
agreement relating to a new wind farm in Bee County, Texas,
USA. The contractually agreed capacity of renewable energy is
equivalent to 100 percent of the annual electricity demand of
Henkel’s operations in the USA.
In June, Henkel became the world’s first company to place a
plastic waste reduction bond, marking yet another step in
combining attractive financing instruments with sustainability
advancements. The proceeds from this bond with a total vol-
ume of around 100 million euros are specifically allocated to
Henkel’s projects and activities aimed at reducing plastic waste.
We have, moreover, further expanded our collaboration with
our partner Plastic Bank. We have also further increased the
use of the recycled material – known as Social Plastic® – in the
packaging of our consumer products. In doing so, we are help-
ing to fight plastic waste in the environment while at the same
time creating opportunities for people living in poverty.
Our progress in the area of sustainability is also manifested in
our sustainable innovations for consumers and industrial cus-
tomers. In Laundry & Home Care, for example, we expanded
our Pro Nature range to include products of our Somat and Biff
brands. In addition, we launched the cross-category brand
Love Nature onto the market, which also offers an innovative
refill concept. Beauty Care launched solid shampoos, body and
facial care products under the brands Nature Box and N.A.E. –
without plastic packaging. Adhesive Technologies introduced
Loctite Liofol, a certified, recyclable thermal and cold seal
coating, which enables the replacement of polyethylene with
paper and is suitable for a broad range of food and non-food
packaging.
We also made important progress in digitalization. In 2020,
Henkel recorded a strong increase in digital sales, especially in
the Beauty Care and Laundry & Home Care business units. We
successfully implemented the integration of all digital and IT
teams within our Henkel dx organization, as announced in
March 2020, and have defined the unit’s future strategic direc-
tion. Moreover, we opened our first Innovation Hub, located in
Berlin, in November.
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Henkel has implemented key changes to drive future-ready
operating models. In our Adhesive Technologies business, a
new structure comprising four business areas made up of
eleven strategic business units has been established, enabling
us to be even more effective in serving our sales markets and
customers. Further organizational changes were also made in
Laundry & Home Care and Beauty Care to strengthen regional
focus and ensure closer proximity to customers and consumers.
New structures were likewise established in our Group-wide
purchasing function to ensure optimum alignment to our busi-
ness units, customers and procurement markets.
We launched a comprehensive change program to advance
our corporate culture. This included the introduction of
specially designed training and upskilling projects with partic-
ular focus on leadership, digitalization and innovation. During
the COVID-19 pandemic especially, the strength of Henkel’s
corporate culture and the extraordinary commitment of our
people around the globe have been very much in evidence.
Management system and
performance indicators
Our management system and key performance indicators are
derived from our ambition to generate purposeful growth. The
key performance indicators are organic sales growth, adjusted
return on sales, and growth in adjusted earnings per preferred
share at constant exchange rates.
Medium to long term, Henkel is aiming to achieve organic
sales growth of 2 to 4 percent. For adjusted earnings per pre-
ferred share at constant exchange rates, Henkel is targeting
growth in the mid- to high single-digit percentage range.
The key performance indicators are represented in both our
year and our medium-term plans. A regular comparison of
these plans with current developments and the regular report-
ing of expected figures enable focused management of the
company based on the described performance indicators.
Moreover, we report further key performance indicators, such
as adjusted earnings per preferred share, net working capital
as a percentage of sales, return on capital employed (ROCE),
and free cash flow, which we are aiming to further expand, as
described in our mid- to long-term financial ambitions.
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7.25%
Group WACC before
tax in fiscal 2020
Cost of capital
The cost of capital is calculated as a weighted average of the
cost of equity and debt capital (WACC).
We regularly review our cost of capital in order to reflect
changing market conditions. In addition, we apply different
WACC rates depending on the business unit involved. These
are based on business-unit-specific beta factors determined
from a peer group benchmark.
The following two tables indicate the WACC rates before and
after tax for the Henkel Group and each business unit.
WACC before tax by business unit
in percent
Adhesive Technologies
Beauty Care
Laundry & Home Care
Henkel Group
WACC after tax by business unit
in percent
Adhesive Technologies
Beauty Care
Laundry & Home Care
Henkel Group
2020
9.00
7.25
7.25
7.25
2020
6.75
5.25
5.25
5.25
2021
8.75
6.75
6.75
6.75
2021
6.50
5.00
5.00
5.00
Takeover-relevant information,
corporate governance statement,
remuneration report
With regard to the disclosures and explanations
pursuant to Sections 289a (1) and 315a (1) German Commercial
Code [HGB] – takeover-relevant information – please refer
to pages 31 to 35,
pursuant to Sections 289f and 315d HGB – corporate gov-
ernance statement – please refer to pages 35 to 52, and
pursuant to Sections 289a (2) and 315a (2) HGB as applicable
to the annual financial statements 2020 – remuneration
report including remuneration policy – please refer to
pages 53 to 92, which duly constitute integral parts of the
combined management report.
Pursuant to Section 317 (2) sentence 6 HGB, any audit of the
disclosures pursuant to Sections 289f and 315d HGB – corporate
governance statement – is limited to the auditor ensuring the
relevant information has actually been disclosed.
Separate non-financial report
With regard to the explanations pursuant to Sections 289b
and 315b HGB, please refer to our Sustainability Report 2020.
This constitutes the separate, combined non-financial
corporate report for the Henkel Group and Henkel AG & Co.
KGaA for fiscal 2020 as required in Sections 315b and 315c HGB
in conjunction with Sections 289b to 289e HGB, and is made
publicly available through publication on the website:
www.henkel.com/sustainabilityreport
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Economic report
Macroeconomic development
The general economic conditions described in this section are
based on data published by IHS Markit.
Overview:
Significant economic slump due to global pandemic
Global economic development was largely dictated by the
COVID-19 pandemic and the associated major impacts suffered
by the general economy in 2020. In terms of gross domestic
product, the global economy shrank by approximately -4 per-
cent. The mature markets recorded a considerable decline of
approximately -5 percent, whereas gross domestic product in
the emerging markets decreased by approximately -2 percent
year on year.
For the year as a whole, the economies in North America and
Western Europe contracted by around -4 percent and around
-7 percent respectively. Japan also recorded a negative devel-
opment of approximately -5.5 percent. Asia (excluding Japan)
posted a slight economic decline of around -1 percent, with
China achieving growth of approximately 2 percent despite the
impacts of the COVID-19 pandemic. Economic development
was negative in the Africa/Middle East region at around
-7 percent. In Eastern Europe, economic output decreased by
around -4 percent, and in Latin America by approximately
-7 percent.
Unemployment:
Moderate increase worldwide
Global unemployment was up year on year at approximately
8 percent. In North America, the unemployment rate rose
notably versus the prior year to approximately 8 percent. By
contrast, unemployment in Western Europe was more or less
on a par with the prior-year level at around 7 percent. The
unemployment rate in Latin America rose to approximately
11 percent, and in the Africa/Middle East region to approxi-
mately 12 percent. Asia (excluding Japan) and Eastern Europe
both recorded unemployment rates of around 7 percent.
Inflation:
Moderate rise in global price levels
Global inflation in 2020 was approximately 2 percent and thus
slightly lower year on year. The inflation rate in the mature
markets was around 1 percent. Inflation in Western Europe,
North America and Japan was lower compared to the prior-
year increases. The inflation rate in the emerging markets was
approximately 4 percent in the year under review. Inflation
was lower year on year in both Latin America and Eastern Eu-
rope. In Africa/Middle East, inflation rose slightly to around
5 percent, while the inflation rate in Asia (excluding Japan)
was virtually unchanged year on year.
H e n k e l A n n u a l R e p o r t 2 0 2 0
1 04
Development by sector
Considerable decline in global consumption
Private consumer spending declined considerably by approxi-
mately -5.5 percent. Consumer spending in mature markets
decreased by approximately -6 percent year on year. Consum-
ers in North America spent approximately -4 percent less. In
Western Europe, consumer spending decreased to an even
greater extent, by around -9 percent compared to the previous
year. Private consumer spending in the emerging markets
decreased by approximately -5 percent.
Significant slowdown in industrial production
At approximately -5 percent globally, the industrial production
index (IPX) was significantly lower than in the previous year.
The mature markets registered a notable decline of around
-8 percent, while the emerging markets were also negative at a
rate of -2 percent.
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Direct materials:
Slightly above prior-year level
Prices for direct materials (raw materials, packaging, and pur-
chased goods and services) increased slightly in 2020 com-
pared to the previous year. Lower prices for petrochemical and
natural input materials were countervailed by – in some cases
significantly – higher prices for specialty feedstocks and price
rises in some emerging markets.
Currencies:
Mainly negative trend in currencies
The currencies in the emerging markets of importance to
Henkel devalued on average over the year. The Turkish lira lost
the most ground, the devaluation of the Russian ruble and
Mexican peso was also in the double-digit percentage range.
The US dollar closed at 1.23 US dollars to the euro at year-end.
Averaged out over the year, the US dollar depreciated versus
the euro.
Changes in the average exchange rates of the currencies of
relevance to Henkel are indicated in the following table:
Average rates of exchange versus the euro
Chinese yuan
Mexican peso
Polish zloty
Russian ruble
Turkish lira
US dollar
2019
7.74
21.56
4.30
72.48
6.36
1.12
2020 Appreciation (+)/
Depreciation (-)
-1.7%
-12.1%
-3.2%
-12.3%
-21.0%
-1.9%
7.87
24.52
4.44
82.66
8.05
1.14
Source: ECB daily foreign exchange reference rates.
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Review of overall business
performance
2020 proved to be a very challenging year for Henkel. Business
performance was substantially impacted by the effects of the
COVID-19 pandemic. A significant decline in demand from
key industries affected our industrial business. Official clo-
sures of hair salons in many countries due to the COVID-19
pandemic had an adverse effect on Hair Salon business. In
some areas, the pandemic caused changes in demand and con-
sumer behavior that had both positive and negative effects on
our consumer goods businesses. In these extremely difficult
economic conditions, Henkel’s business performance showed
itself to be robust.
Sales totaled 19,250 million euros in the year under review. Or-
ganic sales development was slightly negative at -0.7 percent.
Sales growth in the emerging markets was strong at 3.0 per-
cent. By contrast, the organic sales development of our busi-
nesses in the mature markets was negative, at -3.2 percent.
Year on year, adjusted1 gross margin increased by 0.4 percent-
age points to 46.7 percent. Ongoing measures to reduce costs
and enhance production and supply chain efficiency enabled
us to more than offset the impact exerted by slightly higher
prices for direct materials (raw materials, packaging, and pur-
chased goods and services), negative mix effects and adverse
foreign exchange influences. The profitability of the Group
was affected both by the increased investments in marketing,
advertising, digitalization and IT announced at the start of
2020, and by declining volumes. Our cost management and
the adjustment of our structures to our markets and customers
served to only partially offset these negative developments. As
a result of the pandemic, we incurred additional expenditures
– for hygiene protection measures, for example; however,
these were offset by cost savings, in particular in the form of
1 Adjusted for one-time expenses and income, and for restructuring expenses.
2 Proposal to shareholders for the Annual General Meeting on April 16, 2021.
lower travel expenses. Adjusted1 return on sales in the year
under review decreased versus the previous year to 13.4 per-
cent (2019: 16.0 percent).
Adjusted1 earnings per preferred share declined to 4.26 euros,
equivalent to a decrease of -21.5 percent versus 2019 (5.43 euros).
At constant exchange rates, adjusted earnings per preferred
share showed a development of -17.9 percent.
Net working capital expressed as a proportion of sales improved
significantly to 0.7 percent, down -3.2 percentage points
compared to the previous year’s figure of 3.9 percent. Free cash
flow totaled 2,338 million euros, putting it almost on a par
with the prior-year figure. Our net financial position came in
at -888 million euros (December 31, 2019: -2,047 million euros).
Results of operations of the Group
Sales
Sales in fiscal 2020 decreased nominally by -4.3 percent to
19,250 million euros. Foreign exchange developments had a
negative effect on sales of -3.9 percent. Adjusted for these
foreign exchange effects, sales declined by -0.4 percent. Ac-
quisitions/divestments increased sales slightly by 0.3 percent.
Organic sales development, i.e. adjusted for foreign exchange
and acquisitions/divestments, was slightly negative at
-0.7 percent due to lower volumes. By contrast, we were able
to hold prices firm at 0.1 percent.
Organic sales
growth
-0.7%
Adjusted1
EBIT margin
13.4%
Adjusted1
EPS
4.26€
Development of
adjusted1 EPS at
constant exchange
rates
-17.9%
Dividend per
preferred share2
1.85€
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Sales development
in percent
Change versus previous year
Foreign exchange
Adjusted for foreign exchange
Acquisitions/divestments
Organic
of which price
of which volume
Price and volume effects
2020
-4.3
-3.9
-0.4
0.3
-0.7
0.1
-0.8
in percent
Adhesive Technologies
Beauty Care
Laundry & Home Care
Henkel Group
Organic
sales
development
-4.2
-2.8
5.6
-0.7
of which
price
of which
volume
0.6
0.1
-0.7
0.1
-4.8
-2.9
6.4
-0.8
In the wake of significantly lower demand from major indus-
tries due to the COVID-19 pandemic, organic sales develop-
ment in the Adhesive Technologies business unit was -4.2 per-
cent. In the Beauty Care business unit, organic sales develop-
ment was negative at -2.8 percent, particularly due to the
significant downturn experienced in the Hair Salon business
as a result of the pandemic. Overall, Laundry & Home Care rec-
orded a slightly positive pandemic-related increase in con-
sumer demand. The business unit achieved organic sales
growth of 5.6 percent.
Sales
in million euros
In a persistently competitive market environment, sales in
the Western Europe region decreased to 5,782 million euros.
Organic sales development was negative at -4.4 percent. The
share of sales from the region remained stable at 30 percent.
In the Eastern Europe region, we achieved sales of 2,919 million
euros, slightly down year on year. Organically, sales grew by
7.1 percent. At 15 percent, the share of sales from the region
was on a par with the prior-year level.
In the Africa/Middle East region, sales decreased to 1,208 mil-
lion euros. Organically, the region posted sales growth of
7.0 percent. At 6 percent, the share of sales from the region
decreased slightly year on year.
Sales in the North America region decreased slightly to
5,173 million euros. Organic sales development was negative
at -2.2 percent. The share of sales from the region increased
slightly to 27 percent compared to 2019.
Sales in the Latin America region were significantly lower year
on year at 1,090 million euros. Organic sales development was
slightly negative at -0.5 percent. At 6 percent, the share of sales
from the region was on a par with the prior-year level.
Sales in the Asia-Pacific region decreased to 2,968 million euros.
Organic sales development in the region was negative at
-1.6 percent. The share of sales from the Asia-Pacific region
was stable at 15 percent.
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Sales in the emerging markets of Eastern Europe, Africa/Middle
East, Latin America and Asia (excluding Japan) were down ver-
sus prior year at 7,625 million euros. Organic sales growth was
3.0 percent. At 40 percent, the share of sales from emerging
markets was unchanged year on year.
Consolidated financial statements
Key financials by region
Further information
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in million euros
Sales 2020¹
Sales 2019¹
Change versus previous year
Organic
Proportion of Group sales 2020
Proportion of Group sales 2019
Operating profit (EBIT) 2020
Operating profit (EBIT) 2019
Change versus previous year
Adjusted for foreign exchange
Return on sales (EBIT margin) 2020
Return on sales (EBIT margin) 2019
1 By location of company.
Western
Europe
Eastern
Europe
5,782
6,017
-3.9%
-4.4%
30%
30%
1,457
1,725
-15.5%
-15.6%
25.2%
28.7%
2,919
2,999
-2.7%
7.1%
15%
15%
228
278
-18.0%
0.3%
7.8%
9.3%
Africa/
Middle
East
1,208
1,302
-7.2%
7.0%
6%
7%
31
106
-70.2%
-53.8%
2.6%
8.1%
North
America
Latin
America
Asia-
Pacific
Corporate
5,173
5,276
-2.0%
-2.2%
27%
26%
-88
337
-126.1%
-124.8%
-1.7%
6.4%
1,090
1,295
-15.8%
-0.5%
6%
6%
69
145
-52.5%
-36.3%
6.3%
11.2%
2,968
3,105
-4.4%
-1.6%
15%
15%
484
431
12.2%
15.2%
16.3%
13.9%
110
121
–
–
1%
1%
-162
-123
–
–
–
–
Henkel
Group
19,250
20,114
-4.3%
-0.7%
100%
100%
2,019
2,899
-30.4%
-26.6%
10.5%
14.4%
Operating profit
The following explanations relate to results adjusted for one-
time expenses and income, and for restructuring expenses so
as to present operational performance before exceptional
items.
Adjusted operating profit (adjusted EBIT)
in million euros
EBIT (as reported)
One-time income
One-time expenses
Restructuring expenses
Adjusted EBIT
2019
2,899
-7
34
294
3,220
2020
2,019
-5
328
237
2,579
+/-
-30.4%
–
–
–
-19.9%
One-time expenses of 328 million euros were primarily at-
tributable to a non-cash impairment expense for assets held
for sale. This is related to our active portfolio management,
within which we have identified brands and categories that
generate total annual sales in excess of one billion euros as re-
quiring portfolio measures. Of these we intend to divest or dis-
continue around 50 percent by the end of 2021.
In order to adapt our structures to our markets and customers,
we spent 237 million euros on restructuring (previous year:
294 million euros). A significant portion of this amount is
attributable to the optimization of our production and sales
structures. Please refer to page 260 for more details on our
restructuring expenses and an explanation of the one-time
expenses and income.
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The profitability of the Group was negatively impacted both by
the increased investments in marketing, advertising, digitali-
zation and IT announced at the start of 2020, and by declining
volumes. Our cost management and the adjustment of our
structures to our markets and customers served to only par-
tially offset these negative developments. As a result of the
pandemic, we incurred additional expenditure – for hygiene
protection measures, for example; however, these were offset
by cost savings, in particular in the form of lower travel ex-
penses.
Adjusted operating profit (adjusted EBIT) totaled 2,579 million
euros, a decrease of -19.9 percent compared to the prior-year
figure of 3,220 million euros. Adjusted return on sales in the
year under review decreased year on year to 13.4 percent (2019:
16.0 percent).
Adjusted return on sales for the Adhesive Technologies busi-
ness unit decreased to 15.2 percent (previous year: 18.1 percent).
Adjusted return on sales for the Beauty Care business unit
also declined year on year to 10.0 percent (previous year:
Reconciliation from sales to adjusted operating profit
13.4 percent). Adjusted return on sales in the Laundry & Home
Care business unit was 15.0 percent (previous year: 16.5 percent).
Expense items
The following explanations relate to our operating expenses
adjusted for one-time expenses and income, and for restruc-
turing expenses. The reconciliation statement and the allo-
cation of the restructuring expenses between the expense
items of the consolidated statement of income can be found
on page 260.
gross margin increased by
Cost of sales was -5.1 percent lower year on year at 10,255 million
euros. Gross profit decreased by -3.3 percent to 8,995 million
euros. Year on year, adjusted
0.4 percentage points to 46.7 percent. Ongoing measures to
reduce costs and enhance production and supply chain effi-
ciency enabled us to more than offset the impact exerted by
slightly higher prices for direct materials (raw materials, pack-
aging and purchased goods and services), negative mix effects
and adverse foreign exchange influences.
in million euros
Sales
Cost of sales
Gross profit
Marketing, selling and distribution expenses
Research and development expenses
Administrative expenses
Other operating income/expenses
Adjusted operating profit
(adjusted EBIT)
2019
20,114
-10,811
9,303
-4,793
-487
-895
92
3,220
%
100.0
-53.7
46.3
-23.9
-2.4
-4.4
0.4
16.0
2020
19,250
-10,255
8,995
-5,034
-495
-906
18
2,579
%
100.0
-53.3
46.7
-26.2
-2.6
-4.7
0.1
13.4
Change
-4.3%
-5.1%
-3.3%
5.0%
1.6%
1.2%
–
-19.9%
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€ 1,424 m
Net income
company of the Henkel Group – Henkel AG & Co. KGaA – can
be found on pages 146 to 148.
Earnings per preferred share (EPS) decreased from 4.81 euros
to 3.25 euros. Earnings per ordinary share decreased from
4.79 euros to 3.23 euros.
Adjusted earnings per preferred share decreased by -21.5 per-
cent to 4.26 euros (previous year: 5.43 euros). At constant ex-
change rates, adjusted earnings per preferred share showed a
development of -17.9 percent. In calculating adjusted earnings
per preferred share, figures are adjusted for one-time expenses
and income, and for restructuring expenses.
Dividend
According to our dividend policy, dividend payouts of
Henkel AG & Co. KGaA shall, depending on the company’s
asset and profit positions and its financial requirements, be
in the range of 30 to 40 percent of net income – adjusted for
exceptional items – after non-controlling interests. We will
propose to the Annual General Meeting the same dividend
payments as in the previous year, namely 1.85 euros per pre-
ferred share and 1.83 euros per ordinary share, for the fiscal
year just ended. This represents a payout ratio of 43.7 percent,
which is above our target bandwidth of 30 to 40 percent, re-
flecting the special nature of the burdens on earnings caused
by the COVID-19 pandemic. This payment is possible not least
thanks to the strong financial base and low net financial debt
of the Henkel Group. Going forward, our dividend policy re-
mains unchanged.
At 5,034 million euros, marketing, selling and distribution ex-
penses were above the prior-year level of 4,793 million euros,
primarily due to higher investments in marketing, advertising,
digitalization and IT. Compared to fiscal 2019, the ratio to sales
increased by 2.3 percentage points to 26.2 percent. We spent a
total of 495 million euros for research and development. The
ratio to sales, at 2.6 percent, was slightly above the prior-year
figure of 2.4 percent. Administrative expenses totaled 906 mil-
lion euros – up from 895 million euros in the previous year. At
4.7 percent, administrative expenses as a percentage of sales
were slightly higher year on year.
Other operating income and expenses
At 18 million euros, the balance of adjusted other operating
income and expenses was lower year on year (2019: 92 million
euros).
Financial result
The financial result came in at -94 million euros in 2020 after
-88 million euros in 2019. The change of -6 million euros was
primarily due to the cost of financing acquisitions and to higher
costs for hedging currency exposure in emerging markets.
Net income and earnings per share (EPS)
Income before tax decreased from 2,811 million euros in 2019
to 1,925 million euros. Taxes on income amounted to 501 mil-
lion euros. At 26.0 percent, the tax rate was above the level
of the previous year (2019: 25.2 percent). The adjusted tax
rate increased slightly year on year by 0.9 percentage points
to 25.2 percent. Net income declined by -32.3 percent from
2,103 million euros to 1,424 million euros. After allowing for
16 million euros attributable to non-controlling interests, net
income attributable to shareholders of Henkel AG & Co. KGaA
amounted to 1,408 million euros, -32.5 percent lower than the
prior-year figure (2019: 2,085 million euros). Adjusted net in-
come after deducting non-controlling interests was 1,843 mil-
lion euros compared to 2,353 million euros in fiscal 2019, rep-
resenting a decrease of -21.7 percent year on year. A condensed
version of the annual financial statements of the parent
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Dividend, preferred shares
in euros
1 Proposal to shareholders for the Annual General Meeting on April 16, 2021.
Return on capital employed (ROCE)
At 9.6 percent, return on capital employed (ROCE) was below
the prior-year figure of 13.5 percent, mainly as a result of the
decline in operating profit.
Economic Value Added (EVA®)
Economic Value Added (EVA®) was 503 million euros, down
from 1,236 million euros in 2019.
Comparison between actual business performance and
guidance
On April 7, 2020 – as a result of the dynamic spread of the
COVID-19 pandemic and the high level of uncertainty about
the impact and development of the global economy – the Man-
agement Board of Henkel AG & Co. KGaA decided to no longer
maintain the forecast for fiscal 2020 that was given in the
combined management report for 2019.
Based on business development in the first nine months of
2020 and assumptions regarding the business performance in
the fourth quarter, the Management Board of Henkel AG & Co.
KGaA approved a new outlook for fiscal 2020 on October 9,
2020.
We expected the Henkel Group to generate organic sales devel-
opment of -2.0 to -1.0 percent. For the Adhesive Technologies
business unit, Henkel forecasted organic sales development
-6.5 to -5.5 percent. For the Beauty Care business unit,
of
Henkel anticipated organic sales development in the range
between -3.0 and -2.0 percent. For the Laundry & Home Care
business unit, we expected growth in the range of 4.5 to
5.5 percent.
We forecasted adjusted return on sales (adjusted EBIT margin)
for the Henkel Group of 13.0 to 13.5 percent in fiscal 2020. We
expected adjusted return on sales (adjusted EBIT margin) of
between 14.5 and 15.0 percent for the Adhesive Technologies
business unit. Our expectations with regard to adjusted return
on sales (adjusted EBIT margin) were between 10.0 and
10.5 percent for Beauty Care, and between 15.0 and 15.5 percent
for Laundry & Home Care.
Adjusted earnings per preferred share (EPS) at constant ex-
change rates were expected to decline in the range between
-22.0 and -18.0 percent.
At -0.7 percent, organic sales development of the Henkel
Group was slightly above our guidance of -2.0 to -1.0 percent.
This positive deviation was mainly due to the performance of
our Adhesive Technologies business unit which was able to
exceed the expected range with an organic sales development
of -4.2 percent. The restrictions reintroduced due to sharply
rising infection rates in many countries had less impact on
our business than originally anticipated. Subsequently, we
witnessed rising customer demand in all business areas in
the fourth quarter. At -2.8 percent, organic sales development
in the Beauty Care business unit was at the lower end of the
forecast range. The Laundry & Home Care business achieved
5.6 percent, slightly better than the expected bandwidth.
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Adjusted return on sales (adjusted EBIT margin) for the Henkel
Group was 13.4 percent and thus at the upper end of the fore-
cast range. The Adhesive Technologies business unit achieved
adjusted return on sales of 15.2 percent, slightly above the
anticipated bandwidth, due to better volume growth in the
fourth quarter than originally expected. Adjusted return on
sales in the Beauty Care and Laundry & Home Care business
units – at 10.0 and 15.0 percent respectively – was at the lower
end of their respective forecast ranges.
Adjusted earnings per preferred share at constant exchange
rates declined by -17.9 percent, thus coming in slightly above
our guidance.
We expected restructuring expenses of between 250 million
euros and 300 million euros in 2020. At 237 million euros, the
figure was slightly below the forecast range. Cash outflows
from investments in property, plant and equipment and intan-
gible assets were expected to be between 650 million euros
and 700 million euros. At 715 million euros, the figure was
slightly above the forecast range.
Guidance versus performance 2020
Organic sales growth
Original guidance for 2020²
Henkel Group: 0 to 2 percent
Updated guidance for 2020³
Henkel Group: -2 to -1 percent
Performance in 2020
Henkel Group: -0.7 percent
Adjusted1 return on sales
(adjusted EBIT margin)
Development of adjusted1
earnings per preferred share
at constant exchange rates
Adhesive Technologies: -2 to 1 percent
Beauty Care: 1 to 3 percent
Laundry & Home Care: 2 to 4 percent
Henkel Group: around 15 percent
Adhesive Technologies: -6.5 to -5.5 percent
Beauty Care: -3 to -2 percent
Laundry & Home Care: 4.5 to 5.5 percent
Henkel Group: 13 to 13.5 percent
Adhesive Technologies: -4.2 percent
Beauty Care: -2.8 percent
Laundry & Home Care: 5.6 percent
Henkel Group: 13.4 percent
Adhesive Technologies: 17 to 18 percent
Beauty Care: 12.5 to 13.5 percent
Laundry & Home Care: 15 to 16 percent
Mid- to high single-digit percentage range
below prior year
Adhesive Technologies: 14.5 to 15 percent
Beauty Care: 10 to 10.5 percent
Laundry & Home Care: 15 to 15.5 percent
-22 to -18 percent
Adhesive Technologies: 15.2 percent
Beauty Care: 10.0 percent
Laundry & Home Care: 15.0 percent
-17.9 percent
1 Adjusted for one-time expenses and income, and for restructuring expenses.
2 Withdrawn on April 7, 2020.
3 Issued on October 9, 2020.
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Results of operations of the business units
Adhesive Technologies
Overview
The economic environment of the Adhesive Technologies
business unit was characterized by the global COVID-19 pan-
demic and the associated widespread restrictions, which re-
sulted in significantly lower demand from major customer in-
dustries. The global industrial production index (IPX) declined
significantly year on year by approximately -5 percent but
showed signs of sequential recovery in the second half of the
year.
Given these very challenging economic conditions, the or-
ganic sales performance and the adjusted return on sales of
the Adhesive Technologies business unit declined overall.
Key financials
in million euros
Sales
Proportion of Henkel sales
Operating profit (EBIT)
Adjusted operating profit (adjusted EBIT)
Return on sales (EBIT margin)
Adjusted return on sales
(adjusted EBIT margin)
Return on capital employed (ROCE)
Economic Value Added (EVA®)
2019
9,461
47%
1,631
1,712
17.2%
18.1%
17.2%
685
2020
8,684
45%
1,248
1,320
14.4%
15.2%
13.4%
410
+/-
-8.2%
–
-23.5%
-22.9%
-2.9pp
-2.9pp
-3.8pp
-40.1%
Sales
Sales generated by the Adhesive Technologies business unit
decreased nominally by -8.2 percent to 8,684 million euros in
the year under review. Foreign exchange effects reduced sales
by -3.7 percent, and acquisitions/divestments by a further
-0.3 percent.
Organically (i.e. adjusted for foreign exchange and acquisi-
tions/divestments), sales decreased by -4.2 percent due to
lower volumes, while price performance was slightly positive
overall, gaining 0.6 percent.
The first half year particularly was strongly impacted by the
COVID-19 pandemic. In the course of the second half year,
however, demand recovered across all business areas and
regions.
Sales development
in percent
Change versus previous year
Foreign exchange
Adjusted for foreign exchange
Acquisitions/divestments
Organic
of which price
of which volume
2020
-8.2
-3.7
-4.5
-0.3
-4.2
0.6
-4.8
Organic sales
growth
-4.2%
Adjusted1
EBIT
€ 1,320 m
Adjusted1
EBIT margin
15.2%
1 Adjusted for one-time expenses and income, and for restructuring expenses.
pp = percentage points
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OOrrggaanniicc ssaalleess ddeevveellooppmmeenntt bbyy bbuussiinneessss aarreeaa
Performance differed among the individual business areas in
the year under review. Organic sales development in the Auto-
motive & Metals business area was significantly negative,
mainly due to the sharp fall in global automotive production
as a result of the COVID-19 pandemic. Despite a challenging
market environment, we developed new solutions for electric
vehicles and brought them to market to benefit from the fu-
ture development in the field of e-mobility. Organic sales de-
velopment was positive overall in the Packaging & Consumer
Goods business area. The Lifestyle business was negatively af-
fected by the COVID-19 pandemic, whereas demand increased
particularly for packaging. We stimulated growth, for example,
with our new generation of adhesives that replace plastics in
packaging for food and hygiene products, thereby facilitating
the recycling of such materials. Sales decreased overall in the
Electronics & Industrials business area due to declining in-
dustrial production in the wake of lower demand – a trend that
was particularly strong in the aerospace industry as a result of
the COVID-19 pandemic. We were able to partially offset this
development with significant growth in our Electronics busi-
ness – with innovative solutions for smart phones and the 5G
infrastructure, for example. Sales were lower year on year in
the Craftsmen, Construction & Professional business area.
Following a weaker first half year due to the pandemic, de-
mand picked up very strongly in the course of the second half
year, driven particularly by our broad range of products for
consumers and craftsmen, as well as solutions for the con-
struction industry.
For details of the activities of the individual business areas,
please refer to pages 94 and 95.
Sales by business area 2020
Top brands
OOrrggaanniicc ssaalleess ddeevveellooppmmeenntt bbyy rreeggiioonn
Sales in the emerging markets were slightly negative overall.
Performance was flat in the Latin America region. Negative
and slightly negative performance in the Asia (excluding Ja-
pan) and Africa/Middle East regions respectively was only par-
tially offset by the very strong sales growth in Eastern Europe.
Performance in the mature markets was negative overall. In
Western Europe, North America and the mature markets of
the Asia-Pacific region, sales were below the prior-year level.
In 2020, we generated more than 80 percent of all sales with
our five technology-based brand clusters for industrial customers
and our four strong brands for consumers. The proportion of
sales from products successfully launched onto the market in
the last five years was around 30 percent.
H e n k e l A n n u a l R e p o r t 2 0 2 0
11 4
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Operating profit
Adjusted operating profit was down year on year at 1,320 mil-
lion euros. Adjusted return on sales was also lower at 15.2 per-
cent. Declining volumes were the main reason for this devel-
opment. Gross margin remained at the prior-year level. Thanks
to slightly positive selling price performance and ongoing
measures to reduce costs and enhance production and supply
chain efficiency, we were able to offset the impact of declining
volumes and adverse foreign exchange effects on gross margin.
Changes in prices of direct materials did not have any significant
impact on gross margin. At 9.2 percent, net working capital
as a percentage of sales was down compared to the prior year.
Return on capital employed (ROCE), at 13.4 percent, declined
year on year, mainly as a result of the lower operating profit.
Economic Value Added (EVA®) decreased year on year to
410 million euros.
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Beauty Care
Overview
The development of the global cosmetics markets and catego-
ries of relevance to the Beauty Care business unit was largely
influenced in 2020 by the COVID-19 pandemic and the result-
ing changes in consumer behavior.
Although having slowed, the pace of market growth in the
markets of importance to the Branded Consumer Goods busi-
ness remained positive overall. Growth in the North America
region, particularly, was very strong. By contrast, the Euro-
pean market developed negatively, as did the Latin America
and Asia-Pacific regions. The effect of the COVID-19 pandemic
differed among the various categories of the Branded Con-
sumer Goods business. The relevant markets in the Body Care
category recorded very strong growth in the wake of higher
sales of hygiene and soap products. The Hair Colorants busi-
ness in the Hair Cosmetics category posted significant market
growth. By contrast, the relevant markets for Hair Care, Styl-
ing and Skin Care declined.
The global Hair Salon market suffered significantly negative
impacts in all regions – particularly in the first half of the year –
from the measures implemented to contain the COVID-19 pan-
demic, including the temporary closure of hair salons. Although
recovery was initially appreciable in the second half of the
year, it slowed as infection rates rose and businesses were
again forced to shut down toward year-end.
1 Adjusted for one-time expenses and income, and for restructuring expenses.
pp = percentage points
Organic sales
growth
-2.8%
Adjusted1
EBIT
€ 377 m
Adjusted1
EBIT margin
10.0%
Notwithstanding the overall negative organic sales performance
in 2020, the Beauty Care business fared relatively well in these
challenging conditions compared to its competitors. Sales in
the Hair Salon business decreased by a low double-digit per-
centage as a result of the pandemic. By contrast, we achieved
good organic sales growth in the Branded Consumer Goods
business, thanks among other things to increased investments
in marketing, advertising, digitalization and IT. Adjusted return
on sales in the Beauty Care business unit was lower year on year.
Key financials
in million euros
Sales
Proportion of Henkel sales
Operating profit (EBIT)
Adjusted operating profit (adjusted EBIT)
Return on sales (EBIT margin)
Adjusted return on sales
(adjusted EBIT margin)
Return on capital employed (ROCE)
Economic Value Added (EVA®)
2019
3,877
19%
418
519
10.8%
13.4%
10.1%
88
2020
3,752
19%
246
377
6.6%
+/-
-3.2%
–
-41.2%
-27.5%
-4.2pp
10.0%
6.2%
-47
-3.4pp
-3.9pp
-154.2%
Sales
Sales generated by the Beauty Care business unit decreased
nominally by -3.2 percent to 3,752 million euros in the year
under review. Acquisitions/divestments increased sales by
2.4 percent. Foreign exchange effects reduced sales by
-2.8 percent.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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The Company
Shares and bonds
Organically (i.e. adjusted for foreign exchange and acquisi-
tions/divestments), sales declined by -2.8 percent, due to
lower volumes.
For details of the activities of the individual business areas,
please refer to page 95.
Top brands
Corporate governance
Sales development
Sales by business area 2020
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
in percent
Change versus previous year
Foreign exchange
Adjusted for foreign exchange
Acquisitions/divestments
Organic
of which price
of which volume
2020
-3.2
-2.8
-0.4
2.4
-2.8
0.1
-2.9
OOrrggaanniicc ssaalleess ddeevveellooppmmeenntt bbyy bbuussiinneessss aarreeaa
Organic sales development in our Branded Consumer Goods
business area in 2020 was good overall, supported by our busi-
nesses in North America, Asia and Eastern Europe. Sales in the
North America region grew by a double-digit percentage,
mainly due to significantly higher demand for body care prod-
ucts and hair colorants. From a brands perspective, our body
care brand Dial and our colorant brands Palette and Natural &
Easy performed particularly well.
In the wake of the COVID-19 pandemic, sales in our Hair Salon
business area declined in 2020, an effect that was also re-
flected by our performance in the individual regions. Follow-
ing the strongly negative impact in the first six months partic-
ularly, the business area initially recovered considerably in the
second half of the year before slowing down again as the year
drew to a close. Positive impetus came from our brand Au-
thentic Beauty Concept, as well as the Schwarzkopf Profes-
sional innovations ChromaID and Fibre Clinix.
OOrrggaanniicc ssaalleess ddeevveellooppmmeenntt bbyy rreeggiioonn
From a regional perspective, overall business performance was
negative in the emerging markets. Good organic sales growth
was achieved in the Asia region (excluding Japan) – particu-
larly driven by a significantly improved performance in China
– and in the Eastern Europe region. By contrast, organic sales
development was below prior year in the Latin America and
Africa/Middle East regions. Sales also decreased in the mature
markets. The Western Europe region and the mature markets in
the Asia-Pacific region were down year on year, mainly due to
the declining Hair Salon business as a result of the pandemic.
By contrast, sales development was flat in the North America
region where we were able to offset the adverse effects of the de-
clining Hair Salon business thanks to a double-digit percentage
increase in sales in our Branded Consumer Goods business.
In 2020, we generated around 85 percent of our sales with our
top 10 brands. The proportion of sales from products success-
fully launched onto the market in the last three years was
around 55 percent.
H e n k e l A n n u a l R e p o r t 2 0 2 0
11 7
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Operating profit
Adjusted operating profit was down year on year at 377 million
euros. Adjusted return on sales decreased significantly to
10.0 percent. As announced at the beginning of 2020, we in-
creased investments in marketing, advertising, digitalization
and IT. The gross margin achieved by the business unit was
higher year on year. Thanks to measures to reduce costs and
enhance production and supply chain efficiency, we were able
to more than offset adverse mix effects arising from declining
volumes in Hair Salon business, and the negative influence of
higher prices for direct materials.
Net working capital as a percentage of sales improved year on
year to -0.5 percent. Return on capital employed (ROCE) was
lower versus prior year at 6.2 percent, mainly as a result of the
decline in operating profit. Economic Value Added (EVA®) to-
taled -47 million euros.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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Organic sales
growth
+5.6%
Adjusted1
EBIT
€ 1,004 m
Adjusted1
EBIT margin
15.0%
Laundry & Home Care
IT, contributed to this performance. Adjusted return on sales
declined year on year.
Key financials
in million euros
Sales
Proportion of Henkel sales
Operating profit (EBIT)
Adjusted operating profit
(adjusted EBIT)
Return on sales (EBIT margin)
Adjusted return on sales
(adjusted EBIT margin)
Return on capital employed (ROCE)
Economic Value Added (EVA®)
2019
6,656
33%
973
1,096
14.6%
16.5%
12.6%
356
2020
6,704
35%
688
1,004
10.3%
15.0%
9.3%
150
+/-
0.7%
–
-29.3%
-8.4%
-4.4pp
-1.5pp
-3.3pp
-57.7%
Sales
Sales generated by the Laundry & Home Care business unit
increased nominally by 0.7 percent to 6,704 million euros in
the year under review. Foreign exchange effects reduced sales
growth by -4.9 percent. Acquisitions/divestments had no sub-
stantial impact on sales.
Organically (i.e. adjusted for foreign exchange and acquisi-
tions/divestments), sales increased by 5.6 percent. With prices
declining slightly, growth was driven by volume.
Overview
The global market for laundry detergents and household
cleaners relevant to the Laundry & Home Care business unit
showed significant growth in 2020.
The mature markets recorded substantial market growth overall.
Growth in the relevant market for laundry detergents and
household cleaners in North America was significantly posi-
tive. Western Europe showed a very strong performance, while
the mature markets in the Asia-Pacific region even recorded
double-digit percentage growth.
Market development in the emerging markets was very strong,
with the market in Africa/Middle East showing double-digit
percentage growth. The relevant markets in Eastern Europe
recorded a very strong performance, while Asia (excluding
Japan) and Latin America achieved good and positive market
growth respectively.
Our relevant markets were largely characterized by changes in
demand and consumer behavior as a result of the COVID-19
pandemic. Positive effects – such as double-digit growth in the
dishwashing products and hard surface cleaners categories –
contrasted with negative developments, for example in the
specialty detergents category. Price and promotional competi-
tion remained intense. Despite this market environment, the
Laundry & Home Care business unit was able to continue its
growth path in 2020 and achieved very strong organic sales
growth. The sustained success of our strong brands and the
successful introduction of our innovations together with
higher investments in marketing, advertising, digitalization and
1 Adjusted for one-time expenses and income, and for restructuring expenses.
pp = percentage points
H e n k e l A n n u a l R e p o r t 2 0 2 0
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Sales development
in percent
Change versus previous year
Foreign exchange
Adjusted for foreign exchange
Acquisitions/divestments
Organic
of which price
of which volume
2020
0.7
-4.9
5.6
0.0
5.6
-0.7
6.4
Sales by business area 2020
Top brands
OOrrggaanniicc ssaalleess ddeevveellooppmmeenntt bbyy bbuussiinneessss aarreeaa
Our Laundry Care business area achieved good organic sales
growth, with our core brand Persil and our heavy-duty laundry
detergents category as the primary contributors. This perfor-
mance was supported primarily by our Persil 4-in-1 Discs, the
portfolio of which was expanded with further variants in the
course of the year. Higher investments in marketing, advertising,
digitalization and IT also had a positive effect.
Organic sales growth in the Home Care business area was in
the double-digit percentage range in fiscal 2020. Dishwashing
products and hard surface cleaners were the biggest contributors
to growth, strongly influenced by the COVID-19 pandemic and
the associated increase in demand for cleaning products. Our
core brands Pril, Bref and Somat all made important contribu-
tions to growth with double-digit percentage increases, sup-
ported by a marketing campaign spotlighting the hygiene as-
pects of our products.
For details of the activities of the individual business areas,
please refer to page 95.
OOrrggaanniicc ssaalleess ddeevveellooppmmeenntt bbyy rreeggiioonn
The emerging markets registered double-digit organic sales
growth and were the biggest driver of organic growth in the
Laundry & Home Care business unit. The Africa/Middle East,
Asia (excluding Japan) and Eastern Europe regions each con-
tributed to this performance with double-digit percentage
sales growth. Organic sales development in the Latin America
region was strong. Sales performance in the mature markets
was good. Organic sales development in the Western Europe
region was positive. The North America region, which had
been affected by disruptions in the production network in the
second quarter, contributed with good organic sales growth.
The mature markets of the Asia-Pacific region achieved sales
growth in the double-digit percentage range.
In 2020, we generated around 65 percent of our sales with our
top 10 brand clusters. A brand cluster comprises individual
global and local brands that share a common brand positioning
internationally. The proportion of sales from products success-
fully launched onto the market in the last three years was
around 45 percent.
H e n k e l A n n u a l R e p o r t 2 0 2 0
1 2 0
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Operating profit
Adjusted operating profit was down year on year at 1,004 million
euros. Adjusted return on sales in the Laundry & Home Care
business unit declined to 15.0 percent, due mainly to increased
investments in marketing, advertising, digitalization and IT.
Gross margin was above the prior-year level. Our ongoing
measures to enhance production and supply chain efficiency
enabled us to more than offset the adverse effects on gross
margin exerted by higher prices for direct materials and
slightly negative price trends caused, not least, by high pro-
motional intensity.
Net working capital as a percentage of sales improved to
-9.3 percent. Return on capital employed (ROCE) was lower
year on year at 9.3 percent, mainly as a result of the lower
operating profit. At 150 million euros, Economic Value Added
(EVA®) was down year on year.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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Net assets and financial position
Acquisitions and divestments
Effective September 1, 2020, Henkel acquired 75 percent of the
shares in a holding company whose subsidiaries operate busi-
nesses involving the three premium direct-to-consumer
brands HelloBody, Banana Beauty and Mermaid+Me. With this
acquisition, the Beauty Care unit will significantly expand its
direct-to-consumer activities while adding strong digital ca-
pabilities in relation to areas such as performance marketing,
analytics and agile innovation.
In addition, Henkel acquired the consumer sealants business
operating under the licensed GE brand on November 2, 2020.
This acquisition strengthens Adhesive Technologiesʼ North
American business involving high-quality and innovative
silicone-based sealants.
Capital expenditures on property, plant and equipment totaled
281 million euros (previous year: 277 million euros) in the
Adhesive Technologies business unit, 91 million euros (previous
year: 89 million euros) in Beauty Care, and 268 million euros
(previous year: 217 million euros) in Laundry & Home Care. We
invested 66 million euros in intangible assets (previous year:
68 million euros).
€ 715 m
Investments in
property, plant and
equipment and
intangible assets
Around two-thirds of these expenditures were channeled into
expansion projects, innovations and streamlining measures,
which, for example, included expanding our production capacity
and our IT infrastructure, and also implementation of our
innovation strategy.
The major projects of 2020 were as follows:
Construction of an Innovation Center in Düsseldorf,
Germany (Adhesive Technologies)
A production facility for a new generation of detergents and
On April 1, 2020, we sold our Asian business involving surface
cleaners used within the semi-conductor and LCD industries.
automatic dishwashing products in Kruševac, Serbia
(Laundry & Home Care)
Additional disclosures relating to our acquisitions and divest-
ments can be found on pages 182 and 183 of the notes to the
consolidated financial statements.
Neither the acquisitions and divestments nor other measures
undertaken in the year under review resulted in any material
changes in the business and organizational structure of the
Henkel Group. For detailed information on our organization
and business activities, please refer to the disclosures on
pages 94 and 95.
Capital expenditures
In the reporting period, capital expenditures (excluding acqui-
sitions) amounted to 715 million euros (previous year: 662 mil-
lion euros). Investments in property, plant and equipment for
existing operations totaled 649 million euros, following
594 million euros in 2019.
Optimization of our production structure in Bowling Green,
USA (Laundry & Home Care)
Construction of a new production site for electronic
adhesives in Seoul, South Korea (Adhesive Technologies)
In regional terms, capital expenditures focused primarily on
Western and Eastern Europe and North America.
The acquisitions resulted in additions to intangible assets and
property, plant and equipment (including right-of-use assets)
in the amount of 505 million euros. Details of these additions
can be found on pages 194 to 203 of the notes to the consolidated
financial statements.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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Capital expenditures in 2020 by business unit1
1 Existing operations
Financial calendar
Capital expenditures 2020
in million euros
Intangible assets
Property, plant and
equipment
Total
Existing
operations
66
649
715
Acquisitions
501
4
505
Total
567
653
1,220
Right-of-use assets
In the course of its business operations, Henkel enters into
various lease agreements as a lessee. In 2020, the Henkel
Group recognized additions to right-of-use assets in property,
plant and equipment of 182 million euros in total (previous
year: 139 million euros). Of these additions, acquisitions ac-
counted for 3 million euros (previous year: 15 million euros).
Additional disclosures relating to leases can be found on pages
202 and 203 of the notes to the consolidated financial state-
ments.
Net assets
At 30.3 billion euros, total assets decreased compared to year-
end 2019 (31.4 billion euros).
Under non-current assets, intangible assets decreased by
-1,239 million euros in total. Additions of 567 million euros
from acquisitions and capital expenditures were offset, in
particular, by negative currency effects of 1,101 million euros,
reclassifications of 203 million euros to assets held for sale,
amortization of 155 million euros and impairment of 318 mil-
lion euros. Property, plant and equipment decreased by
-87 million euros, likewise mainly due to negative foreign
exchange effects of 272 million euros. Investments of 649 mil-
lion euros in property, plant and equipment and additions of
182 million euros to right-of-use assets (both excluding acqui-
sitions) were offset by scheduled depreciation of 563 million
euros and impairment of 56 million euros. Of the scheduled
depreciation, 136 million euros was attributable to right-of-use
assets.
Current assets increased from 9.1 billion euros to 9.3 billion
euros, mainly as a result of higher cash and cash equivalents,
which increased by 0.3 billion euros, and of higher assets held
for sale, which increased by 0.2 billion euros. Trade accounts
receivable, on the other hand, decreased to 3.1 billion euros
after 3.4 billion euros in 2019.
Compared to year-end 2019, equity including non-controlling
interests decreased by -0.7 billion euros to 17.9 billion euros,
primarily due to negative currency translation effects of
1,278 million euros, the dividend payment of 798 million euros
in June 2020, and the recognition of a liability in an amount of
191 million euros for a put option granted on non-controlling
interests in relation to an acquisition. The addition of net
income amounting to 1,424 million euros had the effect of
increasing equity. The individual components influencing
equity development are shown in the table on page 175. By
year-end 2020, the equity ratio had decreased compared to
year-end 2019 by -0.2 percentage points to 59.1 percent.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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Financial structure
in million euros
The Company
Shares and bonds
Corporate governance
Combined management report
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Further information
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Contacts
Financial calendar
1 Prior-year figures amended (please refer to the notes on page 188).
Non-current liabilities were down year on year with a total of
4.0 billion euros (previous year: 4.3 billion euros). Compared
to year-end 2019, non-current borrowings decreased by
-266 million euros. In January 2020, Henkel added a second
tranche of 100 million British pounds to its existing British
pound bond. A bond with a nominal volume of 330 million
Swiss francs was issued in April 2020. In addition, the Group
placed a plastic waste reduction bond in July 2020 consisting
of two tranches – one of 70 million US dollars and one of
25 million euros. The increase in non-current borrowings as a
result of these new issuances was offset by the reclassification
of a bond with a nominal volume of 700 million euros to current
borrowings.
In total, all other non-current liabilities were roughly on a par
with the prior year. The recognition of a liability for the put
option granted to the non-controlling shareholders of Henkel
Beauty & IB Holding GmbH increased the figure for other finan-
cial liabilities. Henkel Beauty & IB Holding GmbH holds the
shares in the companies that operate the businesses involving
the brands HelloBody, Banana Beauty and Mermaid+Me, of
which the Henkel Group acquired a majority stake in fiscal
2020. This effect was offset primarily by lower deferred tax
liabilities and reduced pension obligations.
Current liabilities decreased compared to year-end 2019
by -183 million euros to 8.4 billion euros as of December 31,
2020. This was mainly due to the decrease of 0.8 billion euros
in respect of commercial paper liabilities. In liabilities relating
to bonds, the increase due to reclassification of a bond from
non-current borrowings (nominal volume: 700 million euros)
was offset by the scheduled redemption of a bond with a
nominal value of 600 million US dollars.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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The Company
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Corporate governance
The reduction in current borrowings was partly countervailed
by an increase of 262 million euros in other current provisions
compared to year-end 2019 and an increase of 134 million euros
in trade accounts payable.
Combined management report
Consolidated financial statements
Net financial position
in million euros
Further information
Credits
Contacts
Financial calendar
1 Prior-year figures amended (please refer to the notes on page 188).
2 Including purchase of non-controlling interests with no change in control.
3 Primarily foreign exchange effects.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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The Company
Shares and bonds
Corporate governance
Combined management report
-888 million euros (previous year: -2,047 million
Effective December 31, 2020, our net financial position1
amounted to
euros). The change versus the previous year was essentially
attributable to the strong free cash flow despite the influence
of the COVID-19 pandemic, while payments for acquisitions
were lower year on year.
Consolidated financial statements
Net financial position 2015 to 2020
The cash outflow in cash flow from investing activities
(-1,261 million euros) was slightly below the figure for the
prior-year period (-1,461 million euros). Capital expenditures
on intangible assets and property, plant and equipment were
higher than in 2019, whereas investments in subsidiaries and
other business units and payments for other current financial
assets were lower versus the prior-year figure.
€ -888 m
Net financial position
Further information
Credits
Contacts
Financial calendar
in million euros
2015
2016
2017
2018
2019¹
2020
At -1,475 million euros, the cash outflow in cash flow from
financing activities was higher year on year (-1,395 million
euros). In fiscal 2020, higher cash inflows received in re-
spect of pension obligations versus the previous year were
countervailed primarily by lower cash inflows from the issuance
of bonds.
335
-2,301
-3,222
-2,895
-2,047
-888
1 Prior-year figures amended (please refer to the notes on page 188).
Financial position
Cash flow from operating activities in fiscal 2020 came in at
3,080 million euros, representing a decrease versus fiscal 2019
(3,241 million euros). This was attributable particularly to the
increased expenditure on marketing and distribution announced
at the beginning of 2020 and to lower volumes as a result of
the COVID-19 pandemic. By contrast, the reduction in net
working capital2 had a positive effect on cash flow from
operating activities.
Year on year, the ratio of net working capital to sales improved
by 3.2 percentage points to 0.7 percent (previous year: 3.9 per-
cent), to which negative foreign exchange effects contributed
0.8 percentage points.
The prior-year figures for cash flow from investing activities
and cash flow from financing activities have been amended.
For details, please refer to our discussion of the consolidated
statement of cash flows on pages 176 and 177.
Cash and cash equivalents increased compared to December
31, 2019, by 267 million euros to 1,727 million euros.
The decline in free cash flow from 2,471 million euros in the
prior-year period to 2,338 million euros in 2020 was primarily
due to the decrease in cash flow from operating activities.
1 The net financial position is defined as cash and cash equivalents plus readily monetizable securities & time deposits and financial collateral provided, less
borrowings, plus positive and minus negative fair values of derivative financial instruments.
2 Inventories plus payments on account, trade accounts receivable and receivables from suppliers, less liabilities to customers, trade accounts payable and current
sales provisions.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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The Company
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Financing and capital management
Financing of the Group is centrally managed by Henkel AG &
Co. KGaA. Funds are, as a general rule, obtained centrally and
distributed within the Group. Our financial management is
based on the financial ratios defined in our financial strategy
(see table of key financial ratios on the following page). We
pursue a conservative and flexible investment and borrowings
policy with a balanced investment and financing portfolio.
The primary goals of our financial management are to secure
the liquidity and creditworthiness of the Group, together with
ensuring access at all times to the capital market, and to generate
a sustainable increase in shareholder value.
Measures deployed in order to achieve these aims include
optimization of our capital structure, adoption of an appropriate
dividend policy, equity management and long-term debt re-
duction. Our capital needs and capital procurement activities
are coordinated to ensure that requirements with respect to
earnings, liquidity, security and independence are taken into
account and properly balanced.
In fiscal 2020, Henkel paid the same dividends for both ordinary
and preferred shares as in 2019. Cash flows not required for
capital expenditures, dividends and interest payments were
used to reduce our net debt and to fund acquisitions. We covered
our short-term financing requirement primarily through
commercial paper. Our multi-currency commercial paper
program is additionally secured by a syndicated credit facility.
In addition, the Henkel Group had access to credit lines of
1.6 billion euros as of December 31, 2020 (previous year: 1.6 bil-
lion euros) that remain unutilized.
Our credit rating is regularly reviewed by the two rating agencies
Standard & Poor’s and Moody’s. As in previous years, our ratings
remain within the “single A” target corridor, at A/A–1 (Stand-
ard & Poor’s) and A2/P1 (Moody’s). This is a good rating in the
prime investment grade segment.
Credit ratings
Long term
Outlook
Short term
At December 31, 2020
Standard & Poor’s
A
Stable
A–1
Moody’s
A2
Stable
P1
Our long-term ratings remain at A flat (Standard & Poor’s) and
A2 (Moody’s). We intend to maintain a solid “A” rating to ensure
our continued unrestricted access to the money and capital
markets and to favorable financing terms and conditions.
As of December 31, 2020, our borrowings totaled 3,084 million
euros (previous year: 3,958 million euros) and mainly comprised
bonds issued and commercial paper.
Henkel’s financial risk management activities are explained in
the risks and opportunities report on pages 151 to 165. Further
detailed information on our financial instruments can be
found in the financial instruments report on pages 227 to
252 of the notes to the consolidated financial statements.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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Key financial ratios
Operating debt coverage in 2020 increased compared to
year-end 2019, and was thus well above the minimum level of
50 percent, mainly due to the improvement in our net financial
position. As was also the case at year-end 2019, the interest
coverage ratio in the year under review – at 33.1 – was also well
above the minimum level of 9.
Key financial ratios
Operating debt coverage ratio
(net income + amortization and depreciation,
impairment and write-ups + interest element of
pension obligations)/net borrowings and pension
and lease obligations
Interest coverage ratio
(EBITDA/interest result)
Equity ratio
(equity/total assets)
2019
2020
88.6% 126.4%
41.5
33.1
59.3% 59.1%
H e n k e l A n n u a l R e p o r t 2 0 2 0
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Employees
Our employees shape our company through their commitment,
knowledge and skills. They are instrumental in driving our
long-term success. Therefore, strengthening a corporate culture
characterized by close collaboration and empowered people is
also an integral element of our strategic framework for purpose-
ful growth. Building on shared values and a clear understanding
of collaborating as one team, we want to accelerate our cultural
transformation, drive the upskilling of our employees regarding
future capabilities, and enable our people to continuously
develop. The importance of a strong corporate culture has be-
come particularly clear during the COVID-19 pandemic. We
made good progress over the past year and have together suc-
cessfully driven forward the cultural journey.
The basis for an inspiring and modern working environment
where team spirit plays a key role is an open and appreciative
leadership culture. To reinforce the importance of this leader-
ship culture, we introduced our new Leadership Commitments
at the beginning of 2019, which apply to all Henkel employees,
regardless of whether or not they lead a team. The Leadership
Commitments form the basis for collaboration both within
teams and at the level of each individual. In this way, we place
high expectations on our employees in terms of leadership
behavior, agility and collaboration. By the end of 2020, we had
involved more than 50,000 employees in an active dialog
about our new approach to leadership in specific Leadership
Activation Sessions.
Payroll cost and average employee numbers
Payroll cost in million euros
Average employee numbers
2019
3,195
52,650
2020
3,307
52,600
Employees by organizational unit
At December 31, 2020
Moreover, we consistently integrate the Leadership Commit-
ments into all our HR processes and systems so as to anchor
them further in our corporate culture. We firmly believe that
cultural change requires the commitment of all employees,
which is why we have introduced special formats to improve
collaboration and leadership skills at all levels – such as special
Leadership Commitments workshops for our colleagues in
production.
At the same time, cultural change offers the opportunity to
challenge and improve the status quo. Given that transparency
is a key element that transcends all hierarchical layers, we
conducted the Organizational Health Index survey among
around 10,000 employees worldwide in 2020. Based on the
findings, which show a good total score for organizational health
at Henkel overall, we defined clear areas for action and further
activities for 2021.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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What makes Henkel special
Everyone who works at Henkel acts in an environment charac-
terized by its international nature and diversity. We are repre-
sented by around 52,950 employees (as at year-end 2020) with
125 different nationalities operating in 79 different coun-
tries. At December 31, 2020, the number of employees had in-
creased compared to around 52,450 as of year-end 2019. The
slight increase is also due to acquisitions.
As an international company with numerous sites and three
business units in the industrial and consumer business sectors,
we offer a wide variety of career opportunities. Job rotations
that transcend departmental and country boundaries give
our managers the chance to gain a wealth of experience, to
strengthen their intercultural skills and to build a broad net-
work of contacts.
We value diversity in our workforce. Diversity and inclusion
(D&I) are an integral part of our HR strategy. Therefore, we
continuously strive to promote and embed D&I in our organ-
ization. Women account for 36.9 percent of managers at
Henkel. The key to diversity is to create the necessary frame-
work conditions to enable our employees, male and female,
to reconcile their careers with their personal lives. For years,
the age structure of our employees has remained constant and
well balanced. We equally promote all generations at Henkel
and take into consideration different life phases. For example,
we actively help families to achieve a balance between career
and home life by offering childcare facilities and social services.
We want to actively shape demographic change at Henkel
through the implementation of various partial retirement
models. At the same time, we encourage the targeted, cross-
generational training of qualified newcomers by having their
experienced colleagues coach them in direct preparation
for a specific role. This ensures that we keep many years of
knowledge within Henkel and enhances the company’s future
viability. We also offer events focusing on social law and psy-
chosocial topics for all Henkel employees regardless of age. The
formats differ, with Lunch & Learn sessions, informative
events, seminars and workshops being all part of the mix. Fur-
thermore, to promote an inclusive corporate culture, we have
launched training programs focusing specifically on diver-
sity and how to deal with unconscious biases. And we have
established a network of employees from various parts of the
company who liaise between the individual business units
and functions in driving our D&I initiatives. We want the diver-
sity in our workforce to reflect the diversity in our customer
structure.
Women in management
in percent
Henkel
Managers
Top managers1
1 Corporate Senior Vice Presidents, management circles I and IIa.
2016
33.1
34.3
22.5
2017
34.3
34.5
23.2
2018
34.4
34.7
22.9
2019
35.5
35.7
24.3
2020
36.1
36.9
25.2
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Employees by activity
At December 31, 2020
Energized and empowered teams
We hold regular assessment meetings, provide open feedback
and prepare individual career plans to specifically promote
individual development among our people. This approach
enables us to systematically identify and develop talent within
the company, thereby ensuring in-house succession planning
throughout the Group. Our globally standardized assessment
process includes an annual evaluation of the potential of our
employees and, independently of this, an appraisal of their
performance against pre-agreed role expectations. We are
convinced that identifying potential specifically supports the
long-term career plans of our employees while allowing us to
build a workforce that is fit for the future and able to actively
embrace challenges and changes going forward. Individual
training programs and potential career moves are also discussed.
We support our line managers in these activities by providing
digital HR management systems that are also being increasingly
enabled for mobile use.
Our employees also embrace the opportunities offered by
digitalization. As a means of highlighting and demystifying
the changes and opportunities likely to be encountered, we
launched our Digital Upskilling initiative for all employees
around the globe in 2019, offering personalized digital training
sessions. By the end of 2020, more than 15,000 employees had
made use of these offerings to extend their digital competences.
As such, the Digital Upskilling initiative is making a key
contribution to digital transformation at Henkel. The digital
transformation is also reflected in the fact that the number of
digital learning hours by our employees more than doubled in
2020 compared to the previous year, not least during the
COVID-19 pandemic. Digitalization is also increasingly ena-
bling flexible work models and simplifying daily work pro-
cesses. Although digital and virtual collaboration was already
commonplace at Henkel before, the COVID-19 pandemic –
which brings with it particular challenges for our employees –
accelerated progress in the field “future of work.”
Employees by age group
At December 31, 2020
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Recruiting, developing and retaining talents
As an attractive employer for both existing and potential
employees, we strive to recruit talent for Henkel that best fits
our culture, our convictions, and our objectives. Also in 2020,
we persisted with our recruiting efforts. In addition to the
individual support provided by our local recruitment partners,
we significantly expanded the digitalization of our processes. Our
new recruitment platform simplifies, improves and accelerates
the workflows for everyone involved – offering a simple,
multi-media job application procedure combined with enhanced
process transparency for the departments involved in the re-
cruitment process. We also increased our presence at (virtual)
industry trade fairs and on social media. Using the latter,
our employees post insights into their day-to-day work and
development at Henkel under #MyStory@Henkel and
#JobOfTheMonth.
Our #AskMeAnything format offers the opportunity of address-
ing career-related questions directly to top managers and experts
at Henkel. The response to these formats and the high level of
transparency are reflected not least by increasing numbers of
followers on social media and in positive ranking and rating
results.
We place great importance on the in-house training and pro-
fessional development of our people, giving due consideration
to locally different training paths. Henkel provides 21 appren-
ticeship and four dual-track study programs in Germany – in
2020, despite the COVID-19 pandemic, we welcomed 138 new
apprentices and students embarking on the road toward a pro-
fessional qualification. In selected emerging markets, we also
offer a range of trainee programs tailored specifically to the
needs of the relevant country.
Employees
(at December 31)
Western Europe
Eastern Europe
Africa/Middle East
North America
Latin America
Asia-Pacific
Total
2016
14,450
9,500
5,250
8,300
3,550
10,300
51,350
%
28.1
18.5
10.2
16.2
6.9
20.1
100.0
2017
14,750
9,950
4,750
9,050
5,500
9,700
53,700
%
27.5
18.5
8.8
16.9
10.2
18.1
100.0
2018
14,750
9,800
4,200
9,000
5,800
9,450
53,000
%
27.8
18.5
7.9
17.0
11.0
17.8
100.0
2019
14,750
9,800
3,900
8,950
5,900
9,150
52,450
%
28.1
18.7
7.4
17.1
11.3
17.4
100.0
2020
14,900
10,150
3,850
8,850
6,150
9,050
52,950
%
28.1
19.2
7.3
16.7
11.6
17.1
100.0
Basis: permanent employees excluding apprentices; figures rounded.
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Procurement
We use externally sourced materials (raw materials, packaging
and purchased goods) and services to produce our finished
products. These items all fall under the general category of
direct materials. Examples include washing-active substances
(surfactants), adhesive components, cardboard boxes and
external bottling services.
Aside from supply and demand, the prices of direct materials
are mainly determined by the prices of the input materials
used to manufacture them.
Fiscal 2020 was characterized by the impacts of the COVID-19
pandemic, the resulting significant economic downturn and
weaker demand on the global procurement markets. Prices,
especially for crude oil and petrochemicals, corrugated paper
and cardboard, were below prior-year levels on average. By
contrast, prices for specialty raw materials, such as for fra-
grances and cosmetics, and price levels in some emerging mar-
kets, experienced an – in some cases significant – increase.
With these trends prevailing, prices in 2020 for direct materi-
als rose slightly overall versus the previous year.
Direct material expenditures were down year on year at 8.0 bil-
lion euros (2019: 8.4 billion euros). Savings from our global
procurement strategy and cost reduction measures coupled
with improvements in production and supply chain efficiency,
as well as effects deriving from lower sales volumes, compen-
sated for both the higher material prices and the negative ef-
fects of foreign exchange.
The five most important categories of direct materials are
washing-active substances (surfactants), raw materials for use
in hotmelt adhesives, fragrance and cosmetic raw materials,
inorganic raw materials, and raw materials for water- and
acrylic-based adhesives. These account for 40 percent of all
direct material expenditures. Our five largest suppliers repre-
sent 13 percent of purchasing volume in direct materials.
Within the category of indirect materials and services, we
procure items and inputs that are not directly used in the
production of our finished products. Examples include
maintenance materials, or logistics, marketing and IT services.
At 5.6 billion euros, expenditure on indirect materials and
services in 2020 was slightly above the level of the previous
year (2019: 5.4 billion euros).
Direct material expenditures
by business unit
Direct material expenditures
by type of material
Fiscal 2020
Fiscal 2020
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In order to improve efficiency and secure material supplies,
we continuously optimize our value chain while ensuring that
we maintain or improve our level of quality. In addition to ne-
gotiating new, competitive contract terms, our ongoing initiative
to lower total procurement expenses is a major factor in the
success of our global purchasing strategy. We enter into long-
term business relationships with selected suppliers to foster
the development of innovations, and to optimize manufacturing
costs and logistics processes. At the same time, we ensure the
risk of supply shortages is reduced. We also agree and implement
individual targets with our strategic suppliers aimed at opti-
mizing the supply of direct and indirect materials. We place
great importance on sustainability. Since 2011, we have been
involved as co-founders of “Together for Sustainability –
Chemical Supply Chains for a Better World (TfS),” an initiative
spawned by the chemical industry with the goal of harmoniz-
ing the ever more complex supplier management in the field
of sustainability, and optimizing dialog with global contract
partners. As part of this initiative, we regularly perform sus-
tainability assessments and audits of our strategic suppliers.
We were able to once again increase the efficiency of our pur-
chasing activities by further standardizing, automating and
centralizing our procurement processes. In addition to making
use of e-sourcing tools to support our purchasing operations,
we have pooled and are increasingly automating large portions
of our purchasing administration activities – such as activities
relating to supplier negotiation, order and invoice processing,
price data maintenance and reporting activities – within our
Global Business Solutions organization.
The stronger alignment of our purchasing organization to the
business units, customers and procurement markets that we
put in place in 2020 enables us to be more agile and innovation-
focused.
We are also constantly progressing the digitalization of our
purchasing activities. Through our communication platforms,
we continuously optimize cooperation with our strategic
suppliers and are increasing transparency along the value
chain by means of new digital applications. In addition, we are
deploying a growing number of next-generation technologies
such as robotics and artificial intelligence in order to further
improve our processes. And we have continued consolidating
our production, logistics and purchasing activities across all
business units into a Global Supply Chain organization. This
organization is managed from Amsterdam and a branch office
in Singapore.
Risk management is an important component of our purchasing
strategy, especially against the backdrop of uncertainties with
regard to supply security on the procurement markets and
movements in raw material prices. The emphasis here is on
reducing price and supply risks while maintaining consistently
high quality. As part of our active price management approach,
we employ strategies to safeguard prices over the longer term.
These are implemented both by means of contracts and,
where appropriate and possible, through financial hedging
instruments. In order to minimize the risk of supplier default,
we perform detailed risk assessments of suppliers to determine
their financial stability, and stipulate supplier default clauses.
With the aid of an external, independent financial services
provider, we continuously monitor important suppliers whose
financial situation is regarded as critical. If a high risk of supplier
default is identified, we systematically prepare back-up plans
in order to ensure uninterrupted supply.
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Production
In 2020, Henkel manufactured products at 179 sites in 57 coun-
tries. Our largest production facilities are located in Bowling
Green, USA, and in Düsseldorf, Germany. We manufacture
laundry detergents and household cleaners in Bowling Green.
In Düsseldorf, we produce not only laundry detergents and
household cleaners but also adhesives for consumers and
craftsmen, and products for our industrial customers.
Cooperation with toll manufacturers is an integral component
of our production strategy, enabling us to optimize our produc-
tion and logistics structures when entering new markets or
where volumes are still small. We purchase around 10 percent
in additional production tonnage from toll manufacturers
each year.
In the year under review, the COVID-19 pandemic posed
particular challenges for the production and logistics structures.
Thanks to a very robust supply chain structure, our global pro-
duction network did not suffer any major long-lasting adverse
effects.
Number of production sites
Adhesive Technologies
Beauty Care
Laundry & Home Care
Total
2019
138
13
33
184
2020
133
13
33
179
The Adhesive Technologies business unit continued to opti-
mize its global production network in 2020, with manufacturing
shared between 133 production sites around the world. In both
emerging and mature markets, we invest in the continuous
optimization of production and in facilities that are tailored
to the requirements of our customers. We are dedicated to cut-
ting-edge production technologies and the leveraging of ad-
ditional cost and quality advantages in the manufacture of our
products, as we are to the further development of our production
and warehousing network in line with requirements.
Recently, we successfully implemented a multi-technology
structure in our plants in China, Turkey, Hungary and India.
Technologies are being successively added – both in these new
multi-technology plants and in other sites that have been part
of the network for some time – in order to generate further cost
synergies. These include in particular technologies for which
demand is either growing strongly with our customer industries
or which are following structural change, such as the transition
to e-mobility, as innovative solutions to problems.
In addition to cutting-edge manufacturing technologies, we
also focus on the use of digital applications and holistic sustain-
ability concepts at our production sites. We are continuing to
drive the digitalization of our production to further improve
service quality and raise efficiency. At various production sites,
we have expanded the recording of operating parameters,
enabling us to link important data for better control of the
entire logistics and production process from supplier through
to the customer. Also our new plant for electronics solutions
currently nearing completion in Songdo, South Korea, is being
strictly aligned to the needs of smart, networked production
technologies in a design concept that complies with high
standards of sustainability.
The number of production sites in our Beauty Care business
unit remained constant overall at 13. To ensure long-term
growth, we are investing in capacities and technologies –
especially in emerging markets – based on our supply chain
strategy. We opened a new site for Hair Care products in Turkey
and further expanded certain existing sites, particularly in Latin
and North America, Russia and the Middle East. In doing so,
we are increasing production capacity in all three key technol-
ogies – hair colorants, liquid products and aerosols. In North
America, particularly, we are currently specifically expanding
our liquid hand soap capacities in response to the sharp in-
crease in demand resulting from the COVID-19 pandemic.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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As part of the implementation and further expansion of the
Industry 4.0 concept, we have specifically developed and
launched further programs aimed at the digitalization of
production and distribution processes in anticipation of growing
customer and consumer requirements. For example, we opened
a new state-of-the-art logistics center in Spain that sets high
standards in respect of digitalization, robotics and latest logis-
tics solutions. In 2020, Henkel’s production facility for laundry
detergents and household cleaners in Düsseldorf was awarded
the renowned “Factory of the Year” prize in the “Excellent Pro-
duction Network” category.
Pooling the purchasing, production and logistics activities of
all business units in one Global Supply Chain organization
enables us to develop our global processes more quickly.
For all business units, we have the environmental management
systems at numerous sites externally certified. By the end of
2020, around 80 percent of our production volume was from
sites certified to ISO 14001, the internationally recognized
standard for environmental management systems.
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The business unit continues to focus on continuously improving
its customer supply service in a volatile and innovative market
environment. By integrating our planning processes along the
entire supply chain – from suppliers through production to
the interface with our customers – we can improve our ability
to predict customer needs. The implementation of various
Industry 4.0 initiatives has also further increased process trans-
parency. Our ability to rapidly analyze big data has enabled us to
both speed up the decision-making process and make it more
efficient. Further focus has been placed on enhancing the agility
of the supply chain in response to the requirements of new
e-commerce sales channels and the demand for greater indi-
vidualization. We also further developed our supply chain
sustainability strategy reflecting the specific requirements
and measures relating to the Beauty Care business unit.
The production network in our Laundry & Home Care business
unit encompassed 33 sites in 2020, with the number unchanged
to the previous year.
We continued the integration of the production networks
acquired in North America in previous years and also began
the process of merging warehousing and logistics sites in
various regions.
Enhancing efficiency was a continued key focus, supported by
the real-time production parameter reporting system that we
implemented worldwide in 2018 and have been continuously
improving ever since. Targeted investments, particularly in
production capacities for our pre-dosed detergents and dish-
washing products (caps) and WC cleaners, are supporting
further growth in these important product categories. In
addition, all processes and structures along the entire supply
chain are permanently monitored to ensure they are efficient
and to achieve – through pro-active management – high levels
of quality, agility and utilization of our production and ware-
house capacities.
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Research and development
Expenditures by the Henkel Group for research and develop-
ment (R&D) in fiscal 2020, at 501 million euros, were around
the prior-year figure of 499 million euros. The ratio of R&D
expenses to sales amounted to 2.6 percent (previous year:
2.5 percent). Adjusted R&D expenditures totaled 495 million
euros, following 487 million euros the year before. The ratio
of adjusted expenses to sales was 2.6 percent (previous year:
2.4 percent).
In 2020, internal personnel expenses accounted for most of
the R&D spend. Our research and development costs were
fully expensed; no product- or technology-related develop-
ment costs were capitalized in accordance with International
Financial Reporting Standards (IFRSs).
On an annual average, around 2,600 employees worked in
research and development (previous year: around 2,650).
This corresponds to approximately 5 percent of the total work-
force. Our teams are composed of natural scientists – predom-
inantly chemists – as well as material scientists, engineers and
technicians.
The capabilities of our employees and our investments form
the foundation on which the success of our R&D activities is
built. We continue to focus on highly efficient innovations
and steadily reducing our resource consumption while main-
taining or improving performance. Our open innovation ap-
proach ensures the successful integration of external part-
ners in our project delivery. We are also further expanding our
corporate venture capital activities. And we are committed to
increasing the use of digitalization in research and develop-
ment.
Key R&D figures
R&D expenditures
(in million euros)
R&D expenditures
(in percent of sales)
Adjusted1 R&D
expenditures
(in million euros)
Adjusted1 R&D
expenditures
(in percent of sales)
Employees2
(annual average)
2016
2017
2018
2019
2020
463
2.5
476
2.4
484
2.4
499
2.5
501
2.6
460
469
471
487
495
2.5
2.3
2.4
2.4
2.6
2,700
2,700
2,750
2,650
2,600
R&D expenditures by business unit
1 Adjusted for restructuring expenses.
2 Figures rounded.
Strengthening research and development together
The research and development experts in the three business
units align their project portfolios to the specific needs of their
individual businesses. They work together on fundamental
processes, basic innovations, evaluation of partners for inno-
vation, and on sustainability. The Research and Development
Committee is responsible for Group-wide coordination.
Fiscal 2020
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The business units continually exchange on innovations in
common areas of knowledge. Activities in 2020 focused on
sustainability and digitalization, as was also the case in the
previous year. On the digitalization side, the key areas were
digital methods for faster, more efficient and optimized product
development, and digital product and service innovations for
consumers. Advancement in sustainability took the form of
various market launches of particularly sustainable products.
Open innovation
Our innovations come from both internal and external
sources. The concept of open innovation therefore holds great
significance for us. Accordingly, we continue to intensify our
efforts to involve external partners such as universities, research
institutes, suppliers or startups in many of our development
projects.
Corporate venture capital
Henkel is striving to gain access to strategically relevant new
technologies, applications and business models by partnering
with, and investing in, startups with digital or technological
expertise.
In 2020, we further expanded our venture capital activities
and strengthened our expertise base by investing in startup
companies.
Henkel expanded its technology portfolio by investing in
Actnano, a startup based in Boston, USA. This company has
developed an innovative coating technology that protects en-
tire printed circuit boards, providing benefits in a variety of
automotive electronics and consumer electronics applications.
Our investment in LoveLocal, a startup based in Mumbai, India,
further expands our involvement in emerging markets. Love-
Local enables the kiranas – small local retailers – to digitize
their businesses and thus to offer their customers a conven-
ient and personalized online shopping experience.
Henkel also invested in Fero Labs, a software startup based in
the USA that aims to use machine learning to optimize industrial
processes, such as planning, procurement and production.
We also invested in two startups in the UK: Nourished is a
company that uses 3D-printing technology to offer personalized
food supplements through a direct-to-consumer model.
Streetbees is a real-time platform based on artificial intelligence
where users capture with their smartphones moments of their
everyday lives which are then analyzed in terms of identified
authentic habits, shopping preferences or opinions for market
research purposes.
Research and development worldwide
In addition to its central research laboratories, Henkel main-
tains research and development sites in all regions around
the world as hubs for innovative problem-solving. Worldwide
research and development activities are managed globally by
the business units. Research-intensive base technologies are
developed at a central location with optimal access to external
resources. These basic technologies are then applied in the
regional research and development sites in the creation of
customer- and market-specific innovations. At the same time,
the research and development staff in the regional sites obtain
information about specific problems for the next generation
of innovations while working in close contact with customers
and consumers. The new base technologies needed for the
relevant solutions are, in turn, developed centrally.
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The Adhesive Technologies business unit supports its cus-
tomers around the globe with customized solutions based on a
comprehensive portfolio of products, applications and services.
The success of Adhesive Technologies is founded in particular
on its broad technology portfolio, the outstanding expertise of
its global innovation team, and its proximity to its customers
as the reward from years of working in close collaboration
with them.
Again in 2020, the business unit aligned its innovation activities
and resources to technology development and expanding its
partnerships with companies engaging with the three mega-
trends mobility, connectivity and sustainability.
In the field of mobility, Adhesive Technologies has developed
silicone-free, thermally conductive gap fillers, for example,
that enable the manufacture of high-performance and safe
battery systems for electric vehicles.
In the field of connectivity, we offer solutions for printed
electronics, including a wide range of inks and coating materials
for the manufacture of smart, networked surfaces. They are
used, for example, to equip homes with smart infrastructures,
to improve our lives through smart preventive healthcare, or
to provide solutions for smart mobility.
Sustainability continues to be a key driver of innovation in all
our markets. Additions to the Adhesive Technologies portfolio
of recyclable adhesives include, for example, hot and cold
sealable coatings for paper that can be used instead of plastic
to make sustainable packaging.
By rolling out a new global, harmonized data platform, Adhesive
Technologies can trawl the data for valuable information that
enables it to formulate innovative products and materials. The
data are collected along the entire product development chain.
Thus we support our scientists in their efforts to work more
efficiently and accelerate and improve their product innovation
processes. Our researchers use artificial intelligence and
machine learning to plan and conduct experiments, which
can shorten – in some cases significantly – the time to market
of a new product.
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At its Competence Centers in the various regions, the Beauty
Care business unit develops base technologies for product in-
novations in both its Hair Salon and Branded Consumer Goods
businesses. The teams develop both global product formulas
and localized products to meet very specific customer needs in
a particular region.
Products have been developed especially for sensitive scalps,
for example, with the launch taking place in 2020 under the
Gliss Kur and Syoss brands. These innovative products main-
tain the natural balance of the scalp microbiome.
We distribute reconstructed human tissue models and associ-
ated tests under our Phenion brand. We were able to expand our
test offerings this year with the development of epiCS® tech-
nology, a method for testing skin irritation and corrosion that is
recognized by the OECD, and which marks an important step
toward providing suitable in-vitro systems to test the safety of
cosmetic products and their ingredients.
We also expanded our portfolio of sustainable products. The
proportion of recycled material used in our packaging again
increased. One of the materials used is Social Plastic® – recy-
cled plastic that, in countries without a functioning recycling
infrastructure, is collected by people of otherwise very low in-
comes and then returned to the value chain rather than pass-
ing into oceans or lakes. We have been collaborating since
2017 with our partner Plastic Bank, which developed this recy-
cling concept. Henkel also introduced a technology for black
packaging in its Beauty Care business unit that uses an alter-
native dye to ensure error-free machine identification of the
material in recycling plants, thus enabling the full recycling of
this waste.
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In addition, the launch of solid shampoos in cardboard boxes
has served to reduce the use of plastic packaging.
In the formulation of our products, we are increasingly turn-
ing to natural raw materials. Their predominance in our
Nature Box brand has led to the line being awarded COSMOS
certification for natural cosmetics.
In 2020, research and development activities in the global net-
work of our Laundry & Home Care business unit continued
to focus on sustainable innovations in the fields of raw materi-
als, formulations, packaging concepts and production methods.
One example is the launch of our new Love Nature series. This
sustainable innovation underpins our ambition to overcome
environmental challenges in product development while still
accommodating economic and social imperatives. The prod-
uct portfolio includes detergents, bathroom and general
cleaners, and dishwashing products. The new product range
offers high-performance plant-based products in fully recycla-
ble packaging that can be refilled at designated stations and
thus help to reduce plastic waste. The environmental compati-
bility of the line has been recognized with award of the EU
Ecolabel seal of approval.
In addition, two further products – new Somat All-in-1 Pro
Nature automatic dishwashing tabs and Biff Pro Nature toilet
cleaner – have been added to the Pro Nature range in our
Home Care business, thus extending our portfolio of particu-
larly sustainable products. Somat All-in-1 Pro Nature consists
of 94 percent natural raw materials and is fragrance-free. Biff
Pro Nature WC cleaner consists of more than 90 percent natu-
ral raw materials. The bottle is made of 50 percent recycled
polyethylene, and the printed film cover can be removed to
make the packaging fully recyclable. Like the existing product
range, the new products have also been awarded the Blue
Angel certification.
The packaging development team has added new functions to
its Easy D4R software tool to support the development of sus-
tainable recyclable packaging solutions and facilitate im-
proved circular economy. The latest release from 2020 now en-
ables packaging developers to also analyze paper/cardboard,
glass, aluminum and tinplate packaging. This version was also
tested independently by the Fraunhofer Institute, which con-
firmed the tool’s reliability for assessing recyclability.
To boost the innovation process, we have launched a program to
prepare our employees for the skills they are going to need in
the future. With an increased regional focus, we are striving for
more synergies and strengthened processes, leveraging the
assistance available from within our regions in order to make
use of all insights and to promote proximity to the consumer.
Contributing to sustainability
Worldwide, growth and quality of life need to be decoupled
from resource use and emissions. Our contribution here lies in
the development of innovative products and processes that
consume ever less resources while offering the same or better
performance. It is therefore our ambition to ensure that all
new products contribute to sustainable development in at least
one of our six defined focal areas. These are systematically inte-
grated within our innovation process. Early on, our researchers
must demonstrate the specific advantages of their project in re-
gard to product performance, added value for our customers
and consumers, resource efficiency, and social criteria. We
thus aim to combine product performance and quality with
social and environmental responsibility. Our focus in this re-
spect is on three goals: The first is to continuously improve, in
collaboration with our suppliers, the sustainability profile of
the raw materials we use. The second is to help our customers
and consumers reduce their energy use and carbon dioxide
emissions through our innovations. The third is to ensure that
our packaging fulfills consumers’ performance expectations
yet uses the least possible quantity of materials and the most
sustainable solutions, and that it can be recycled once the
product has been used.
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Life cycle analyses, profiles of potential raw materials and
packaging materials, and our many years of experience in
sustainable development help us to identify and evaluate
improvement opportunities right from the start of the product
development process. A key tool in this respect is our Henkel
Sustainability#Master®. At the center of this evaluation system
is a matrix based on the individual steps in our value chain
and on our six focal areas. It shows which areas are most rele-
vant from a sustainability perspective, and allows a transparent
and quantifiable comparison to be made between two products
or processes.
Patents and registered designs
We hold a good 10,200 patents to protect our technologies
around the world. Approximately 5,300 patents are currently
pending. And we have registered more than 1,300 design
patents to protect our intellectual property.
Further information on our research and development activities
can be found on our website:
www.henkel.com/brands-and-businesses
Marketing and distribution
We put our customers and consumers at the center of what we
do. We offer them maximum benefit, quality and service, to-
gether with attractive innovations of our brands and technolo-
gies. In doing so, we create sustainable value.
Adhesive Technologies offers a broad and globally leading
portfolio of high-impact solutions in adhesives, sealants and
functional coatings. Ground-breaking innovations, tailor-
made products and strong brands are the basis for the success
of our business. Working in close partnership with our cus-
tomers, we combine our innovation and technology leader-
ship to create high-impact solutions that are essential compo-
nents in innumerable industrial and consumer goods around
the world.
We develop global and regional marketing strategies for our
brands and technologies. The measures derived from our plan-
ning are then implemented locally. Our branding strategy fo-
cuses consistently on our five technology-based brand clusters
for industrial customers and our four strong brands for con-
sumers.
Our customer base of around 130,000 direct industry and re-
tail customers is managed primarily by our own sales teams,
while our retail customers and distributors service the needs
of private users, craftsmen and smaller industrial customers.
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Our team of more than 6,500 technical experts fosters the
long-term relationships with our customers and partners from
more than 800 manufacturing sectors. In the process, we gain
an in-depth understanding of an exceptionally wide range of
applications across all markets. Since many of our solutions
and technologies are integrated into technically highly com-
plex processes and products, first-class technical customer
service and thorough user training worldwide are of key im-
portance.
To further expand our innovation leadership, we are currently
building a new global innovation center on the site of our cor-
porate headquarters in Düsseldorf where, starting in 2021, we
will be showcasing our entire range of technologies to custom-
ers and partners from around the globe. Around 500 of our re-
search and development experts will work with our customers
in the new innovation center to develop future-oriented solu-
tions and applications. We also focus our corporate venture
activities on new and scalable technologies to enhance our
portfolio and strengthen the innovative power of our material
science and digital business areas.
New digital solutions are integral to our effort to further im-
prove personal interaction with our customers. For our global
sales teams, we successfully completed the roll-out of an in-
novative cloud-based customer relationship management
(CRM) platform, making plans, data and communication ma-
terials available at any time. This enables us to respond even
faster and more efficiently to our customers’ needs and to lev-
erage synergies between our business areas.
During the COVID-19 pandemic and associated travel and con-
tact restrictions, we provided our customers with increased
online support in the year under review. We expanded digital
technologies that our technical customer services use to per-
form virtual remote analysis and offer solutions to customers
around the world. We also broadened our range of online
training courses and seminars and added new interactive for-
mats.
Not only in personal exchange but also in digital interaction,
we aim to ensure positive customer experiences at all
contact points around the globe. Our website www.henkel-
adhesives.com is tailored to the needs of our customers in a
wide range of industries, and is available in numerous lan-
guages. We are continuously expanding our digital ordering
platform, the Henkel Adhesives eShop, which is now used by
customers in more than 60 countries.
In addition to digital communications, in order to address
consumers and craftsmen, we make use of classic advertising
coupled with measures to attract target groups at the point of
sale. Leveraging our close customer relationships and our
comprehensive technical expertise, we continue to offer tai-
lored solutions and innovative branded products with sustain-
able added value for our customers.
The vision that drives the development of the products, ser-
vices and brands in our Beauty Care business unit is “Reveal
the World’s True Beauty.” We want to help our consumers look
better, feel better and reach out to one another. Consequently,
we are focusing specifically on further developing those mar-
kets, categories and brands in which we have strong expertise
and where we see clear growth opportunities. Our focused
portfolio of brands with unique, distinct brand equities forms
the basis for leading, consumer-relevant innovations offering
clear product benefits.
Staying true to our commitment to sustainability, we develop
innovations that not only add value for our consumers and
customers but also help us to meet our sustainability targets.
Nature Box, for example, is the world’s first cosmetics brand to
be sold in bottles consisting of 98 percent Social Plastic®, while
we package our Syoss hair care products in fully recyclable
black plastic bottles.
In 2020, moreover, we further improved our operating models to
ensure our competitiveness over the long term and to reflect
current circumstances, recent developments and major trends
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in our business. We develop our innovations and market
launch strategies in the regions for the regions, thus bringing
us closer to consumers and customers. Digital consumer re-
search tools, our Consumer Insight Center and joint develop-
ments with consumers and customers enable us to identify
global and regional trends early on and to respond quickly
and individually to them with innovative products. Corporate
venture capital investments and partnerships support our ef-
forts in the innovation process to identify and develop new
business models, marketing strategies and digital skills. In
addition, our newly established incubator – Fritz Beauty Lab –
allows us to test products quickly in the marketplace, to opti-
mize them and subsequently to rapidly scale them on the back
of our global business and brand management.
By making use of technologies of the future, such as the in-
ternet of things or augmented reality, we are also driving the
further development of our brands and products in the digital
environment. The COVID-19 pandemic and the resulting change
in consumer behavior have further underscored the high im-
portance of digital technologies and media, which is why we
have continued to roll out our digital hair colorant consultant
tool Choicify across regions and retail partners. As a recent de-
velopment, we are specifically targeting first-time users of at-
home hair colorants with our Schwarzkopf Color Lounge,
which offers tutorials, tips and live consultation sessions from
a central digital platform. SalonLab is our data-based net-
worked hair analysis tool that hair salon professionals can use
together with their stylists for personalized in-salon services
and individualized product recommendations for home use.
Advanced digitalization significantly increases media effi-
ciency when interacting with consumers. With personalized
one-on-one interactions, we approach the right target group
with the right message in the right environment, while also ac-
celerating efficient re-targeting with customized content. We
are capable of producing tailored digital content agilely in our
own content factories and of making it available to consumers
in real time.
We not only specifically choose which consumers to com-
municate with and by what means, but also which sales chan-
nels are of strategic relevance for us. We leverage our category
leadership positions both in brick-and-mortar retail and
e-commerce, also adding tangible value for our online cus-
tomers through our shopper expertise. We further strength-
ened our direct-to-consumer business by acquiring 75 percent
of the shares in a business comprising the three premium
brands HelloBody, Banana Beauty and Mermaid+Me. The
brands offer premium beauty care products in the Hair Care,
Body Care and Skin Care categories and reflect the strongly
growing importance of sustainability and clean beauty trends.
One-on-one interaction with consumers also gives us valuable
insights that help us to create promising innovations for the
entire retail business.
Having hosted more than 450 visits so far in our Beauty Care
Lighthouse – opened in Düsseldorf in 2012 and modernized in
2020 – we have been able to consistently intensify our cus-
tomer proximity. The Lighthouse offers our trade partners
from around the world an interactive experience of all our
competences in the field of Beauty Care, with a stronger fo-
cus on digitalization and sustainability. We are also commit-
ted to close cooperation with our customers in our Hair Salon
business. In our globally established Schwarzkopf Academies,
we offer hairdressers value-adding services in the form of
customer-focused seminars and continuous professional up-
skilling programs. Every year, more than half a million hair-
dressers around the globe avail themselves of these offerings.
Thanks to this regular and in-depth exchange with our salon
customers, we can stay relevant at all times. During the
COVID-19 pandemic, we also launched the international
HelpYourSalon initiative to help hairdressers retain their cus-
tomers in the short- and long-term.
In the Laundry & Home Care business unit, we develop
global marketing strategies and product innovations for our
strong laundry detergent and household cleaner brands. We
then adapt these strategies and innovations to regional
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consumer needs and market conditions, and implement them
at the local level. We thus ensure central, efficient manage-
ment of our brands aimed at strengthening their core equities
and responding to our consumers’ desire for both functional
benefits and emotional added value. We focus on an innova-
tion process that enables us to systematically identify global
consumer trends early on, especially through digital data ana-
lytics, and to translate them quickly into new products. In the
field of consumer research, for example, we analyze both
e-commerce data and social media signals as means of early
identification of consumer needs and thus a basis for develop-
ing new products and services.
This year, one focus area was that of expanding the infor-
mation content and the product portfolio of our hygiene and
disinfectant cleaners to meet the needs of our consumers dur-
ing the COVID-19 pandemic. For example, we updated the
cleaning instructions on our digital communication channels,
specified in more detail the effectiveness of existing products,
and quickly launched new cleaning products onto the market.
Digitalization is also of key importance in our other marketing
processes, as reflected in the ongoing implementation of digi-
tal transformation measures in the business unit. One exam-
ple of this is the growing use of modern technologies such as
the internet of things, or the integration of digital services –
such as our Persil Service – in the brand ecosystem. Further
points of digital contact with our consumers are provided by
the virtual assistants of our Persil brand, which provide users
with extensive advice on stain removal in digital channels such
as social media, websites or speech platforms, and our new
consumer platform – Ask Team Clean – in Germany, other
European countries and the USA. With these new technolo-
gies, we plan to drive the further development of our brands in
the digital world and thus increase the benefits for our con-
sumers. We also use corporate venture capital investments
and partnerships to help us identify and develop new business
models and to further drive our digitalization process.
We are convinced that the best way to solve the challenges of
the future is to work together with our customers, industrial
partners and other key stakeholders – which is also reflected
in the vision of the Laundry & Home Care business unit: “To-
gether Creating Clean Living.” Strategic partnerships with key
accounts, startups, industrial partners and influencers in the
areas of innovation, shopper marketing, digitalization includ-
ing smart home, e-commerce, sustainability, supply chain and
new technologies drive long-term profitable growth to the
benefit of everyone involved.
Surveys to examine digital shopping behaviors, for example,
are one way of gaining a better understanding of the various
shopping channels and their interaction, and of helping our
retail partners to create seamless shopping experiences. This
then serves as the basis for developing customized solutions
for the specific requirements of our partners, for identifying
shared value-adding potential, and for advising our partners
on the development of strategies across all the various sales
channels.
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The Global Experience Centers – our customer centers – in
Düsseldorf and Stamford, USA, help us to further deepen our
relationships with customers both in brick-and-mortar retail
and in the field of e-commerce. More than 340 customers have
so far visited the centers, using all their senses to explore the
latest trends, products and sustainability concepts in the field
of Laundry & Home Care.
The importance of sustainability in our relationships with
customers and consumers continues to grow in all three
business units. Our customers expect their suppliers – and
that includes Henkel – to ensure compliance with global envi-
ronmental, safety, and social standards. Our standards and
management systems, our many years of experience in sus-
tainability reporting, and excellent appraisals by external rat-
ing agencies all help us to convince our audience of our cre-
dentials in this domain. Moreover, the credible implementa-
tion of our sustainability strategy strengthens both our brands
and the reputation of our company in the marketplace. Sus-
tainability is firmly anchored in our new strategic framework
and we aim to strengthen it as a true differentiator. With our
experience in aligning our activities to sustainable develop-
ment, we are able to position ourselves as a leader in the field
and as a partner that is capable of providing its customers with
solutions that are fit for the future. Here again, we cooperate
closely with our customers in trade and industry.
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Henkel AG & Co. KGaA (condensed version
according to the German Commercial Code
[HGB])1
The annual financial statements of Henkel AG & Co. KGaA
have been prepared in accordance with the rules and regula-
tions of the German Commercial Code [HGB] and the German
Stock Corporation Act [AktG]. Deviations from the Interna-
tional Financial Reporting Standards (IFRSs) applicable to
the Group arise particularly with respect to the methods of
recognition and measurement of intangible assets, financial
instruments and provisions.
Operational activities
Henkel AG & Co. KGaA is operationally active in the three busi-
ness units Adhesive Technologies, Beauty Care and Laundry &
Home Care, as well as being the parent company of the Henkel
Group. As such it is responsible for defining and pursuing
Henkel’s corporate objectives and also for the management,
control and monitoring of Group-wide activities, including
risk management and the allocation of resources. As of year-
end 2020, some 8,400 people were employed at Henkel AG &
Co. KGaA.
The operating business of Henkel AG & Co. KGaA represents
only a portion of the business activity of the entire Henkel
Group, which is managed across the Group by the business
units, particularly on the basis of the financial performance
indicators: organic sales growth, adjusted return on sales
(adjusted EBIT margin), and growth in adjusted earnings per
preferred share at constant exchange rates. Only the Group ap-
proach can provide complete insight into these key financials
(see the discussion of the management system and performance
indicators applicable to the Henkel Group on page 101).
Unappropriated profit, the metric that determines a corpora-
tion’s ability to pay dividends, is a financial performance indi-
cator specifically of Henkel AG & Co. KGaA with its declared
aim to ensure the reasonable participation of its shareholders
in the net income of the Henkel Group.
The profit generated by Henkel AG & Co. KGaA is dictated by
its own operations, which are reflected in the sales figures,
among other metrics. Profit levels are also influenced to a
large degree by the operations of its subsidiaries. Income from
subsidiaries is a substantial contributor to the financial result
of Henkel AG & Co. KGaA.
Thus the financial situation of Henkel AG & Co. KGaA gener-
ally corresponds to that of the Group as a whole, which is
discussed in the section “Review of overall business perfor-
mance” on page 105.
1 The full financial statements of Henkel AG & Co. KGaA with the auditor’s unqualified opinion are filed with the commercial register and accessible on the internet at
www.henkel.com/reports.
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Results of operations
Sales and operating profit
At 3,576 million euros, sales of Henkel AG & Co. KGaA in 2020
declined compared to the previous year. Due to the difficult
general business environment caused by the COVID-19 pan-
demic, sales came in lower than the forecast of matching the
prior-year level. Thanks to an improved financial result, in par-
ticular, Henkel AG & Co. KGaA was nevertheless able to gener-
ate a significantly higher profit. The result was better than the
forecasted flat profit. The improved financial result was
mainly attributable to higher income from profit and loss
transfer agreements.
Condensed income statement in accordance with
the German Commercial Code [HGB]
in million euros
Sales
Cost of goods and services sold
Gross profit
Selling and general administrative
expenses
Research and development expenses
Other operating income/expenses
Operating profit
Financial result
Income before tax
Taxes on income
Income after tax/
Net income
Profit brought forward
Unappropriated profit
2019
3,625
-2,682
943
-894
-339
246
-44
991
947
-26
921
791
1,712
2020
3,576
-2,622
954
-970
-349
341
-24
1,153
1,129
-36
1,093
914
2,007
The Adhesive Technologies business unit achieved sales of
995 million euros in 2020 (previous year: 1,045 million euros).
The decrease year on year was due in particular to the signifi-
cant decline in industrial and automotive production in 2020.
The Beauty Care business unit achieved sales of 480 million
euros in 2020 (previous year: 498 million euros). Sales were
lower in particular due to declining consumer demand in
Germany during the COVID-19 pandemic and to the official
closure of hair salons.
The Laundry & Home Care business unit generated sales of
973 million euros in 2020, which – despite the difficult market
conditions prevailing – was on a par with the figure for 2019
(previous year: 972 million euros).
Sales in the Corporate segment increased from 1,110 million
euros in 2019 to 1,128 million euros in 2020, due primarily to
higher income from services to affiliated companies.
The operating profit of Henkel AG & Co. KGaA improved year
on year by 20 million euros to -24 million euros, mainly due to
an improved balance of other operating income and expenses,
which was the result, particularly, of income from affiliates
that related to prior periods.
Expense items
Compared to 2019, cost of goods and services sold decreased
by 60 million euros to 2,622 million euros, due particularly to
lower expenses from intra-Group purchases of products and
services. Gross margin increased by 0.7 percentage points to
26.7 percent.
At 690 million euros, selling and distribution expenses were
above the prior-year figure of 616 million euros. The propor-
tion of sales was 19.3 percent, up 2.3 percentage points com-
pared to the level of 2019. The increase was mainly the result
of higher investments in advertising.
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Compared to 2019, general administrative expenses increased
by 2 million euros to 280 million euros. Their ratio to sales in-
creased by 0.1 percentage points to 7.8 percent.
Expenditures for research and development in the reporting
period increased by 10 million euros to 349 million euros. The
proportion of sales increased accordingly compared to 2019,
by 0.4 percentage points to 9.8 percent. The higher costs were
partly related to increased capital expenditures on digitalization.
Financial result
The financial result increased from 991 million euros in 2019
to 1,153 million euros in 2020, mainly as a result of higher
income from profit and loss transfer agreements and lower
impairments of financial assets.
Taxes on income
Taxes on income amounted to -36 million euros in 2020, com-
pared to -26 million euros in 2019.
On average, approximately 1,150 employees worked in research
and development at Henkel AG & Co. KGaA in 2020, supporting
the development of innovative solutions for global application.
The activities are managed globally by the business units. For
an overview of the research and development activities, please
refer to the information relating to the Henkel Group on pages
136 to 141.
Net income and unappropriated profit
Net income amounted to 1,093 million euros and was there-
fore above the prior-year result of 921 million euros. The in-
crease was mainly attributable to the higher financial result.
Unappropriated profit increased year on year by 295 million
euros to 2,007 million euros.
Restructuring expenses of 80 million euros, included in the
expense items mentioned above, came in higher versus 2019
(53 million euros).
Other operating income/expenses
In 2020, the balance of other operating income and expenses
(other operating result), at 341 million euros, was higher com-
pared to the prior-year period (246 million euros).
Other operating income increased in 2020 versus the previous
year by 72 million euros to 420 million euros, mainly due to
cost reimbursements from foreign subsidiaries that relate to
prior periods.
At 79 million euros, other operating expenses in 2020 were be-
low the prior-year figure (2019: 102 million euros). The higher
prior-year figure was due primarily to a credit note to a foreign
subsidiary that related to a prior period.
Condensed balance sheet in accordance with
the German Commercial Code [HGB]
in million euros
Intangible assets and property,
plant and equipment
Financial assets
Non-current assets
Inventories
Receivables and miscellaneous assets
Marketable securities
Liquid funds
Current assets
Prepaid expenses
Assets arising from the overfunding
of pension obligations
Total assets
Equity
Special accounts with reserve element
Provisions
Liabilities/deferred income
Total equity and liabilities
Dec. 31, 2019 Dec. 31, 2020
1,397
11,405
12,802
15
3,037
4
500
3,556
44
303
16,705
7,084
75
542
9,004
16,705
1,393
12,632
14,024
15
2,014
4
883
2,917
28
333
17,301
7,386
70
719
9,125
17,301
H e n k e l A n n u a l R e p o r t 2 0 2 0
149
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Net assets and financial position
As of December 31, 2020, the total assets of Henkel AG & Co.
KGaA increased compared to year-end 2019 by 596 million euros
to 17,301 million euros.
Non-current assets increased to 14,024 million euros, a rise of
1,222 million euros compared to 2019 attributable to changes
in financial assets. These were higher as a result, particularly,
of a financial receivable being used as a contribution in kind at
a German subsidiary.
Fiscal 2020 also saw substantial capital expenditures on non-
current assets relating to the further expansion of the central
research center of the Adhesive Technologies business unit at
the Düsseldorf site, as well as to numerous replacement and
expansion investments.
Current assets declined in 2020 from 3,556 million euros to
2,917 million euros, due to lower receivables from affiliated
companies. The decrease was partially offset by the increase in
liquid funds.
At 333 million euros, the surplus on the assets side arising
primarily from the overfunding of pension obligations was
higher year on year. The increase was mainly due to the posi-
tive performance of the pension plan assets.
Equity increased from 7,084 million euros to 7,386 million
euros. The equity ratio increased by 0.3 percentage points to
42.7 percent.
Provisions rose by 177 million euros to 719 million euros, due
particularly to higher sales and personnel provisions. The bal-
ance of pension obligations and plan assets is reported in as-
sets due to overfunding.
For details of issued capital and treasury stock, please refer to
the disclosures in the notes to the statutory financial state-
ments of Henkel AG & Co. KGaA.
Year on year, liabilities and deferred income increased overall
by 121 million euros to 9,125 million euros in 2020, due partic-
ularly to an increase in commercial paper borrowings. The
effect was partially offset by lower financial liabilities to affili-
ated companies. As the parent company, Henkel AG & Co. KGaA
manages the Group’s cash pool. The use of cash pools allows
largely centralized management of the Group’s liquidity, thus
facilitating a high degree of financial flexibility.
On the reporting date, Henkel AG & Co. KGaA had eight bonds
on its books with a total volume of 2,423 million euros. They
include a euro bond with a nominal volume of 700 million
euros, four British pound bonds with a total nominal volume
of 1,150 British pounds, one Swiss franc bond with a nominal
volume of 330 million Swiss francs, and two waste reduction
bonds with nominal volumes of 70 million US dollars and
25 million euros respectively. A 600 million US dollar bond
was redeemed in 2020.
For an overview of the financing and capital management of
Henkel AG & Co. KGaA, please refer to the information relating
to the Henkel Group on pages 126 and 127.
H e n k e l A n n u a l R e p o r t 2 0 2 0
1 50
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Risks and opportunities
The business performance of Henkel AG & Co. KGaA is essen-
tially subject to the same risks and opportunities as that of the
Henkel Group. With respect to the risks affecting its subsidiar-
ies, Henkel AG & Co. KGaA is generally exposed in proportion
to its shareholding in each case.
Due to the different discount rates for pension obligations un-
der the German Commercial Code [HGB] and IFRS, the conclu-
sion drawn from the risk assessment for the separate financial
statements of Henkel AG & Co. KGaA differs from that of the
Group. We assess the potential financial impact of this risk for
Henkel AG & Co. KGaA as “major.”
Additional information regarding risks and opportunities and
the internal control and risk management system can be
found on the following pages 151 to 153.
Forecast
The performance of Henkel AG & Co. KGaA in its function as
an operating holding company is influenced primarily by the
development and dividend distributions of the companies in
which it has shareholdings.
We expect sales in 2021 to be on a par with, or slightly above,
the figure for 2020. The performance reported for the Group
also impacts Henkel AG & Co. KGaA through dividend payments
from subsidiaries. Assuming steady development of the finan-
cial result, we expect the unappropriated profit generated in
2021 by Henkel AG & Co. KGaA to be flat or slightly higher year
on year. This will enable our shareholders to participate to a
reasonable extent in the Group’s net income, with retained
earnings also available for utilization if necessary.
The forecast for the Henkel Group can be found on pages 166
to 168.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Risks and opportunities report
Risks and opportunities
In the pursuit of our business activities, Henkel is exposed to
multiple risks inherent in the global market economy. We
deploy an array of effective monitoring and control systems
aligned to identifying risks at an early stage, evaluating the ex-
posure, and introducing effective countermeasures. We have
incorporated these instruments within a risk management
system as described below.
Entrepreneurial activity also involves identifying and exploit-
ing opportunities as means of securing and extending the cor-
poration’s competitiveness. The reporting aspect of our risk
management system, however, does not encompass entrepre-
neurial opportunities. Early and regular identification, analy-
sis and exploitation of opportunities are performed at the
Group level and within the individual business units. This is
a fundamental component of our strategy. We perform in-depth
analysis of the markets and our competitors, and study the
relevant cost variables and key success factors.
Risk management system
The risk management system at Henkel is integrated into the
comprehensive planning, controlling, and reporting systems
used in the subsidiaries, in the business units, and at Group
level. Our early warning system and Internal Audit function
are also important components of our risk management system.
Furthermore, within the corporate governance framework, our
internal control and compliance management systems support
our risk management capability. The risk reporting system
encompasses the systematic identification, evaluation, docu-
mentation and communication of risks. We have defined the
principles, processes and responsibilities relating to risk man-
agement in a corporate standard that is binding on the Henkel
Group. With the continuous development of our corporate
standards and systems, we take into account updated findings.
Within our risk strategy framework, the assumption of calcu-
lated risk is an intrinsic part of our business. However, risks
that endanger the existence of the corporation must be
avoided. When it is not possible to avoid these critical risks,
they must be reduced or transferred, for example through
insurance. Risks are controlled and monitored at the level of
the subsidiaries, the business units, and the Group. Risk man-
agement is thus performed with a holistic, integrative approach
to the systematic handling of risks.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
We understand risks as potential future developments or
events that could lead to negative deviations from our guidance.
Risks with a probability of occurrence of over 50 percent are
taken into account in our guidance and short-term planning.
As a rule, we estimate risks for the one-year forecast period.
The annual risk reporting process begins with identifying ma-
terial risks using checklists based on defined operating (for
example procurement and production) and functional (for ex-
ample information technology and human resources) risk cat-
egories. We evaluate the risks in a two-stage process according
to the probability of occurrence and potential loss. Included in
the risk report are risks with a loss potential of at least 1 million
euros or 10 percent of the net external sales of a country, where
the probability of occurrence is considered greater than zero.
The first step entails determining gross risk to the extent that
this is possible. We then calculate the net risk, taking counter-
measures into account. Initially, risks are compiled on a de-
centralized, per-country basis, with the assistance of regional
coordinators. The locally collated risks are then analyzed by
experts in the business units and corporate functions. In par-
ticular areas such as Corporate Treasury, risks are determined
with the support of sensitivity analyses including value-at-risk
computations. Risk analyses are then prepared for the respec-
tive executive committees of the business units and corporate
functions, and finally assigned to an area-specific risk inven-
tory. The risk situation is subsequently reported to our Com-
pliance & Risk Committee, the Management Board and the
various oversight boards. Material unforeseen changes are
reported immediately to the CFO and the Compliance & Risk
Committee. Corporate Accounting is responsible for coordi-
nating the overall process and analyzing the inventoried
exposures.
The risk reporting process is supported by internet-based soft-
ware which ensures transparent communication throughout
the entire Group. Our Internal Audit function regularly re-
views the quality and efficiency of our risk management sys-
tem. Within the framework of the 2020 audit of our annual
financial statements, our external auditor examined the struc-
ture and function of our risk early warning system in accord-
ance with Section 317 (4) German Commercial Code [HGB], and
confirmed its compliance.
The following describes the main features of the internal con-
trol and risk management system in relation to our accounting
processes, in accordance with Section 315 (4) HGB. Corre-
sponding with the definition of our risk management system,
the objective of our accounting processes lies in the identifica-
tion, evaluation and management of all risks that jeopardize
the regulatory preparation of our annual and consolidated
financial statements. Accordingly, the internal control system’s
function is to implement relevant principles, procedures and
controls so as to ensure the financial statement closing pro-
cess is regulatory compliant. Within the organization of the
internal control system, the Management Board assumes over-
riding responsibility at Group level. The duly coordinated sub-
systems of the internal control system lie within the responsi-
bility of the Corporate Accounting, Controlling, Corporate
Treasury, Compliance and Regional Finance functions. Within
these functions, there are a number of integrated monitoring
and control levels. These are assessed by regular and compre-
hensive effectiveness tests performed by our Internal Audit
function. Of the multifaceted control processes incorporated
into the accounting process, several are important to highlight.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
The basis for all our accounting processes is provided by
our corporate standard “Accounting,” which contains detailed
accounting and reporting instructions covering all material cir-
cumstances, including clear procedures for inventory valuation
or how transfer prices applicable for intra-group transactions
should be determined. This corporate standard is binding on
the entire Group and is regularly updated and approved by the
CFO. The local Presidents and Heads of Finance of all consoli-
dated subsidiaries must confirm their compliance with this
corporate standard on an annual basis.
Further globally binding procedural instructions affecting our
accounting practice are contained in our corporate standards
“Treasury” and “Investments.” Through appropriate organiza-
tional measures in conjunction with restrictive access to our
information systems, we ensure segregation of duties in our
accounting systems between transaction entry on the one
hand, and checking and approval on the other. Documentation
relating to the operational accounting and closing processes
ensures that important tasks – such as the reconciliation of
receivables and payables on the basis of account balance
confirmations – are clearly assigned. Additionally, binding
authorization regulations exist governing the approval of con-
tracts, credit notes and the like, with strict adherence to the
principle of dual control as a mandatory requirement. This is
also stipulated in our Group-wide corporate standards.
The significant risks for Henkel and the corresponding con-
trols with respect to the regulatory preparation of our annual
and consolidated financial statements are collated in a central
documentation pack. This documentation is reviewed and
updated annually by the respective process owners. The estab-
lished systems are also regularly reviewed to determine their
improvement and optimization potential. We consider these
systems to be appropriate and effective.
The accounting activities for subsidiaries included in the con-
solidated financial statements are performed either locally by
the subsidiary or through a Shared Service Center, taking the
aforementioned corporate standards into account. The indi-
vidual subsidiaries’ financial statements are transferred to our
central consolidation system and checked at corporate level
for correctness. After all consolidation steps have been com-
pleted, the consolidated financial statements are prepared
by Corporate Accounting in consultation with the specialist
departments. Preparation of the combined management report
is coordinated by Investor Relations in cooperation with each
business unit and corporate function. The Management Board
then compiles the consolidated financial statements and an-
nual financial statements of Henkel AG & Co. KGaA, and the
combined management report for Henkel AG & Co. KGaA and
the Group, and subsequently presents these documents to the
Supervisory Board for approval.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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The Company
Shares and bonds
Corporate governance
Major risk categories
Risks are presented from a net perspective, i.e. with their
respective mitigation measures taken into account.
Combined management report
Consolidated financial statements
Overview of major risk categories
Risk category
Operating risks
Probability
Potential financial impact
Further information
Credits
Contacts
Financial calendar
Procurement market risks
Production risks
Macroeconomic and sector-specific risks
Moderate
Moderate
High
Functional risks
Financial risks
Credit risk
Liquidity risk
Currency risk
Interest rate risk
Risks from pension obligations
Risks from pension obligations
(impact on equity)
Political environment risks
Legal risks
IT and cyber risks
Personnel risks
Risks in connection with the company’s
reputation and its brands
Environmental, safety and health risks
Business strategy risks
Low
Low
High
Moderate
Moderate
High
Low
Low
Low
Moderate
Low
Moderate
Moderate
Major
Major
Major
Major
Minor
Major
Minor
Minor
Major
Major
Major
Major
Minor
Major
Major
Moderate
H e n k e l A n n u a l R e p o r t 2 0 2 0
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The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Classification of risks in ascending order
Probability
Low
Moderate
High
Potential financial impact
Minor
Moderate
Major
Operating risks
1–9%
10–24%
≥ 25%
1–49 million euros
50–99 million euros
≥ 100 million euros
PPrrooccuurreemmeenntt mmaarrkkeett rriisskkss
Description of risk: We expect year-on-year price increases
for direct materials in our procurement markets to be in the
low to medium single-digit range in 2021. Due to geopolitical,
global economic, and climatic uncertainties, we expect prices
to fluctuate in the course of the year. This uncertainty is being
exacerbated in particular by the COVID-19 pandemic and the
associated impacts on the global economy. This may lead to
raw material price trends that are unfavorable for Henkel but
cannot always be passed on in full. We therefore see risks aris-
ing beyond the forecasted increase in the low to medium sin-
gle-digit range in relation to important raw materials, packag-
ing materials and purchased goods.
The segments in the industrial goods sector are affected to a
greater extent by price risks inherent in the performance of the
global raw materials markets than the individual segments in
the consumer goods sector. Additional price and supply risks
exist due to possible demand- or production-related short-
ages in the procurement markets.
Furthermore, the COVID-19 pandemic and persisting risks sur-
rounding the world economy, geopolitics and the climate can
be expected to cause considerable volatility and uncertainty,
and might result in rising material prices and supply shortages.
Measures: The measures taken include active supplier portfolio
management through our globally engaged, cross-divisional
sourcing capability, together with strategies aimed at securing
price and volume both through contracts and, where appropriate
and possible, through financial hedging instruments. Further-
more, we work in interdisciplinary teams within Research and
Development, Supply Chain Management and Purchasing on
devising alternative formulations and packaging forms so as
to be able to respond flexibly to unforeseen fluctuations in raw
material prices. We also avoid becoming dependent on individ-
ual suppliers to better secure the constant supply of the goods
and services that we require. Finally, close collaboration with
our strategic suppliers plays an exceptionally important role in
our risk management. Further details regarding the assessment
of supplier financial stability can be found in the section on
“Procurement” on pages 132 and 133. The basis for our risk
management approach is provided by a comprehensive pro-
curement information system aimed at ensuring permanent
transparency with respect to our purchasing volumes.
Impact: Moderate probability rating, possible major impact
on our earnings guidance.
PPrroodduuccttiioonn rriisskkss
Description of risk: Henkel faces production risks in the
event of low capacity utilization due to volume decreases and
unplanned operational interruptions, especially at our single-
source sites. In light of the COVID-19 pandemic, risks also
might occur from disruptions to our supply chains, regional
and national restrictions on production workflows or reduced
workforce availability.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Measures: We can offset the negative effects of possible
production outages through flexible production control and,
where economically viable, insurance policies. Such production
risks are minimized by ensuring high employee qualification,
clearly defined safety and hygiene standards, and regular plant
and equipment maintenance. Capital expenditure decisions
on property, plant and equipment are made in accordance with
defined, differentiated responsibility procedures and approval
processes. They incorporate all relevant specialist functions
and are regulated in an internal corporate standard. Investments
are analyzed in advance on the basis of detailed risk aspects.
Further audits accompanying projects provide the foundation
for project management and risk reduction.
Impact: Moderate probability rating, possible major impact
on our earnings guidance.
MMaaccrrooeeccoonnoommiicc aanndd sseeccttoorr--ssppeecciiffiicc rriisskkss
Description of risk: We remain exposed to macroeconomic
risks emanating from the uncertainties of the current geo-
political and economic environment. Extensive risk exists, in
particular, due to the COVID-19 pandemic and the associated
impacts on the world economy. This could mean risks for our
business, especially in connection with any long-term adverse
effect on economic development. A slowdown in production
of our industrial customers could lead to less demand for our
solutions. In our consumer businesses, lower volumes due to
reduced demand could pose risks for our sales, as could changes
in purchasing behavior. We also see geopolitical risk arising,
especially in connection with a further increase in the number
of conflict zones. The departure of the United Kingdom from
the European Union (Brexit) poses risks to our business, for
example through a potential weakening of the economy.
The impacts of the global trade conflicts are also jeopardizing
the global economic climate. A decline in the macroeconomic
environment poses a risk to the industrial sector in particular.
A downturn in consumer spending is relevant for the con-
sumer goods segments. A further significant risk is posed by an
increasingly competitive environment, as this could result in
stronger price and promotional pressures in the consumer goods
sector. As consolidation in the retail sector continues and private
labels occupy a growing share of the market, crowding-out com-
petition in the consumer goods sector could further intensify.
The risk of product substitution inherent in this could, in
principle, affect all business units. Technological change asso-
ciated with digitalization may involve risks for the success of
our products and processes.
Measures: Our focus is on continuously monitoring the market
environment to enable flexible adjustment of our portfolio
and our cost structures to dynamic trends. In addition, we
concentrate on strengthening our brands (see separate risk
description on page 162) and on consistently driving the de-
velopment of further innovations. We consider innovative
products and processes to be a significant success factor for
our company, enabling us to differentiate ourselves from the
competition. We also pursue specific marketing and sales ini-
tiatives, for example advertising and promotional activities.
Another central aspect is the advancement of digitalization,
for example through the targeted marketing of our products
via a dedicated eCommerce platform for our industrial cus-
tomers. In our consumer businesses, we are also striving to
strengthen and expand our share of eCommerce and direct-to-
consumer business (for further details, please refer to “Marketing
and distribution” on pages 141 to 145). In addition, we have the
capability to react quickly to potential sales declines through
flexible production control.
Impact: High probability rating, possible major impact on
our sales and earnings guidance.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
receivables and obligations, and collateral agreements are
entered into with key banking partners.
Impact: Low probability rating, possible major impact on our
earnings guidance.
LLiiqquuiiddiittyy rriisskkss
Description of risk: Liquidity risk is defined as the risk of an
entity failing to meet its financial obligations at any given
time.
Measures: We mitigate this risk through our long-term manage-
ment strategy of using financing instruments by issuing bonds
with variously staggered terms up to six years, and in different
currencies. Supported by our existing debt issuance program,
this is also possible on a short-term and flexible basis. Our
credit rating is regularly assessed by the rating agencies
Standard & Poor’s and Moody’s. We intend to maintain our
ratings within a “single A” target corridor. We predominantly
invest cash in financial assets traded in a liquid market in order
to ensure that they can be sold at any time to receive liquid funds
or to manage liquidity in the short term. We also use our US dol-
lar and euro commercial paper program for short-term liquidity
management. In order to ensure the financial flexibility of Henkel
at any time, the liquidity within the Group is largely centralized
and managed through the use of cash pools. In addition, the
Henkel Group has at its disposal confirmed credit lines.
Impact: Low probability rating, possible minor impact on
our earnings guidance.
Functional risks
FFiinnaanncciiaall rriisskkss
CCrreeddiitt rriisskkss
Description of risk: Credit risk is the risk of a debtor failing to
meet interest and redemption payment obligations in full and
on time. Henkel Group is exposed in particular to the risk of
default by customers in the course of its operating activities
and to the risk of non-performance by a contracting party in
the context of financial investments. With general economic
conditions deteriorating as a result of the COVID-19 pandemic,
the risk of defaults – particularly with regard to trade accounts
receivable – is increasing.
Measures: In order to reduce the credit risk resulting from the
operating activities of the Henkel Group, the default risks that
our customers might represent are permanently monitored by
our credit risk management, which operates on the basis of a
globally valid Credit Policy. In addition to minimizing losses
on receivables through the application of fixed credit limits,
use of customer-specific creditworthiness analyses, risk
classifications, and continuous monitoring of risks associated
with the receivables concerned, we also implement hedging
measures both globally and also selectively on a country- and
customer-specific basis. Risk mitigating instruments include
credit insurance cover such as global excess-of-loss policies,
letters of credit for the export business, plus for example sure-
ties, guarantees and cover notes.
Default risks from financial investments are mitigated by
selecting counterparties with good credit ratings and by capping
investment amounts. Credit ratings and investment limits
are continuously monitored so as to enable intervention in the
event that fixed thresholds for ratings and credit default swaps
(CDS) are exceeded. Our financial investments are broadly diver-
sified across various counterparties and various financial assets.
In addition, netting arrangements are in place to offset bilateral
H e n k e l A n n u a l R e p o r t 2 0 2 0
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The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
CCuurrrreennccyy rriisskkss
Description of risk: Because of the internationality of our
business, we are exposed to two types of currency risk. Trans-
action risks arise from possible exchange rate fluctuations
causing changes in the value of future foreign currency cash
flows. Translation risks arise from changes caused by foreign
exchange fluctuations to items on the statement of financial
position and the income statement of a subsidiary, and the
effect these changes have on the translation of individual
company financial statements into Group currency.
Measures: Transaction risks arising from our operating business
are partially avoided by the fact that we manufacture our
products in those countries in which they are sold. Residual
transaction risks on the operating side are proactively managed
by Corporate Treasury. This includes the ongoing assessment
of the specific currency risk and the development of appropriate
hedging strategies. The objective of currency hedging is to fix
prices based on hedging rates so that we are protected from
future adverse fluctuations in exchange rates. Because we limit
our potential losses, any negative impact on profits is restricted.
The transaction risk arising from major financial payables and
receivables is extensively hedged. In order to manage these risks,
we primarily utilize forward exchange contracts and cross-
currency interest rate swaps. The risks arising from the trans-
lation of the earnings results of subsidiaries in foreign currencies
and from net investments in foreign entities are only hedged
in exceptional cases.
Impact: High probability rating, possible major impact on
our earnings guidance.
IInntteerreesstt rraattee rriisskkss
Description of risk: Interest rate risk encompasses those
potentially negative influences on profits, equity or cash flow
in current or future reporting periods arising from changes in
interest rates. The cash funding and cash investment activities
of the Henkel Group mainly take place on international money
and capital markets. The resulting financial liabilities and our
cash deposits are exposed to the risk of changing interest
rates.
Measures: The aim of our centralized interest rate manage-
ment is to reduce the risk by choosing fixed or floating interest
rate contracts and by using interest rate derivatives. Henkel’s
interest management strategy is essentially aligned to optimiz-
ing the net interest result for the Group. The decisions made in
interest management relate to the bonds, liabilities to banks
and commercial paper put in place to secure Group liquidity,
the securities and time deposits used for cash investments,
and other interest-bearing financial instruments. Depending
on forecasts with respect to interest rate developments, Henkel
enters into derivative financial instruments, primarily interest
rate swaps, in order to optimize the interest rate lock-down
structure.
Impact: Moderate probability rating, possible minor impact
on our earnings guidance.
RRiisskkss ffrroomm ppeennssiioonn oobblliiggaattiioonnss
Description of risk: Our pension obligations are exposed to
various market risks. The risks relate primarily to changes in
market interest rates, inflation, and life expectancy. The risks
to which the plan assets are exposed are general market price
risks.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Measures: We counteract these risks by managing the funding
level and the structure of pension commitments. Our internal
pension risk management monitors the risks of all pension
plans Group-wide in compliance with local legal regulations.
As part of the monitoring process, guidelines on the control
and management of risks are adopted and continuously devel-
oped; these guidelines are mainly targeted at funding levels,
portfolio structure and actuarial assumptions. The funds
earmarked for covering pension obligations are invested in
line with an asset-liability study based on the respective ex-
pected cash flows of the country-specific pension obligations.
The objective of the financing strategy within the Group is to
ensure that plan assets cover 90 to 100 percent of the present
value of the funded pension obligations.
Impact: Moderate probability rating, possible minor impact
on our earnings guidance; high probability rating, possible
major impact on our equity.
PPoolliittiiccaall eennvviirroonnmmeenntt rriisskkss
Description of risk: As a globally operating Group, Henkel
is exposed to the risk of major political incidents in certain
countries resulting in a loss of assets. They could include the
nationalization or dispossession of assets, bans on transfers
of capital, state institutions defaulting on accounts receivable,
war, terrorist attacks or other forms of upheaval.
Measures: We closely monitor the countries concerned, taking
external ratings into account, and ensure risk-optimized funding
and the repatriation of excess liquidity. Planned investments
are also analyzed with regard to potential political risks, and
appropriate requirements specified for the return on invest-
ment. If a major political incident occurs, early and targeted risk
analysis is performed and mitigation measures are put in place.
Impact: Low probability rating, possible major impact on
our earnings guidance.
LLeeggaall aanndd rreegguullaattoorryy rriisskkss
Description of risk: As a globally active corporation we are
exposed, in the course of our ordinary business activities, to a
range of risks relating to litigations and other actions, including
government agency proceedings in which we are currently in-
volved or may become involved in the future. These risks arise,
in particular, in the fields of product liability, product deficiency,
competition and cartel law, infringement of proprietary rights,
patent law, tax law, environmental protection and legacy re-
mediation. We cannot rule out the likelihood of negative
rulings on current litigations and further litigations being
initiated in the future. Legal uncertainty in some regions
could also limit our ability to assert our rights.
Our business is subject to various national rules and regulations
and – within the European Union (EU) – increasingly to harmo-
nized laws applicable throughout the EU. In addition, some of
our operations are subject to rules and regulations derived
from approvals, licenses, certificates or permits. Our manu-
facturing operations are bound by rules and regulations with
respect to the registration, evaluation, usage, storage, transpor-
tation and handling of certain substances and also in relation
to emissions, wastewater, effluent and other waste. The con-
struction and operation of production facilities and other plant
and infrastructure are governed by framework rules and
regulations, including those relating to legacy remediation.
Product-specific regulations of relevance to us relate in particular
to ingredients and input materials, safety in manufacturing,
the handling of products and their contents, and the packaging
and marketing of these items. The control mechanisms include
statutory material-related regulations, usage prohibitions or
restrictions, procedural requirements (test and inspection,
identification marking, provision of warning labels, etc.), and
product liability law. Violation of such regulations may lead to
legal proceedings or compromise our future business activities.
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Amendments to the aforementioned regulations and further
changes to the regulatory environment in our relevant markets
could influence our business activities and thus adversely affect
our assets, financial position and results of operations. Such
changes might involve import and export controls, customs
or other trade regulations, or pricing and foreign exchange
restrictions.
Equally, as a globally active company, we maintain business
relations with customers in countries that are subject to
export control legislation, embargoes, economic sanctions or
other forms of trade restriction. Changes to these regulations,
new or extended sanctions, or corresponding initiatives by in-
stitutional investors or non-governmental organizations may
result in restrictions being imposed on our business activities
in these countries or, indirectly, in other countries, or may
prevent us from acquiring or keeping customers and suppliers.
Measures: Our internal standards, guidelines, codes of conduct,
and training measures are geared to ensuring compliance with
the aforementioned statutory requirements and, for example,
safeguarding our manufacturing facilities and products. These
precepts have also been incorporated into our management
systems and are regularly reviewed. This includes the early
monitoring and evaluation of relevant statutory and regula-
tory requirements and changes.
Ensuring compliance with laws and regulations is an integral
component of our business processes. This includes the early
monitoring and evaluation of relevant statutory and regula-
tory requirements and changes. Henkel has further estab-
lished a Group-wide compliance organization with locally and
regionally responsible compliance officers led by a globally re-
sponsible General Counsel & Chief Compliance Officer (details
can be found in the corporate governance section on pages 31
to 52). In addition, our corporate legal department maintains
constant contact with local counsel. Current proceedings and
potential risks are recorded in a separate reporting system. For
certain legal risks, we have concluded insurance policies that
are standard for the industry and that we consider to be appro-
priate. However, the outcome of proceedings is inherently
difficult to foresee, especially in cases in which the claimant is
seeking substantial or unspecified damages. In view of this,
we are unable to predict what obligations may arise from such
litigations. Consequently, major losses may result from litiga-
tions and proceedings that are not covered by our insurance
policies or provisions. Potential reputational damage is not
covered by insurance nor is there any guarantee that Henkel
will acquire adequate insurance cover at reasonable terms and
conditions in future.
Impact: Low probability rating, possible major impact on our
earnings guidance.
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IITT aanndd ccyybbeerr rriisskkss
Description of risk: Information technology (IT) has strategic
significance for Henkel. Our business processes rely to a great
extent on internal and external IT services, applications, net-
works, and infrastructure systems. The failure or disruption
of key IT services and the manipulation or loss of data – as a
result of unauthorized access, for example – constitute material
risks for Henkel. We analyze different potential in-house and
external perpetrators and types of threat, such as intent, error
or natural phenomena. The failure or disruption of important
IT services can impair critical business processes. The loss of
confidential data, for example formulations, customer infor-
mation or price lists, could put us at a disadvantage with our
competitors or give rise to legal consequences. Henkel’s repu-
tation could also be damaged by such loss.
Measures: The technical and organizational safeguards for
assuring information and cyber security at Henkel are based
on the international standards ISO 27001 and 27002. Major
components include the classification of information and IT
applications with respect to confidentiality, availability, integrity
and data protection requirements, as well as commensurate
measures for mitigating risk. In addition, Henkel has put tech-
nical and organizational measures in place to prevent, discover
and defeat cyber attacks. Henkel maintains regular contact
with other major corporations, associations and specialized
service providers to enable the early detection of threats and
implementation of effective countermeasures.
Our critical business processes operate through redundantly
configured systems designed for high availability. Our data
backup procedures reflect best engineering practice. We regu-
larly review our restore and disaster recovery processes.
Access to buildings and areas containing IT systems, as well as
user authorizations for our information systems, are limited
to the minimum level necessary. For critical business processes,
the required segregation of duties is enforced by technological
means.
Our IT services are protected against unauthorized external
access and are consistently kept up to date. We develop our
systems using proven project management and program modi-
fication procedures.
We instruct and train our employees in the proper and secure
use and operation of information systems as part of their regular
duties. We require our IT service providers to maintain a com-
parable level of IT and cyber security.
The implementation of our security measures is continually
reviewed by our Internal Audit function, other internal
departments, and independent third parties.
Impact: Low probability rating, possible major impact on our
earnings guidance.
PPeerrssoonnnneell rriisskkss
Description of risk: The motivation and the qualification of
our employees are key drivers of Henkel’s business success.
Therefore, it is strategically important to attract highly qualified
professionals and executives and ensure they stay with the
company. When it comes to selecting and recruiting talent, we
are facing increased global competition for the best candidates
and we are noticing the effects of demographic change in
many of our markets. These developments expose us to the
risk of losing valuable employees or of being unable to recruit
relevant qualified professionals and executives.
Measures: We combat the risk of losing valuable employees
through specifically devised personnel development programs
and incentive systems. Supporting this is an established, thor-
ough annual review process from which we derive individually
tailored and future-viable qualification programs as well as
performance-related remuneration systems. The Leadership
Commitments form the focal point of our efforts to advance
our leadership culture and to drive our cultural change. Further
areas of our HR management focus include a global health
management system and support for flexible work models
to ensure better work-life flexibility.
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We reduce the risk of not being able to recruit qualified profes-
sionals and executives by expanding our employer reputation
initiatives and through targeted cooperation with colleges
and universities in all regions where we conduct business. In
addition, talent is targeted through social media with authentic
posts relating to the day-to-day activities and experiences of
our employees. Our attractiveness as an employer is reinforced
by our focus on promoting talent and specialized development
programs.
Measures: We minimize these risks through the measures
described under legal and regulatory risks (see pages 159 and
160). These are designed to ensure that our production facilities
and products are safe. We also pursue a policy of pro-active
public relations management that serves to reinforce the repu-
tation of our corporate brand and individual product brands.
These measures are supported by a global communication net-
work and international and local crisis management systems
with regular training sessions.
Further information relating to our employees can be found
on pages 128 to 131.
Impact: Low probability rating, possible major impact on our
sales and earnings guidance.
Impact: Moderate probability rating, possible minor impact
on our earnings guidance.
RRiisskkss iinn ccoonnnneeccttiioonn wwiitthh tthhee ccoommppaannyy’’ss rreeppuuttaattiioonn aanndd iittss
bbrraannddss
Description of risk: As a globally active corporation, Henkel is
exposed to potential damage to the reputation of its corporate
brand – Henkel – or of our product brands, particularly in the
consumer goods sector, in the event of negative reports in the
media, including social media. These could lead to a negative
impact on sales.
EEnnvviirroonnmmeennttaall,, ssaaffeettyy aanndd hheeaalltthh rriisskkss
Description of risk: Henkel is a global manufacturing corpo-
ration and is therefore exposed to risks pertaining to the envi-
ronment, safety, health, and social standards, manifesting in
the form of personal injury, physical damage to goods, and
reputational damage. Soil contamination and the associated
remediation expense, as well as leakage or other technical
failures, could give rise to direct costs for the corporation.
Furthermore, indirect costs such as fines, claims for compen-
sation or reputational damage may also be incurred.
We assign the highest priority to the health and safety of our
employees. Nevertheless, employees may be exposed to health
risks as a result of the COVID-19 pandemic, which may result
in workforce shortages.
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Measures: We minimize these risks through the measures de-
scribed under legal and regulatory risks (see pages 159 and 160),
and through our auditing, advisory and training activities.
We continually update these preventive measures in order to
properly safeguard our facilities, assets and reputation. We
ensure compliance with high technical standards, rules of
conduct, and relevant statutory requirements as a further
means of preserving our assets, and make sure that our corporate
values – one of which is sustainability – are put into practice.
We have introduced strict hygiene rules and protection strate-
gies at all our sites to counter the COVID-19 pandemic. We pro-
vide our employees around the globe with personal protective
equipment, make it possible for them to work from home, and
have optimized communal areas to comply with strict social
distancing rules.
BBuussiinneessss ssttrraatteeggyy rriisskkss
Description of risk: Business strategy risks can arise from
our expectations for internal projects, acquisitions and strategic
alliances failing to materialize. The associated capital expendi-
tures may not generate the originally anticipated value added
due to internal or external influences. Individual projects
could also be delayed or even halted by unforeseen events.
Measures: We combat these risks through comprehensive
project management. We limit exposure through financial
viability assessments in the review, decision, and implemen-
tation phases. These assessments are performed by specialist
departments, assisted by external consultants where appropriate.
Project transparency and control are supported by our manage-
ment systems.
Impact: Moderate probability rating, possible major impact on
our earnings guidance.
Impact: Moderate probability rating, possible moderate impact
on our earnings guidance.
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Impact: We classify financial opportunities as follows:
Currency opportunities with a moderate probability of
a major impact on our earnings guidance
Interest rate opportunities with a moderate probability of
a minor impact on our earnings guidance
Opportunities arising from our pension obligations with
a low probability of a minor impact on our earnings guidance,
and with a high probability of a major impact on our equity
AAccqquuiissiittiioonn ooppppoorrttuunniittiieess
Description of opportunities: Acquisitions are a key
component of our strategy.
Impact: Large acquisitions could have a major impact on our
earnings guidance.
RReesseeaarrcchh aanndd ddeevveellooppmmeenntt ooppppoorrttuunniittiieess
Description of opportunities: Opportunities arising from our
extensively continuous innovation process are a key component
of our strategy and are already accounted for in our guidance.
There are additional opportunities in the event of product in-
troductions that exceed our expectations of market acceptance,
and in the development of exceptional innovations that have
not yet been taken into account.
Impact: Innovations arising from future research and develop-
ment could have a major impact on our sales and earnings
guidance.
Major opportunity categories
Entrepreneurial opportunities are identified and evaluated
at Group level and in the individual business units, and duly
incorporated into the strategy and planning processes. We
understand the opportunities presented in the following as
potential future developments or events that could lead
to a positive deviation from our guidance. We also assess the
probabilities of price-related procurement market and financial
opportunities.
PPrrooccuurreemmeenntt mmaarrkkeett ooppppoorrttuunniittiieess
Description of opportunities: Countervailing the procure-
ment market risks listed on page 155, opportunities may also
arise in which the influencing factors described in this section
develop in a direction that is advantageous to Henkel.
Impact: Low probability rating, possible major impact on our
earnings guidance.
MMaaccrrooeeccoonnoommiicc aanndd sseeccttoorr--ssppeecciiffiicc ooppppoorrttuunniittiieess
Description of opportunities: Additional business opportu-
nities would arise if the uncertain geopolitical and macroeco-
nomic situation in some regions, or the economic conditions
in individual sectors, develop substantially better than expected –
in connection with the COVID-19 pandemic, for example.
Impact: The opportunities described could have a major
impact on our sales and earnings guidance.
FFiinnaanncciiaall ooppppoorrttuunniittiieess
Description of opportunities: Countervailing the currency
and interest rate risks indicated under financial risks, and the
risks arising from pension obligations as described on pages
158 and 159, opportunities may also arise in which the influenc-
ing factors described in this section develop in a direction
that is advantageous to Henkel.
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Risks and opportunities in summary
At the time this report was prepared, there were no identifiable
risks related to future developments that could endanger the
existence either of Henkel AG & Co. KGaA, or a material sub-
sidiary included in the consolidation, or the Group, as a going
concern.
The COVID-19 pandemic has caused a substantial deterioration
in global economic conditions compared to the situation pre-
vailing in the previous year, and has also exerted significant
influence on the markets. We have established crisis teams in
all countries and regions to carefully monitor the COVID-19
pandemic and in order to limit the associated impact through
appropriate countermeasures. At Group level, a global crisis
team has control of our overarching activities and coordinates
communication within the corporation. Our actions are fo-
cused on protecting the health and safety of our employees, our
customers and our business partners, and on ensuring busi-
ness continuity.
Compared to the presentation of the major risk categories in
the Annual Report 2019, the COVID-19 pandemic has particu-
larly increased the probability of occurrence and/or the po-
tential financial impact of procurement, macroeconomic and
sector-specific risks, production, credit and currency risks,
and environmental, health and safety risks. Within the classi-
fication categories, we have raised procurement, personnel,
and environmental, safety and health risks from a low to a mod-
erate probability of occurrence, compared to the presentation in
our Annual Report 2019. The likelihood of currency and pension
obligation risks occurring (influence on equity) has been raised
from moderate to high. We have presented risks in the political
environment as a further risk area. Apart from the aforemen-
tioned, the overall risk and opportunities situation has not
altered to any significant degree.
The system of risk categorization adopted by Henkel continues
to indicate that the most significant exposure currently relates
to the impact of macroeconomic and sector uncertainty together
with financial risks, to which we are responding with the coun-
termeasures described above. The Management Board remains
confident that the earning power of the Group forms a solid
foundation for future business development and provides
the necessary resources to leverage our opportunities.
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Forecast
Macroeconomic development
The assessment of future world economic development is
based on information provided by IHS Markit.
Overview:
Notable recovery and growth of gross domestic product of
approximately 4.5 percent
Following the substantial economic slump in 2020 in the wake
of the COVID-19 pandemic, world economic growth is expected
to recover significantly in 2021. IHS expects gross domestic
product to rise notably by approximately 4.5 percent. The further
progress of the pandemic and its impacts on the global economy
are, however, subject to high uncertainty. Economic develop-
ment will depend on several critical factors including the du-
ration and intensity of the pandemic and specific health policy
countermeasures.
The mature markets should grow by approximately 3.5 percent.
The North American economy is expected to grow by approxi-
mately 4 percent, Western Europe by around 3 percent, and
Japan’s economy by around 2 percent.
The emerging markets are forecasted to achieve notable eco-
nomic growth of approximately 6 percent in 2021, but devel-
opments are expected to vary between individual regions and
countries. Asia (excluding Japan) is expected to increase its
economic output by around 6 percent. Growth of approximately
3 percent is forecasted for the Eastern Europe region, while the
Africa/Middle East region is expected to grow by approximately
5 percent, and the Latin America region by approximately
4 percent.
Inflation:
Global inflation rate at prior-year level
Global inflation in 2021 is expected to be around 2 percent,
thus remaining more or less at the level of the previous year.
For the mature markets, IHS anticipates inflation of around
1 percent. A slight decline in inflation to approximately
3 percent on average is forecasted for the emerging markets.
Direct materials:
Increase in price levels
We expect price increases for direct materials (raw materials,
packaging and purchased goods and services) to be in the low
to mid-single-digit percentage range compared to the previous
year.
Currencies:
Continued high volatility
We anticipate continued high volatility in the currency mar-
kets. Some major currencies in the emerging markets could
weaken on average in 2021 compared to 2020. We expect the
US dollar to weaken versus the euro.
Development by sector
Consumption and retail:
Recovery and growth of approximately 4.5 percent
IHS expects global private consumption to increase by approx-
imately 4.5 percent in 2021. For the mature markets, IHS antic-
ipates growth of approximately 4 percent. Private spending in
the emerging markets is forecasted to rise by around 5 percent.
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Industrial production index:
Growth of approximately 5.5 percent
IHS expects the industrial production index (IPX) to grow by
approximately 5.5 percent worldwide. Industrial production is
expected to increase by approximately 5 percent in the mature
markets and by approximately 6.5 percent in the emerging
markets.
Outlook for the Henkel Group
in 2021
Following the sharp decline in global economic growth in
2020 resulting from the COVID-19 pandemic, it is assumed
based on current estimates that industrial demand will revive
in 2021 and that demand for consumer goods will return to
normal as the year progresses. At present, however, demand in
some of the areas and regions of importance to Henkel is not
expected to regain pre-crisis levels in 2021. In addition, there
is a high level of uncertainty about the further course of infec-
tion rates as well as the progress of vaccination activities, and
thus the development of pandemic-related restrictions.
Given these circumstances, our guidance is based on the as-
sumption that industrial demand and areas of the consumer
goods business of relevance to Henkel – the Hair Salon busi-
ness in particular – will recover, in some cases significantly.
In those consumer goods categories that were able to record
increased demand in 2020 as a result of the pandemic, we ex-
pect consumer demand to return to normal levels. We assume
that the restrictions currently in place to contain the pandemic
in our core regions will be lifted as the first quarter progresses
and that – unlike the second quarter of 2020 in particular –
there will be no widespread closures of retail and industrial
businesses and production facilities as the year progresses.
Taking these factors into account, we expect the Henkel Group
to generate organic sales growth of between 2.0 and 5.0 percent
in fiscal 2021.
For the Adhesive Technologies business unit, the performance
of which will, to a large extent, depend on the recovery in in-
dustrial demand, we expect organic sales growth to range be-
tween 2.0 and 6.0 percent. For the Beauty Care business unit,
we currently anticipate organic sales growth in the range be-
tween 2.0 and 6.0 percent. On a full-year basis, a significant
increase in demand in the Hair Salon business should take
effect, while continued growth is expected in our Branded
Consumer Goods business. We expect the Laundry & Home
Care business unit to achieve organic sales growth of between
1.0 and 3.0 percent. Here, the higher customer demand wit-
nessed in some categories in the previous year as a result of
the pandemic is expected to return to normal levels over the
course of the year with the effect of slowing organic growth.
We expect the contribution to nominal sales growth of the
Henkel Group from our acquisitions in 2020 to be in the low
single-digit percentage range. Our guidance does not reflect
the effects of the intended divestment and discontinuation of
business activities, brands and categories as part of our active
portfolio management in 2021, since it is not possible to relia-
bly predict if and when such activities will actually occur. The
translation of sales in foreign currencies is expected to have a
negative effect in the mid-single-digit percentage range.
The anticipated recovery in demand, particularly in our indus-
trial and Hair Salon businesses, is expected to have a positive
effect on Henkel’s earnings performance in 2021. This is likely
to be offset to some degree by countervailing effects arising
from increased prices for direct materials, which we assume
will rise by a low to mid-single digit percentage, and from
adverse changes in foreign currency exchange rates. At the
same time, we intend to maintain our strict cost discipline.
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We expect the Henkel Group to generate an adjusted return
on sales (EBIT margin) of between 13.5 and 14.5 percent. Our
expectations with respect to adjusted return on sales in our
individual business units are between 15.5 and 16.5 percent
for Adhesive Technologies, between 10.5 and 12.0 percent for
Beauty Care, and between 15.0 and 16.0 percent for Laundry &
Home Care.
Dividend
In accordance with our dividend policy and depending on the
company’s asset and profit positions as well as its financial
requirements, we expect a dividend payout by Henkel AG &
Co. KGaA for fiscal 2021 in the range of 30 to 40 percent of net
income after non-controlling interests, and adjusted for ex-
ceptional items.
Adjusted earnings per preferred share (EPS) at constant ex-
change rates are expected to increase in the range between
5.0 and 15.0 percent.
Furthermore, we have the following expectations for 2021:
Restructuring expenses of 250 to 300 million euros
Cash outflows from investments in property, plant and
equipment and intangible assets of between 600 and
700 million euros
Capital expenditures
In fiscal 2021, we plan cash outflows for investments in property,
plant and equipment and intangible assets in a range between
600 and 700 million euros. We plan to invest considerable
amounts in strengthening our innovation capabilities and in
expanding and streamlining our production and logistics. We
also intend to drive the digitalization of Henkel through targeted
IT investments.
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Consolidated
financial statements
171
Consolidated statement of financial position
193
173
Consolidated statement of income
174
Consolidated statement of comprehensive
income
175
Consolidated statement of changes in equity
176
Consolidated statement of cash flows
178
Notes to the consolidated financial statements –
Group segment report by business unit
180 Notes to the consolidated financial statements –
Key financials by region
181 Notes to the consolidated financial statements –
Accounting principles and methods applied
in preparation of the consolidated financial
statements
194
200
204
205
205
205
206
207
207
208
209
210
210
210
210
210
222
223
225
226
226
226
227
Notes to the consolidated financial statements –
Notes to the consolidated statement of
financial position
Goodwill and other intangible assets
Property, plant and equipment
Other financial assets
Other assets
Deferred taxes
Inventories
Trade accounts receivable
Cash and cash equivalents
Assets and liabilities held for sale
Issued capital
Capital reserve
Treasury shares
Retained earnings
Other components of equity
Non-controlling interests
Provisions for pensions and similar obligations
Other provisions
Borrowings
Other financial liabilities
Other liabilities
Trade accounts payable
Income tax liabilities
Financial instruments report
Henkel Annual Report 2020 1Contents The Company 2 Fiscal 2020 at a glance 6 Foreword 13 Report of the Supervisory Board 20 Our Management Board 22 Shaping our future 23 Shares and bonds Corporate governance 31 Takeover-relevant information 35 Corporate governance statement 53 Remuneration system 77 Remuneration report 2020 Combined management report 94 Fundamental principles of the Group 103 Economic report 146 Henkel AG & Co. KGaA (condensed version according to the German Commercial Code [HGB]) 151 Risks and opportunities report 166 Forecast Consolidated financial statements 171 Consolidated statement of financial position 173 Consolidated statement of income 174 Consolidated statement of comprehensive income 175 Consolidated statement of changes in equity 176 Consolidated statement of cash flows 178 Notes to the consolidated financial statements 274 Subsequent events 275 Recommendation for the approval of the annual financial statements and the appropriation of the profit of Henkel AG & Co. KGaA 276 Corporate bodies of Henkel AG & Co. KGaA Further information 281 Independent Auditor’s Report 290 Responsibility statement 291 Quarterly breakdown of sales 292 Multi-year summary 294 Glossary 297 Credits 298 Contacts 298 Financial calendar Henkel Annual Report 2020 1Contents The Company 2 Fiscal 2020 at a glance 6 Foreword 13 Report of the Supervisory Board 20 Our Management Board 22 Shaping our future 23 Shares and bonds Corporate governance 31 Takeover-relevant information 35 Corporate governance statement 53 Remuneration system 77 Remuneration report 2020 Combined management report 94 Fundamental principles of the Group 103 Economic report 146 Henkel AG & Co. KGaA (condensed version according to the German Commercial Code [HGB]) 151 Risks and opportunities report 166 Forecast Consolidated financial statements 171 Consolidated statement of financial position 173 Consolidated statement of income 174 Consolidated statement of comprehensive income 175 Consolidated statement of changes in equity 176 Consolidated statement of cash flows 178 Notes to the consolidated financial statements 274 Subsequent events 275 Recommendation for the approval of the annual financial statements and the appropriation of the profit of Henkel AG & Co. KGaA 276 Corporate bodies of Henkel AG & Co. KGaA Further information 281 Independent Auditor’s Report 290 Responsibility statement 291 Quarterly breakdown of sales 292 Multi-year summary 294 Glossary 297 Credits 298 Contacts 298 Financial calendar Henkel Annual Report 2020 1Contents The Company 2 Fiscal 2020 at a glance 6 Foreword 13 Report of the Supervisory Board 20 Our Management Board 22 Shaping our future 23 Shares and bonds Corporate governance 31 Takeover-relevant information 35 Corporate governance statement 53 Remuneration system 77 Remuneration report 2020 Combined management report 94 Fundamental principles of the Group 103 Economic report 146 Henkel AG & Co. KGaA (condensed version according to the German Commercial Code [HGB]) 151 Risks and opportunities report 166 Forecast Consolidated financial statements 171 Consolidated statement of financial position 173 Consolidated statement of income 174 Consolidated statement of comprehensive income 175 Consolidated statement of changes in equity 176 Consolidated statement of cash flows 178 Notes to the consolidated financial statements 274 Subsequent events 275 Recommendation for the approval of the annual financial statements and the appropriation of the profit of Henkel AG & Co. KGaA 276 Corporate bodies of Henkel AG & Co. KGaA Further information 281 Independent Auditor’s Report 290 Responsibility statement 291 Quarterly breakdown of sales 292 Multi-year summary 294 Glossary 297 Credits 298 Contacts 298 Financial calendar
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272
272
273
273
273
Exercise of exemption options
Remuneration of the corporate bodies
Declaration of compliance with the Corporate
Governance Code
Subsidiaries and other investments
Auditor’s fees and services
274 Notes to the consolidated financial statements –
Subsequent events
275
Recommendation for the approval of the
annual financial statements and the appropri-
ation of the profit of Henkel AG & Co. KGaA
276
Corporate bodies of Henkel AG & Co. KGaA
253 Notes to the consolidated financial statements –
Notes to the consolidated statement of income
Sales and principles of income recognition
Cost of sales
253
254
254 Marketing, selling and distribution expenses
254
255
255
255
255
256
259
Research and development expenses
Administrative expenses
Other operating income
Other operating expenses
Financial result
Taxes on income
Non-controlling interests
260 Notes to the consolidated financial statements –
Other disclosures
Reconciliation of adjusted net income
Payroll cost and employee structure
Share-based payment plans
Group segment report
Earnings per share
Consolidated statement of cash flows
Contingent liabilities
Other unrecognized financial commitments
Related party disclosures
260
261
261
264
267
268
271
271
271
Henkel Annual Report 2020 1Contents The Company 2 Fiscal 2020 at a glance 6 Foreword 13 Report of the Supervisory Board 20 Our Management Board 22 Shaping our future 23 Shares and bonds Corporate governance 31 Takeover-relevant information 35 Corporate governance statement 53 Remuneration system 77 Remuneration report 2020 Combined management report 94 Fundamental principles of the Group 103 Economic report 146 Henkel AG & Co. KGaA (condensed version according to the German Commercial Code [HGB]) 151 Risks and opportunities report 166 Forecast Consolidated financial statements 171 Consolidated statement of financial position 173 Consolidated statement of income 174 Consolidated statement of comprehensive income 175 Consolidated statement of changes in equity 176 Consolidated statement of cash flows 178 Notes to the consolidated financial statements 274 Subsequent events 275 Recommendation for the approval of the annual financial statements and the appropriation of the profit of Henkel AG & Co. KGaA 276 Corporate bodies of Henkel AG & Co. KGaA Further information 281 Independent Auditor’s Report 290 Responsibility statement 291 Quarterly breakdown of sales 292 Multi-year summary 294 Glossary 297 Credits 298 Contacts 298 Financial calendar Henkel Annual Report 2020 1Contents The Company 2 Fiscal 2020 at a glance 6 Foreword 13 Report of the Supervisory Board 20 Our Management Board 22 Shaping our future 23 Shares and bonds Corporate governance 31 Takeover-relevant information 35 Corporate governance statement 53 Remuneration system 77 Remuneration report 2020 Combined management report 94 Fundamental principles of the Group 103 Economic report 146 Henkel AG & Co. KGaA (condensed version according to the German Commercial Code [HGB]) 151 Risks and opportunities report 166 Forecast Consolidated financial statements 171 Consolidated statement of financial position 173 Consolidated statement of income 174 Consolidated statement of comprehensive income 175 Consolidated statement of changes in equity 176 Consolidated statement of cash flows 178 Notes to the consolidated financial statements 274 Subsequent events 275 Recommendation for the approval of the annual financial statements and the appropriation of the profit of Henkel AG & Co. KGaA 276 Corporate bodies of Henkel AG & Co. KGaA Further information 281 Independent Auditor’s Report 290 Responsibility statement 291 Quarterly breakdown of sales 292 Multi-year summary 294 Glossary 297 Credits 298 Contacts 298 Financial calendar Henkel Annual Report 2020 1Contents The Company 2 Fiscal 2020 at a glance 6 Foreword 13 Report of the Supervisory Board 20 Our Management Board 22 Shaping our future 23 Shares and bonds Corporate governance 31 Takeover-relevant information 35 Corporate governance statement 53 Remuneration system 77 Remuneration report 2020 Combined management report 94 Fundamental principles of the Group 103 Economic report 146 Henkel AG & Co. KGaA (condensed version according to the German Commercial Code [HGB]) 151 Risks and opportunities report 166 Forecast Consolidated financial statements 171 Consolidated statement of financial position 173 Consolidated statement of income 174 Consolidated statement of comprehensive income 175 Consolidated statement of changes in equity 176 Consolidated statement of cash flows 178 Notes to the consolidated financial statements 274 Subsequent events 275 Recommendation for the approval of the annual financial statements and the appropriation of the profit of Henkel AG & Co. KGaA 276 Corporate bodies of Henkel AG & Co. KGaA Further information 281 Independent Auditor’s Report 290 Responsibility statement 291 Quarterly breakdown of sales 292 Multi-year summary 294 Glossary 297 Credits 298 Contacts 298 Financial calendar
H e n k e l A n n u a l R e p o r t 2 0 2 0
1 71
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Consolidated statement of
financial position
Assets
in million euros
Goodwill
Other intangible assets
Property, plant and equipment
Other financial assets
Income tax refund claims
Other assets
Deferred tax assets
Non-current assets
Inventories
Trade accounts receivable
Other financial assets
Income tax refund claims
Other assets
Cash and cash equivalents
Assets held for sale
Current assets
Total assets
1 Prior-year figures amended (please refer to the notes on page 188).
Note
1
1
2
3
4
5
6
7
3
4
8
9
Dec. 31, 2019¹
12,972
4,278
3,775
125
23
231
875
22,279
2,187
3,415
1,335
222
472
1,460
39
9,130
%
41.3
13.6
12.0
0.4
0.1
0.7
2.8
70.9
7.0
10.9
4.3
0.7
1.5
4.6
0.1
29.1
Dec. 31, 2020
12,359
3,652
3,688
99
5
240
887
20,930
2,189
3,106
1,372
204
495
1,727
228
9,321
%
40.9
12.1
12.2
0.3
0.0
0.8
2.9
69.2
7.2
10.3
4.5
0.7
1.6
5.7
0.8
30.8
31,409
100.0
30,250
100.0
H e n k e l A n n u a l R e p o r t 2 0 2 0
1 72
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Consolidated statement of
financial position
Equity and liabilities
in million euros
Issued capital
Capital reserve
Treasury shares
Retained earnings
Other components of equity
Equity attributable to shareholders of
Henkel AG & Co. KGaA
Non-controlling interests
Equity
Provisions for pensions and similar obligations
Other provisions
Borrowings
Other financial liabilities
Other liabilities
Deferred tax liabilities
Non-current liabilities
Other provisions
Borrowings
Trade accounts payable
Other financial liabilities
Other liabilities
Income tax liabilities
Current liabilities
Note
10
11
12
13
14
Dec. 31, 2019¹
438
652
-91
18,659
-1,135
15
16
17
18
19
20
5
17
18
21
19
20
18,523
88
18,611
635
307
1,932
568
14
802
4,258
1,653
2,026
3,819
292
333
417
8,540
%
1.4
2.1
-0.3
59.4
-3.6
59.0
0.3
59.3
2.0
1.0
6.2
1.8
0.0
2.6
13.6
5.3
6.5
12.2
0.9
1.1
1.3
27.2
Dec. 31, 2020
438
652
-91
19,152
-2,373
17,778
101
17,879
551
329
1,666
804
27
636
4,015
1,915
1,418
3,953
264
352
454
8,357
%
1.4
2.2
-0.3
63.3
-7.8
58.8
0.3
59.1
1.8
1.1
5.5
2.7
0.1
2.1
13.3
6.3
4.7
13.1
0.9
1.2
1.5
27.6
Total equity and liabilities
31,409
100.0
30,250
100.0
1 Prior-year figures amended (please refer to the notes on page 188).
H e n k e l A n n u a l R e p o r t 2 0 2 0
1 73
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Consolidated statement of income
in million euros
Sales
Cost of sales
Gross profit
Marketing, selling and distribution expenses
Research and development expenses
Administrative expenses
Other operating income
Other operating expenses
Operating profit (EBIT)
Interest income
Interest expense
Other financial result
Investment result
Financial result
Income before tax
Taxes on income
Tax rate
Net income
in %
Attributable to non-controlling interests
Attributable to shareholders of Henkel AG & Co. KGaA
Earnings per ordinary share – basic and diluted
Earnings per preferred share – basic and diluted
in euros
in euros
Note
24
25
26
27
28
29
30
31
32
33
2019
20,114
-10,883
9,231
-4,942
-499
-969
162
-84
2,899
13
-88
-13
–
-88
2,811
-708
25.2
2,103
18
2,085
4.79
4.81
%
100.0
-54.1
45.9
-24.6
-2.5
-4.8
0.8
-0.4
14.4
0.1
-0.4
-0.1
-0.4
14.0
-3.5
10.5
0.1
10.4
2020
19,250
-10,378
8,871
-5,377
-501
-950
115
-139
2,019
12
-55
-51
–
-94
1,925
-501
26.0
1,424
16
1,408
3.23
3.25
%
100.0
-53.9
46.1
-27.9
-2.6
-4.9
0.6
-0.7
10.5
0.1
-0.3
-0.3
-0.5
10.0
-2.6
7.4
0.1
7.3
+/-
-4.3%
-4.6%
-3.9%
8.8%
0.5%
-2.0%
-28.9%
65.9%
-30.4%
-9.7%
-37.2%
289.8%
6.8%
-31.5%
-29.2%
-32.3%
-11.3%
-32.5%
-32.6%
-32.4%
H e n k e l A n n u a l R e p o r t 2 0 2 0
1 74
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Consolidated statement of
comprehensive income
See Notes 16 and 23 for further explanatory information
in million euros
Net income
Results subject to possible future reclassification:
Exchange differences on translation of foreign operations
Gains/losses from derivative financial instruments (Hedge reserve)
Gains/losses from debt instruments
Income taxes on these items
Results not subject to future reclassification:
Remeasurement of net liability from defined benefit pension plans
Gains/losses from equity instruments
Income taxes on these items
Other comprehensive income (net of taxes)
Total comprehensive income for the period
Attributable to non-controlling interests
Attributable to shareholders of Henkel AG & Co. KGaA
1 Prior-year figures amended due to separate disclosure of income taxes starting in fiscal 2020.
2019¹
2,103
245
-5
1
–
210
-7
-7
437
2,540
15
2,525
2020
1,424
-1,290
50
-3
-9
76
2
1
-1,173
251
4
247
H e n k e l A n n u a l R e p o r t 2 0 2 0
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Consolidated statement of
changes in equity
See Notes 10 to 15 for further explanatory information
in million euros
At January 1, 2019
Net income
Other comprehensive income
Total comprehensive income
for the period
Dividends
Share-based payments
Changes in ownership interest
with no change in control
Capital increase of a subsidiary
with non-controlling interests
Acquisition of a subsidiary
with non-controlling interests
Other changes in equity
Equity transactions with shareholders
At Dec. 31, 2019/Jan. 1, 2020
Net income
Other comprehensive income
Total comprehensive income
for the period
Dividends
Share-based payments
Acquisition of a subsidiary
with non-controlling interests
Other changes in equity
Equity transactions with shareholders
At December 31, 2020
Issued capital
Other components of equity
Ordinary
shares
Preferred
shares
Capital
reserve
Treasury
shares
Retained
earnings
Currency
translation
Hedge
reserve
260
–
–
–
–
–
–
–
–
–
–
260
–
–
–
–
–
–
–
–
260
178
–
–
–
–
–
–
–
–
–
–
178
–
–
–
–
–
–
–
–
178
652
–
–
–
–
–
–
–
–
–
–
652
–
–
–
–
–
–
–
–
652
-91
–
–
–
–
–
–
–
–
–
–
-91
–
–
–
–
–
–
–
–
-91
17,254
2,085
203
2,288
-798
11
8
–
–
-104
-883
18,659
1,408
77
1,485
-798
14
–
-208
-992
19,152
-1,176
–
248
248
–
–
–
–
–
–
–
-928
–
-1,278
-1,278
–
–
–
–
–
-2,206
-199
–
-5
-5
–
–
–
–
–
–
–
-204
–
40
40
–
–
–
–
–
-164
Reserve for
equity and
debt instru
ments
3
–
-6
Share
holders of
Henkel AG
& Co. KGaA
16,881
2,085
440
-6
–
–
–
–
–
–
–
-3
–
0
0
–
–
–
–
–
-3
2,525
-798
11
8
–
–
-104
-883
18,523
1,408
-1,161
247
-798
14
–
-208
-992
17,778
Non
controlling
interests
84
18
-3
15
-19
–
-8
8
12
-4
-11
88
16
-12
4
-13
–
22
–
9
101
1 75
Total
16,965
2,103
437
2,540
-817
11
–
8
12
-108
-894
18,611
1,424
-1,173
251
-811
14
22
-208
-983
17,879
H e n k e l A n n u a l R e p o r t 2 0 2 0
1 76
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Consolidated statement of cash flows
See Note 39 for further explanatory information
in million euros
Operating profit (EBIT)
Income taxes paid
Amortization/depreciation/impairment/write-ups of intangible assets, property, plant and equipment,
and assets held for sale
Net gains/losses on disposal of intangible assets and property, plant and equipment, and from divestments
Change in inventories
Change in trade accounts receivable
Change in other assets
Change in trade accounts payable
Change in other liabilities, provisions and equity
Cash flow from operating activities
Purchase of intangible assets and property, plant and equipment including payments on account
Acquisition of subsidiaries and other business units
Acquisition of associates and other investments
Proceeds on disposal of subsidiaries, other business units and investments
Proceeds on disposal of intangible assets and property, plant and equipment
Financial receivables issued to third parties
Change in other current financial assets2
Cash flow from investing activities
Dividends paid to shareholders of Henkel AG & Co. KGaA
Dividends paid to non-controlling shareholders
Interest received
Interest paid3
Dividends and interest paid and received
Issuance of bonds
Repayment of bonds
Repayment of non-current bank liabilities
Other changes in borrowings
Redemption of lease obligations
TABLE CONTINUED ON NEXT PAGE
2019¹
2,899
-607
757
-11
–
241
43
63
-144
3,241
-677
-564
-18
8
78
-18
-270
-1,461
-798
-19
28
-98
-887
847
-666
–
-519
-125
2020
2,019
-618
1,096
-15
-141
102
-90
295
431
3,080
-715
-452
-18
53
20
–
-149
-1,261
-798
-13
16
-79
-874
518
-534
–
-541
-139
H e n k e l A n n u a l R e p o r t 2 0 2 0
1 77
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
in million euros
Allocations to pension funds
Other changes in pension obligations
Payments for the acquisition of treasury shares
Payments for the acquisition of non-controlling interests with no change in control
Other financing transactions2
Cash flow from financing activities
Net change in cash and cash equivalents
Effect of exchange rates on cash and cash equivalents
Change in cash and cash equivalents
Cash and cash equivalents at January 1
Cash and cash equivalents at December 31
Financial calendar
Additional voluntary information: Reconciliation to free cash flow
in million euros
Cash flow from operating activities
Purchase of intangible assets and property, plant and equipment including payments on account
Redemption of lease obligations
Proceeds on disposal of intangible assets and property, plant and equipment
Net interest paid
Other changes in pension obligations
Free cash flow
2019¹
-50
24
–
-21
2
-1,395
385
12
397
1,063
1,460
2019¹
3,241
-677
-125
78
-70
24
2,471
2020
-67
155
–
–
7
-1,475
344
-77
267
1,460
1,727
2020
3,080
-715
-139
20
-63
155
2,338
1 Prior-year figures amended (please refer to the notes on page 188).
2 Effective from fiscal 2020, payments for and proceeds from the purchase and sale of current financial assets are allocated to cash flow from investing activities and
no longer to cash flow from financing activities. Prior-year figures have been amended accordingly.
3 Including interest paid in connection with lease liabilities.
H e n k e l A n n u a l R e p o r t 2 0 2 0
1 78
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Group segment report by business unit
in million euros
Sales 2020
Proportion of Henkel sales
Sales 2019
Change versus previous year
Adjusted for foreign exchange
Organic
Operating profit (EBIT) 2020
Operating profit (EBIT) 2019
Change versus previous year
Return on sales (EBIT margin) 2020
Return on sales (EBIT margin) 2019
Adjusted operating profit (adjusted EBIT) 2020
Adjusted operating profit (adjusted EBIT) 2019
Change versus previous year
Adjusted return on sales (adjusted EBIT margin) 2020
Adjusted return on sales (adjusted EBIT margin) 2019
Capital employed 2020¹
Capital employed 2019¹
Change versus previous year
Return on capital employed (ROCE) 2020
Return on capital employed (ROCE) 2019
TABLE CONTINUED ON NEXT PAGE
Adhesive
Technologies
Beauty
Care
Laundry &
Home Care
8,684
45%
9,461
-8.2%
-4.5%
-4.2%
1,248
1,631
-23.5%
14.4%
17.2%
1,320
1,712
-22.9%
15.2%
18.1%
9,304
9,464
-1.7%
13.4%
17.2%
3,752
19%
3,877
-3.2%
-0.4%
-2.8%
246
418
-41.2%
6.6%
10.8%
377
519
-27.5%
10.0%
13.4%
4,405
4,131
6.6%
6.2%
10.1%
6,704
35%
6,656
0.7%
5.6%
5.6%
688
973
-29.3%
10.3%
14.6%
1,004
1,096
-8.4%
15.0%
16.5%
7,473
7,722
-3.2%
9.3%
12.6%
Operating
business
units total
19,140
99%
19,994
-4.3%
-0.3%
-0.7%
2,181
3,022
-27.8%
11.4%
15.1%
2,701
3,328
-18.8%
14.1%
16.6%
21,182
21,316
-0.6%
10.4%
14.2%
Corporate
110
1%
121
-9.1%
–
–
-162
-123
–
–
–
-122
-108
–
–
–
142
144
–
–
–
Henkel
Group
19,250
100%
20,114
-4.3%
-0.4%
-0.7%
2,019
2,899
-30.4%
10.5%
14.4%
2,579
3,220
-19.9%
13.4%
16.0%
21,325
21,460
-0.6%
9.6%
13.5%
H e n k e l A n n u a l R e p o r t 2 0 2 0
1 7 9
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
in million euros
Amortization/depreciation/impairment/write-ups of intangible
assets and property, plant and equipment 2020²
Of which: impairment 2020
Of which: write-ups 2020
Amortization/depreciation/impairment/write-ups of intangible
assets and property, plant and equipment 2019²
Of which: impairment 2019
Of which: write-ups 2019
Additions to non-current assets 2020
Additions to non-current assets 2019
Operating assets 2020³
Operating liabilities 2020
Net operating assets 2020³
Operating assets 2019³
Operating liabilities 2019
Net operating assets 2019³
Adhesive
Technologies
Beauty
Care
Laundry &
Home Care
Corporate
Operating
business
units total
346
16
–
358
23
-3
561
385
11,693
3,118
8,575
11,985
3,086
8,899
206
90
–
106
6
–
473
712
5,803
1,840
3,963
5,679
1,738
3,941
502
251
–
268
14
–
356
287
10,627
3,048
7,579
10,820
2,913
7,907
1,053
357
–
732
43
-3
1,390
1,384
28,123
8,005
20,117
28,484
7,737
20,747
43
22
–
25
–
–
12
17
576
434
142
586
442
144
Henkel
Group
1,096
378
–
757
43
-3
1,402
1,401
28,699
8,439
20,260
29,070
8,179
20,891
1 Including goodwill at cost prior to any accumulated impairment in accordance with IFRS 3.79(b).
2 Including depreciation, impairment and write-ups of right-of-use assets.
3 Including goodwill at net carrying amounts.
H e n k e l A n n u a l R e p o r t 2 0 2 0
18 0
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Key financials by region
Key financials by region
in million euros
Sales 2020¹
Sales 2019¹
Change versus previous year
Organic
Proportion of Group sales 2020
Proportion of Group sales 2019
Operating profit (EBIT) 2020
Operating profit (EBIT) 2019
Change versus previous year
Adjusted for foreign exchange
Return on sales (EBIT margin) 2020
Return on sales (EBIT margin) 2019
1 By location of company.
Western
Europe
Eastern
Europe
5,782
6,017
-3.9%
-4.4%
30%
30%
1,457
1,725
-15.5%
-15.6%
25.2%
28.7%
2,919
2,999
-2.7%
7.1%
15%
15%
228
278
-18.0%
0.3%
7.8%
9.3%
Africa/
Middle
East
1,208
1,302
-7.2%
7.0%
6%
7%
31
106
-70.2%
-53.8%
2.6%
8.1%
North
America
Latin
America
Asia-
Pacific
Corporate
5,173
5,276
-2.0%
-2.2%
27%
26%
-88
337
-126.1%
-124.8%
-1.7%
6.4%
1,090
1,295
-15.8%
-0.5%
6%
6%
69
145
-52.5%
-36.3%
6.3%
11.2%
2,968
3,105
-4.4%
-1.6%
15%
15%
484
431
12.2%
15.2%
16.3%
13.9%
110
121
–
–
1%
1%
-162
-123
–
–
–
–
Henkel
Group
19,250
20,114
-4.3%
-0.7%
100%
100%
2,019
2,899
-30.4%
-26.6%
10.5%
14.4%
In 2020, the subsidiaries domiciled in Germany, including
Henkel AG & Co. KGaA, generated sales of 2,281 million euros
(previous year: 2,382 million euros). Sales realized by the sub-
sidiaries domiciled in the USA amounted to 4,819 million euros
in 2020 (previous year: 4,899 million euros). Subsidiaries
domiciled in China achieved sales of 1,368 million euros in
2020 (previous year: 1,390 million euros). In fiscal 2019 and
2020, no individual customer accounted for more than 10 per-
cent of total sales.
Of the total non-current assets disclosed for the Henkel Group
at December 31, 2020 (excluding financial instruments and
deferred tax assets) amounting to 19,944 million euros (previous
year: 21,275 million euros), 2,751 million euros (previous year:
2,497 million euros) was attributable to the subsidiaries
domiciled in Germany, including Henkel AG & Co. KGaA.
The non-current assets (excluding financial instruments and
deferred tax assets) recognized in respect of the subsidiaries
domiciled in the USA amounted to 10,450 million euros at
December 31, 2020 (previous year: 11,723 million euros).
H e n k e l A n n u a l R e p o r t 2 0 2 0
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The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Accounting principles and methods
applied in preparation of the consolidated
financial statements
Further information
Credits
Contacts
Financial calendar
General information
The consolidated financial statements of Henkel AG & Co. KGaA
(Düsseldorf Regional Court, HRB 4724), Düsseldorf, as of Decem-
ber 31, 2020 have been prepared in accordance with Interna-
tional Financial Reporting Standards (IFRSs), as adopted per
Regulation number 1606/2002 of the European Parliament and
the Council on the application of international accounting
standards in the European Union, and in compliance with
Section 315e German Commercial Code [HGB]. The financial
statements are based on the going concern principle. The
consolidated financial statements are published in the Federal
Gazette.
The individual financial statements of the companies included
in the consolidation are prepared on the same accounting
date, December 31, 2020, as that of Henkel AG & Co. KGaA.
Members of the PwC organization or other independent firms
of auditors instructed accordingly have audited the financial
statements of the material companies included in the con-
solidation. The Management Board of Henkel Management
AG – which is the Personally Liable Partner of Henkel AG &
Co. KGaA – compiled the consolidated financial statements on
January 30, 2021 and approved them for forwarding to the Super-
visory Board and for publication.
The functional currency of Henkel AG & Co. KGaA and the
reporting currency of the Group is the euro. Unless otherwise
indicated, all amounts are shown in million euros. All individual
figures have been rounded. Addition may result in deviations
from the totals indicated. In order to improve the clarity and
informative value of the consolidated financial statements,
certain items are combined in the consolidated statement of
financial position, the consolidated statement of income and
the consolidated statement of comprehensive income, and
then shown separately in the notes.
Scope of consolidation
In addition to Henkel AG & Co. KGaA as the ultimate parent
company, the consolidated financial statements at December
31, 2020 include 22 German and 193 non-German companies in
which Henkel AG & Co. KGaA has a dominating influence over
financial and operating policies, based on the concept of con-
trol. The Group controls a company when it is exposed, or has
rights, to variable returns from its involvement with the com-
pany and has the ability to affect those returns through its
power over the company. Companies in which the stake held
represents less than half of the voting rights are fully consoli-
dated if Henkel AG & Co. KGaA controls them, as defined in
IFRS 10 Consolidated Financial Statements, through contrac-
tual agreements or the right to appoint corporate bodies.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Henkel AG & Co. KGaA prepares the consolidated financial
statements for the largest and the smallest groups of compa-
nies to which Henkel AG & Co. KGaA and its subsidiaries belong.
The following table shows the changes to the scope of consoli-
dation in fiscal 2020:
Scope of consolidation
At January 1, 2020
Additions
Mergers
Disposals
At December 31, 2020
215
11
-7
-3
216
Further details can be found in the section “Acquisitions and
divestments” below.
Subsidiaries which are of secondary importance to the Group
and to the presentation of a true and fair view of our net assets,
financial position and results of operations due to their inac-
tivity or low level of activity are generally not included in the
consolidated financial statements. For simplification purposes,
investments in these subsidiaries are recognized at cost less
impairment. The total assets of these companies represent less
than 1 percent of the Group’s total assets; their total sales and
income (net of taxes) are also less than 1 percent of the Group
totals.
Acquisitions and divestments
Acquisitions
Effective September 1, 2020, Henkel acquired 75 percent of the
shares in a holding company whose subsidiaries operate
businesses involving the three premium direct-to-consumer
brands HelloBody, Banana Beauty and Mermaid+Me. The pro-
visional purchase price was 299 million euros, settled in cash.
With regard to the remaining 25 percent of shares, put and call
options have been agreed between Henkel and the sellers.
Since the economic benefits of the non-controlling interests
do not yet accrue to the Henkel Group, the present access
method is used to recognize the put options granted to non-
controlling shareholders. The non-controlling interests con-
tinue to be recognized in the statement of financial position
and the statement of comprehensive income. In recognition of
the commitment in connection with the put option granted to
the non-controlling shareholders, a financial liability was rec-
ognized upon first-time consolidation in an amount equal to
the discounted expected purchase price and subsequently
measured through equity. As of December 31, 2020, the liabil-
ity amounted to 191 million euros. Provisional goodwill was
capitalized in an amount of 238 million euros. With this ac-
quisition, the Beauty Care unit will significantly expand its
direct-to-consumer activities while adding strong digital ca-
pabilities in relation to areas such as performance marketing,
analytics and agile innovation.
In addition, Henkel acquired the consumer sealants business
operating under the licensed GE brand on November 2, 2020.
The final purchase price was 153 million euros, settled in cash.
Provisional goodwill was capitalized in an amount of 133 mil-
lion euros.
The provisional goodwill acquired through the aforemen-
tioned acquisitions represents the growth potential of the
acquired businesses, as well as both offensive and defensive
synergies resulting from the acquisitions.
We also raised the stake in our subsidiary Persil Service GmbH,
Düsseldorf, from 45 percent to 75 percent. The acquisition of
the additional shares cost 4 million euros.
Because some of the information that is crucial for valuation
is not yet available, the allocation of the purchase price to the
acquired assets and liabilities in accordance with IFRS 3 Busi-
ness Combinations is provisional both in respect of the shares
in Henkel Beauty & IB Holding GmbH, the subsidiaries of
H e n k e l A n n u a l R e p o r t 2 0 2 0
18 3
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
which operate the businesses involving the HelloBody, Banana
Beauty and Mermaid+Me brands acquired effective Septem-
ber 1, 2020, and in respect of the business with sealants for
consumers under the licensed GE brand acquired effective
November 2, 2020. Also and above all, determination of the
fair value of the other intangible assets, provisions and deferred
taxes and the resulting goodwill from the acquisition has not
yet been finalized.
The fair values of the acquired assets and liabilities were deter-
mined by the contracts and available opening balances on
each respective acquisition date. The recognition and measure-
ment principles adopted by the Henkel Group were applied.
Financial calendar
Acquisitions 2020
in million euros
Goodwill
Other intangible assets
Property, plant and equipment
Other non-current assets
Non-current assets
Inventories
Trade accounts receivable
Liquid funds
Other current assets
Current assets
Total assets
Net assets
Non-current liabilities
Other current provisions/liabilities
Trade accounts payable
Current liabilities
Total equity and liabilities
Fair value
375
126
4
4
509
10
3
8
13
33
542
478
39
15
11
25
542
Reconciliation of the purchase price to provisional goodwill
in million euros
Acquisitions 2020
Purchase price
Non-controlling interests based on shares of recognized
assets and liabilities
Fair value of the acquired assets and liabilities (provisional)
Provisional goodwill
2020
456
22
103
375
If the aforementioned acquisitions had been completed –
and thus their business activities included – effective Janu-
ary 1, 2020, sales of the Henkel Group for the reporting period
January 1 to December 31, 2020 would have been higher by
212 million euros and income after tax would have been higher
by 11 million euros after deduction of acquisition-related inci-
dental costs.
The business activities actually contributed 42 million euros
to sales and 0.3 million euros to income after tax. Acquisition-
related incidental costs amounted to 2 million euros.
Divestments
On April 1, 2020, we sold our Asian business involving surface
cleaners used within the semi-conductor and LCD industries.
The sale price was around 51 million euros.
Consolidation methods
The financial statements of Henkel AG & Co. KGaA and of the
subsidiaries included in the consolidated financial statements
were prepared on the basis of uniformly valid principles of
recognition and measurement, applying the standardized
year-end date adopted by the Group. Such entities are included
in the consolidated financial statements as of the date on
which the Group acquired control.
H e n k e l A n n u a l R e p o r t 2 0 2 0
18 4
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
All receivables and liabilities, sales, income and expenses, as
well as intra-group profits on transfers of non-current assets
or inventories, are eliminated on consolidation.
The purchase method is used for capital consolidation. With
business combinations, therefore, all hidden reserves and
hidden charges in the entity acquired are revalued at the time
of acquisition, and all identifiable intangible assets are sepa-
rately disclosed if they are clearly separable or if their recogni-
tion arises from a contractual or other legal right. Any differ-
ence arising between the acquisition cost and the (share of)
net assets after purchase price allocation is recognized as
goodwill. The goodwill attributable to subsidiaries is meas-
ured in the functional currency of the subsidiary.
Entities acquired are included in the consolidation for the first
time as subsidiaries by offsetting the carrying amount of the
respective parent company’s investment in them against their
assets and liabilities. Contingent consideration is recognized
at fair value as of the date of first-time consolidation. Subse-
quent changes in value do not result in an adjustment to the
valuation at the time of acquisition. (Incidental) costs relating
to the acquisition of participating interests in entities are not
included in the purchase price. Instead, they are recognized
through profit or loss in the period in which they occur.
In the recognition of acquisitions of less than 100 percent
of the shares in a company, non-controlling interests are
measured at the fair value of the proportion of net assets that
they represent. The Henkel Group uses the present access
method to recognize put options granted on non-controlling
interests, unless the acquisition of the outstanding non-con-
trolling interests has already been realized from an accounting
standpoint. This method requires the recognition of a finan-
cial liability, remeasured through equity, for the commitment
associated with the put options granted. The non-controlling
interests continue to be recognized in the statement of finan-
cial position and the statement of comprehensive income.
Changes in the shareholdings of subsidiary companies result-
ing in a decrease or an increase in the participating interests of
the Group without loss of control are recognized within equity
as equity transactions between shareholders.
As soon as the control of a subsidiary is relinquished, all the
assets and liabilities and the non-controlling interests, and
also the accumulated currency translation gains or losses, are
derecognized. In the event that Henkel continues to own non-
controlling interests in the non-consolidated entity, these are
measured at fair value. The result of deconsolidation is recog-
nized under other operating income or expenses.
Associates
An associate is a company over which the Group can exercise
significant influence on the financial and operating policies
without controlling it. Significant influence is generally as-
sumed when the Group holds 20 percent or more of the voting
rights. Where a Group company conducts transactions with
an associate, the resulting profits or losses are eliminated in
accordance with the share of the Group in that company.
Shares in associates are generally recognized using the equity
method. For simplification purposes, investments in associ-
ates that are less relevant for the Group and for the presenta-
tion of a fair view of its net assets, financial position and re-
sults of operations, are recognized at cost less impairment.
The carrying amount of the companies recognized by the
Group using the equity method as of December 31, 2020 was
0 million euros (previous year: 0 million euros).
H e n k e l A n n u a l R e p o r t 2 0 2 0
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The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Currency translation
The annual financial statements, including the hidden reserves
and hidden charges of Group companies recognized by the
purchase method, goodwill arising on capital consolidation,
and the statement of cash flows, are translated into euros
using the functional currency method outlined in IAS 21 The
Effects of Changes in Foreign Exchange Rates. The functional
currency is the currency in which a foreign company predomi-
nantly generates funds and makes payments. As the func-
tional currency for all the companies included in the consoli-
dation is generally the local currency of the company con-
cerned, assets and liabilities are translated at closing rates,
while income and expenses are translated at the average rates
for the year as an approximation of the actual rates at the date
of the transaction. Equity items are recognized at historical ex-
change rates. The differences arising from using average rather
than closing rates are taken to equity and shown as other com-
ponents of equity, or as non-controlling interests, and remain
neutral in respect of net income until the shares in the Group
company are divested.
In the subsidiaries’ annual financial statements, transactions
in foreign currencies are converted at the rates prevailing at
the time of the transaction. Financial assets and liabilities in
foreign currencies are measured at closing rates through profit
or loss. For the main currencies in the Group, the following
exchange rates have been used based on 1 euro:
Currencies
Chinese yuan
Mexican peso
Polish zloty
Russian ruble
Turkish lira
US dollar
ISO code
CNY
MXN
PLN
RUB
TRY
USD
Average exchange rate
Exchange rate on December 31
2019
7.74
21.56
4.30
72.48
6.36
1.12
2020
7.87
24.52
4.44
82.66
8.05
1.14
2019
7.82
21.22
4.26
69.96
6.68
1.12
2020
8.02
24.42
4.56
91.47
9.11
1.23
H e n k e l A n n u a l R e p o r t 2 0 2 0
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The Company
Shares and bonds
Corporate governance
Combined management report
Recognition and measurement methods
Summary of selected measurement methods
Financial statement items
Assets
Goodwill
Measurement method
Lower of initially recognized value of acquisitions as per IFRS 3 and comparative figure follow-
ing impairment testing at the level of the cash-generating units (“impairment only” method)
Consolidated financial statements
Other intangible assets
Further information
Credits
Contacts
Financial calendar
With indefinite useful lives
With definite useful lives
Property, plant and equipment
Financial assets (categories per IFRS 9)
Amortized cost
Fair value through profit or loss
Fair value through other comprehensive income
Other assets
Inventories
Assets held for sale
Lower of cost and recoverable amount (“impairment only” method)
Amortized cost less any impairment losses
Depreciated cost less any impairment losses
Amortized cost using the effective interest method
Fair value with gains or losses recognized in the income statement
Fair value with gains or losses recognized in other comprehensive income1
(Amortized) cost
Lower of cost and fair value less costs to sell
Lower of carrying amount and fair value less costs to sell
1 Apart from impairment equivalent to the expected credit losses, and from effects arising from measurement in a foreign currency.
Equity and liabilities
Provisions for pensions and similar obligations
Other provisions
Financial liabilities (categories per IFRS 9)
Amortized cost
Fair value through profit or loss
Other liabilities
Present value of future obligations (projected unit credit method)
Settlement amount
Amortized cost using the effective interest method
Fair value with gains or losses recognized in the income statement
Settlement amount
H e n k e l A n n u a l R e p o r t 2 0 2 0
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The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
The methods of recognition and measurement, which are
basically unchanged from the previous year, are described
in detail in the notes relating to the individual items of the
statement of financial position. Also provided as part of the
financial instruments report (Note 23 on pages 227 to 252) are
the disclosures relevant for the Henkel Group with regard to
IFRS 7 Financial Instruments: Disclosures, showing the break-
down of our financial instruments by class, our methods for
fair value measurement, and the derivative financial instru-
ments that we use. Changes to International Financial Report-
ing Standards (IFRSs) that were applied for the first time in the
year under review are discussed in the section entitled “New
international accounting regulations according to Interna-
tional Financial Reporting Standards (IFRSs)” on pages 189 to
192. Changes in the methods of recognition and measurement
arising from revised and new standards are applied retrospec-
tively, provided that the effect is material and there are no al-
ternative regulations. The consolidated statement of income
from the previous year and the opening balance for this com-
parative period are amended as if the new methods of recogni-
tion and measurement had always been applied.
Accounting estimates, assumptions
and discretionary judgments
Preparation of the consolidated financial statements is based
on a number of accounting estimates and assumptions. These
have an impact on the reported amounts of assets, liabilities
and contingent liabilities at the reporting date and the dis-
closure of income and expenses for the reporting period. The
actual amounts may differ from these estimates.
The accounting estimates and their underlying assumptions
are based on past experience and are continually reviewed.
Changes in accounting estimates are recognized in the period
in which the change takes place where such change exclu-
sively affects that period. A change is recognized in the period
in which it occurs and in later periods where such change af-
fects both the reporting period and subsequent periods. The
judgments of the Management Board regarding the application
of those IFRSs which have a significant impact on the consoli-
dated financial statements are presented, in particular, in the
explanatory notes on goodwill and other intangible assets
(Note 1 on pages 194 to 199), right-of-use assets recognized in
property, plant and equipment (Note 2 on pages 200 to 203),
provisions for pensions and similar obligations (Note 16 on
pages 210 to 221), other provisions (Note 17 on pages 222 and
223), financial instruments (Note 23 on pages 227 to 252), sales
(Note 24 on pages 253 and 254), income taxes (Note 22 on page
226 and Note 32 on pages 256 to 258), and share-based payment
plans (Note 36 on pages 261 to 264).
In light of the global COVID-19 pandemic, estimates required
when preparing the consolidated financial statements are sub-
ject to greater uncertainty in some areas. This is especially true
of estimates of any possible impairment of non-financial as-
sets, such as goodwill and other intangible assets. Particular
attention has therefore been paid to the heightened uncer-
tainty surrounding future cash flows in the sensitivity anal-
yses conducted as part of impairment testing (see Note 1 on
pages 194 to 199).
H e n k e l A n n u a l R e p o r t 2 0 2 0
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The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Details of the impacts of the COVID-19 pandemic on the valua-
tion of financial instruments can be found in Note 23 on pages
227 to 252.
Amendments to the consolidated statement
of financial position
Material discretionary judgments are made in respect of the
demarcation of the cash-generating units as explained in Note 1
on pages 194 to 199 and the segment reporting as explained
in Note 37 on pages 264 to 266. Put options granted on non-
controlling interests require estimation as to whether the
Henkel Group is already the beneficiary of these shares or
not, and hence, whether the present access method must be
applied.
Amendment of prior-year figures
The allocation of the purchase price for all shares in Deva
Parent Holdings, Inc., New York City, USA, and the majority
shareholding in eSalon.com LLC, Los Angeles, USA, was final-
ized in fiscal 2020. The prior-year figures were subsequently
amended accordingly. The adjustment included an increase
of 4 million euros in intangible assets and of 12 million euros
for deferred tax assets. The prior-year figure for current assets
was reduced by 10 million euros in total. Conversely, deferred
tax liabilities decreased by 13 million euros while other current
provisions increased by 19 million euros.
in million euros
Goodwill
Other intangible assets
Property, plant and equipment
Deferred tax assets
Non-current assets
Inventories
Trade accounts receivable
Income tax refund claims
Other assets
Cash and cash equivalents
Current assets
Total assets
Equity
Deferred tax liabilities
Non-current liabilities
Other provisions
Current liabilities
Total equity and liabilities
Dec. 31, 2019
reported
12,922
4,324
3,775
863
22,263
2,193
3,413
225
473
1,462
9,140
31,403
18,611
815
4,271
1,634
8,521
31,403
Amend-
ments
51
-46
–
12
16
-6
2
-3
-1
-2
-10
6
Dec. 31, 2019
amended
12,972
4,278
3,775
875
22,279
2,187
3,415
222
472
1,460
9,130
31,409
–
-13
-13
19
19
6
18,611
802
4,258
1,653
8,540
31,409
H e n k e l A n n u a l R e p o r t 2 0 2 0
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The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
New international accounting
regulations according to
International Financial Reporting
Standards (IFRSs)
Accounting methods applied for the first time
in the year under review
Amendments to References to the
Conceptual Framework in IFRS Standards
IAS 1 and IAS 8 (Amendment)
Definition of Material
IFRS 3 (Amendment) Definition of a Business
IFRS 9, IAS 39 and IFRS 7 (Amendment)
Interest Rate Benchmark Reform
IFRS 16 (Amendment) Covid 19-Related
Rent Concessions
Mandatory for fiscal
years beginning
on or after
January 1, 2020
January 1, 2020
January 1, 2020
January 1, 2020
January 1, 2020
AAmmeennddmmeennttss ttoo rreeffeerreenncceess ttoo tthhee ccoonncceeppttuuaall ffrraammeewwoorrkk iinn
IIFFRRSSss
Following revision of the conceptual framework of the IFRSs,
corresponding references to same were updated in various
standards. These – primarily editorial – changes do not di-
rectly influence the consolidated financial statements.
IIAASS 11 aanndd IIAASS 88 ((AAmmeennddmmeenntt))
Following the amendments to IAS 1 Presentation of Financial
Statements and IAS 8 Accounting Policies, Changes in Account-
ing Estimates and Errors, the term “materiality” has been de-
fined more narrowly. Whereas the former interpretation meant
that the omission or misrepresentation of the information
could serve to influence users of the financial statements,
information is now likewise classed as material if obscuring
it with immaterial information can have an influencing effect.
This also applies if such an effect can reasonably be expected.
According to the new definition, however, this must be seen in
relation to the primary users of the financial statements only.
While the amendments to IAS 1 and IAS 8 have produced a
more precise definition of the term “material,” they do not
currently exert any tangible influences on the consolidated
financial statements.
IIFFRRSS 33 ((AAmmeennddmmeenntt))
In its amendments to IFRS 3, the standard-setter has included
a more precise definition of a “business” such that it requires
an input and a substantive process that together significantly
contribute to the ability to create outputs. The requirement to
assess whether market participants are capable of replacing
any missing elements has been removed. It is also stated that
if an entity is acquired before it starts generating sales, the or-
ganized workforce must also be taken on before a business ac-
quisition can be assumed. If a business acquisition cannot be
assumed, IFRS 3 is not applicable and therefore, for example,
goodwill cannot be recognized. Now that the definition of a
business has been narrowed, some acquisitions by the Henkel
Group may in future be classified as the purchase of a group of
assets, rather than qualifying as a business per IFRS 3.
IIFFRRSS 99,, IIAASS 3399 aanndd IIFFRRSS 77 ((AAmmeennddmmeenntt))
Following the replacement of interest rate benchmarks as part
of the IBOR reform, the standard-setter amended those stand-
ards that govern the accounting policies and presentation of
financial statements – IFRS 9 Financial Instruments, IAS 39
Financial Instruments: Recognition and Measurement, and
IFRS 7 – as part of Phase 1 of the respective project of the Inter-
national Accounting Standards Board (IASB). These amend-
ments allow for a continuous application of hedge accounting
for hedging transactions directly affected by the IBOR reform.
They enable the simplified demonstration of the highly prob-
able occurrence of cash flows under designated cash flow
hedges that are dependent on an IBOR. The same applies to
the effectiveness of hedges. Since there were no occurrences
requiring application of the simplification rules within the
Henkel Group in fiscal 2020, the amendments to IFRS 9, IAS 39
H e n k e l A n n u a l R e p o r t 2 0 2 0
1 9 0
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
and IFRS 7 do not have any impact on the consolidated finan-
cial statements.
IIFFRRSS 1166 ((AAmmeennddmmeenntt))
The amendments to IFRS 16 Leases provide lessees with an
exemption from assessing whether a COVID-19-related rent
concession – such as waiving or deferring payments – is a
lease modification. Instead, the changes in cash flows can, as
a rule, be treated as variable lease payments. The exemption
from the general rules governing modification is only applica-
ble to rent concessions received prior to June 30, 2021. Since
the Henkel Group did not receive any such rent concessions
in fiscal 2020, the amendment does not affect the consoli-
dated financial statements of Henkel.
Accounting regulations not yet applied
The following accounting regulations have already been
adopted into EU law (endorsed) but were not yet applicable
in fiscal 2020 or were not voluntarily applied by the Henkel
Group in advance of their effective date:
Accounting regulations not yet applied
IFRS 4 (Amendment) Deferral of IFRS 9
IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16
(Amendment) Interest Rate Benchmark
Reform – Phase 2
Mandatory for fiscal
years beginning
on or after
January 1, 2021
January 1, 2021
The accounting standards and amendments to existing stand-
ards that have not yet been applied are not generally expected
to have any significant impact on the consolidated financial
statements.
IIFFRRSS 44 ((AAmmeennddmmeenntt))
Following amendment of IFRS 4 Insurance Contracts, insur-
ance companies are temporarily allowed to continue using IAS
39 for financial instrument accounting instead of IFRS 9, until
IFRS 17 Insurance Contracts becomes applicable.
IIFFRRSS 99,, IIAASS 3399,, IIFFRRSS 77,, IIFFRRSS 44 aanndd IIFFRRSS 1166 ((AAmmeennddmmeenntt))
As part of Phase 2 of the IASB’s IBOR reform project, further
practical expedients have been defined with regard to interest-
bearing original financial instruments and to hedge account-
ing. Unlike Phase 1 of the project, these amendments to exist-
ing standards IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 relate to
the effects of actually replacing interest rate benchmarks. For
example, as a practical expedient when accounting for finan-
cial instruments measured at amortized cost, the replacement
of the interest rate benchmark can be represented through
amendment to the effective interest rate. In addition, for
hedge accounting purposes, for example, designated hedged
items and hedging transactions may be adjusted to reflect the
changed interest rate benchmark.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Accounting regulations not yet adopted into EU law
In fiscal 2020, the IASB issued the following standards and
amendments to existing standards of relevance to Henkel,
which still have to be adopted into EU law before they become
applicable:
Accounting regulations not yet adopted into EU law
Improvements to IFRSs 2018–2020
IFRS 3 (Amendment) Reference to the
Conceptual Framework
IAS 16 (Amendment) Proceeds before Intended Use
IAS 37 (Amendment) Onerous Contracts –
Cost of Fulfilling a Contract
IAS 1 (Amendment) Classification of Liabilities as
Current or Non-current and Deferral of Effective Date
IFRS 17 Insurance Contracts (including Amendments)
Mandatory for fiscal
years beginning
on or after
January 1, 2022
January 1, 2022
January 1, 2022
January 1, 2022
January 1, 2023
January 1, 2023
The accounting standards and amendments to existing stand-
ards not yet adopted into EU law are not generally expected to
have any significant impact on the consolidated financial
statements.
IImmpprroovveemmeennttss ttoo IIFFRRSSss 22001188––22002200
Four standards were amended in the 2018–2020 cycle of an-
nual improvements to IFRSs. The amendments to IFRS 1 First-
time Adoption of International Financial Reporting Standards
permit a subsidiary to measure not only assets and liabilities
but also cumulative translation differences using the amounts
reported by its parent if it does not apply the IFRSs to its indi-
vidual financial statements until after the parent’s transition.
These amounts must, however, be amended for consolidation
adjustments and any other adjustments performed by the
parent under IFRS 3 in connection with the acquisition of the
subsidiary.
The amendments to IFRS 9 clarify which fees are to be included
in the 10-percent test to ascertain whether a change in cash
flows from a financial liability represents a substantial modifi-
cation requiring derecognition of the liability. The fees to be
included are, accordingly, only fees and costs that are payable
by the debtor to the creditor or vice versa or that are paid on
behalf of both parties.
As part of the annual improvements, one of the Illustrative
Examples in IFRS 16 was amended that had formerly caused a
deal of confusion with regard to classifying payments by the
lessor to the lessee in connection with tenant fixtures. Follow-
ing the removal of references to payment made by the lessor
from the example, according to the general regulations of the
standard such payments only constitute lease incentives if the
tenant fixtures in question represent assets belonging to the
lessee.
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Amendments were also made to IAS 41 Agriculture relating to
the inclusion of tax effects in the initial and subsequent meas-
urement of agricultural products.
IIFFRRSS 33 ((AAmmeennddmmeenntt))
Following the revision of the IFRS conceptual framework pub-
lished in 2018, corresponding references to the conceptual
framework in IFRS 3 were amended, with clarification requir-
ing that contingent assets acquired through a business combi-
nation should not be recognized. The amendments are mostly
of an editorial nature.
IIAASS 1166 ((AAmmeennddmmeenntt))
The IASB has amended IAS 16 Property, Plant and Equipment
to clarify that proceeds from selling items produced while
bringing an item of property, plant and equipment to the loca-
tion and condition necessary for it to be capable of operating
in the manner intended by management may not be deducted
from the cost of said asset. Instead they must be recognized in
profit.
IIAASS 3377 ((AAmmeennddmmeenntt))
The planned amendments to IAS 37 Provisions, Contingent Li-
abilities and Contingent Assets specify which costs comprise
the costs of contract fulfillment when determining whether a
contract is onerous. Accordingly, these costs include both in-
cremental costs of fulfilling the contract, such as direct labor
or material costs, and also allocated overhead costs that relate
directly to the fulfillment of the contract, such as depreciation
of certain property, plant and equipment.
IIAASS 11 ((AAmmeennddmmeenntt))
In its amendments to IAS 1, the IASB clarifies that the classifi-
cation of liabilities as current or non-current is determined by
the rights and obligations in place at the reporting date. Any
expectations of management or events after the reporting date
that could affect the classification are to be ignored. Due to the
COVID-19 pandemic, the IASB has deferred the effective date of
this amendment from January 1, 2022 to January 1, 2023.
IIFFRRSS 1177 IInnssuurraannccee CCoonnttrraaccttss ((iinncclluuddiinngg AAmmeennddmmeennttss))
IFRS 17 represents a comprehensive new approach for insurers
when accounting for insurance contracts. The standard will
replace the formerly applicable IFRS 4.
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Notes to the consolidated statement of
financial position
The measurement and recognition policies for financial statement items are described in the relevant note.
The intangible assets with indefinite useful lives essentially
comprise trademarks and other rights with no obvious time
limitation on the generation of cash inflows. Given the con-
sistency and strength of the brands, indefinite useful lives are
assumed, and these intangible assets are not subject to sched-
uled amortization. However, an impairment test is instead
performed annually and whenever there are indications of
impairment.
Non-current assets
All non-current assets with definite useful lives are depreciated
or amortized exclusively using the straight-line method on the
basis of their estimated useful lives. The useful life estimates
are reviewed annually. If facts or circumstances indicate the
need for impairment, the recoverable amount is determined.
It is measured at the higher of fair value less costs of disposal
and value in use. Impairment losses are recognized if the recov-
erable amounts of the assets are lower than their carrying
amounts. Impairment is allocated to the functions in the
statement of income.
The same standardized useful lives were applied in the fiscal
year as in the previous year, as follows:
Useful life
in years
Intangible assets with definite useful lives
Residential buildings
Office buildings
Research and factory buildings, workshops,
stores and staff buildings
Plant facilities
Machinery
Office equipment
Vehicles
Factory and research equipment
3 to 20
50
40
25 to 33
10 to 25
7 to 10
10
5 to 10
2 to 5
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1 Goodwill and other intangible assets
Cost
Trademarks and other rights
Assets
with indefinite
useful lives
Assets
with definite
useful lives
3,181
82
–
–
–
-16
–
49
3,296
98
–
–
–
-372
–
-190
2,833
1,918
16
–
8
-22
-4
5
43
1,964
28
–
7
-62
-21
4
-94
1,827
Internally
generated
intangible
assets with
definite useful
lives
499
–
–
6
-1
–
54
9
567
–
–
7
-6
–
38
-8
597
Intangible
assets in
development
Goodwill
Total
291
–
–
54
–
–
-59
1
287
–
–
52
–
–
-41
–
298
12,335
482
-20
–
–
-9
–
196
12,984
375
-29
–
–
-65
–
-893
12,371
18,224
580
-20
68
-23
-29
–
298
19,098
501
-29
66
-68
-458
–
-1,185
17,926
in million euros
At Jan. 1, 2019
Acquisitions
Divestments
Additions
Disposals
Reclassifications to assets held for sale
Reclassifications
Translation differences
At Dec. 31, 2019/Jan. 1, 2020¹
Acquisitions
Divestments
Additions
Disposals
Reclassifications to assets held for sale
Reclassifications
Translation differences
At Dec. 31, 2020
1 Prior-year figures amended (please refer to the notes on page 188).
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Accumulated amortization/impairment
Trademarks and other rights
Assets
with indefinite
useful lives
Assets
with definite
useful lives
in million euros
At Jan. 1, 2019
Divestments
Write-ups
Scheduled amortization
Impairment
Disposals
Reclassifications to assets held for sale
Reclassifications
Translation differences
At Dec. 31, 2019/Jan. 1, 2020
Divestments
Write-ups
Scheduled amortization
Impairment
Disposals
Reclassifications to assets held for sale
Reclassifications
Translation differences
At Dec. 31, 2020
8
–
–
–
5
–
-5
–
3
11
–
–
–
268
–
-217
–
–
62
1,371
–
–
109
–
-21
-2
–
37
1,494
–
–
100
1
-60
-7
–
-79
1,449
Internally
generated
intangible
assets with
definite useful
lives
280
–
–
51
–
-1
–
–
1
331
–
–
55
19
-6
–
–
-6
393
Intangible
assets in
development
Goodwill
Total
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
29
-17
–
–
9
–
-9
–
–
12
–
–
–
31
–
-31
–
–
12
1,688
-17
–
160
14
-22
-16
–
41
1,848
–
–
155
318
-66
-255
–
-84
1,915
H e n k e l A n n u a l R e p o r t 2 0 2 0
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Net carrying amounts
Trademarks and other rights
Assets
with indefinite
useful lives
Assets
with definite
useful lives
in million euros
At December 31, 2020
At December 31, 20191
2,771
3,284
378
471
1 Prior-year figures amended (please refer to the notes on page 188).
Goodwill represents the future economic benefit of assets that
are acquired through business combinations and are not indi-
vidually identifiable and separately recognized, together with
expected synergies. Goodwill upon first-time consolidation
constitutes a positive difference between the cost of acquiring
the entity and the amount of acquired identified assets and
assumed liabilities existing at the time of acquisition and
measured as specified in IFRS 3. Subsequent measurement is
based on the lower of initially recognized value at acquisition
and a comparative figure following impairment testing at the
level of the cash-generating units. Trademarks and other
rights acquired for valuable consideration are stated at pur-
chase cost, while internally generated software is stated at
development cost.
Additions to internally generated intangible assets mostly
reflect investments in consolidating and optimizing our IT
system architecture for managing business processes.
The change in goodwill resulting from acquisitions and divest-
ments made in the fiscal year is presented in the section “Acqui-
sitions and divestments” on pages 182 and 183.
Amortization and impairment of trademarks and other rights
are recognized as selling and distribution expenses. Write-
Internally
generated
intangible
assets with
definite useful
lives
204
236
Intangible
assets in
development
Goodwill
Total
298
287
12,359
12,972
16,011
17,250
downs and impairment losses on other intangible assets are
allocated to the same expense items in the consolidated state-
ment of income as the scheduled amortization of the assets.
Goodwill as well as trademarks and other rights with indefi-
nite useful lives are subjected to an impairment test once a
year and also where there are indications of impairment
(“impairment only” approach). In light of the economic impacts
of the COVID-19 pandemic, impairment tests were conducted
as indicated during the year at the level of the individually
affected cash-generating units for goodwill and for trademarks
and other rights with indefinite useful lives. The tests did not
reveal any need for impairment.
We duly tested goodwill and trademarks and other rights with
indefinite useful lives for impairment in the course of our an-
nual analysis. The following table shows the cash-generating
units together with the associated goodwill at the carrying
amounts applicable as of the reporting date. The description
of the cash-generating units can be found in Note 37 on
pages 264 to 266 and in the combined management report
on pages 112 to 120.
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Goodwill carrying amounts
Cash-generating units
in million euros
Automotive & Metals
Electronics & Industrials
Craftsmen, Construction & Professional
Packaging & Consumer Goods
Total Adhesive Technologies
Branded Consumer Goods
Hair Salon business
Total Beauty Care
Laundry Care
Home Care
Total Laundry & Home Care
December 31, 2019¹
Goodwill
Terminal
growth rate
956
1,852
788
2,007
5,603
1,259
1,360
2,619
3,616
1,134
4,750
1.50%
1.40%
1.00%
1.50%
1.00%
1.00%
1.00%
1.00%
Weighted
average cost
of capital
(after tax)
6.75%
6.75%
6.75%
6.75%
5.25%
5.25%
5.25%
5.25%
December 31, 2020
Goodwill
Terminal
growth rate
887
1,708
877
1,908
5,380
1,426
1,168
2,594
3,314
1,071
4,385
1.50%
1.40%
1.00%
1.50%
1.00%
1.00%
1.00%
1.00%
Weighted
average cost
of capital
(after tax)
6.50%
6.50%
6.50%
6.50%
5.00%
5.00%
5.00%
5.00%
1 Prior-year figures amended (please refer to the notes on page 188 and to the notes on the segment report on pages 264 to 266).
Goodwill impairment is assessed at the level of the global
cash-generating units, and is predominantly based on fair
value less costs of disposal. During reorganization of the
Adhesive Technologies business unit, the cash-generating
units that form the basis for testing goodwill impairment were
redefined. In order to ensure the best possible reflection of the
goodwill associated with the new structure, allocation was
based on the relative fair values of the new cash-generating
units in accordance with the requirements of IAS 36 Impair-
ment of Assets. The impairment test performed as part of this
procedure did not reveal any need for impairment.
Impairment of trademarks and other rights with indefinite
useful lives is assessed at the level of either global cash-gener-
ating units (Adhesive Technologies) or regional cash-generat-
ing units (Beauty Care and Laundry & Home Care). Testing is
also based on fair value less costs of disposal.
A discounted cash flow method is used to determine fair value
(before deduction of costs of disposal), which is allocated to
level 3 of the fair value hierarchy (see Note 23 on pages 227 to
252). The estimated future cash flows are derived from the
budget approved by the relevant corporate management bod-
ies, which is the basis for the impairment test. The assumptions
upon which the essential planning parameters are based reflect
experience gained in the past, aligned to current information
provided by external sources. Budgets are prepared on the
basis of a planning horizon of four years. During the budgeting
process, the anticipated adverse effects of the COVID-19 pan-
demic on the Group’s business were considered despite their
being surrounded by great uncertainty. Overall, we do not ex-
pect our sales in fiscal 2021 to match the level prior to the
outbreak of the COVID-19 pandemic. In the years that follow,
however, we expect sales in the cash-generating units to re-
turn to the level witnessed before the COVID-19 pandemic and
the markets of relevance for our business activities to return to
normal, albeit within differing time frames.
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The expected average annual growth in sales in the cash-gen-
erating units of Adhesive Technologies during the four-year
detailed planning period is between 2 and 6 percent (previous
year: 1 to 4 percent). The average annual sales growth of the
cash-generating units in the Beauty Care business unit over
the four-year forecasting horizon is budgeted at between 4 and
7 percent (previous year: 4 to 5 percent), accompanied by a
slight increase in market share. We expect an average annual
growth in sales in the cash-generating units in the Laundry &
Home Care business unit during the four-year detailed plan-
ning period of 3 percent (previous year: 4 percent). Here, too,
we expect a slight increase in market share.
For the period after that, a growth rate in cash flows of between
1 and 2 percent (previous year: 1 to 2 percent) is assumed for
the purpose of goodwill impairment testing. This assumption
considers, in particular, the passing-on of expected inflation
rises to our customers. The euro to US dollar exchange rate ap-
plied is 1.17 (previous year: 1.16). Taking into account specific
tax effects, the cash flows of the various cash-generating units
are discounted at different rates reflecting the weighted aver-
age cost of capital (WACC) in each business unit: 6.5 percent
(previous year: 6.75 percent) after tax for Adhesive Technolo-
gies and 5.0 percent (previous year: 5.25 percent) after tax for
both Beauty Care and Laundry & Home Care.
Most of the trademarks and other rights with indefinite useful
lives are attributable to two cash-generating units. The carry-
ing amount of the trademarks and other rights allocated to the
regional cash-generating unit Laundry Care North America in
the Laundry & Home Care business unit was 1.1 billion euros
as of December 31, 2020 (previous year: 1.3 billion euros). For
impairment testing purposes, a cost of capital of 5.0 percent
and a terminal growth rate of 1.0 percent were applied. The
average annual increase in sales in the cash-generating unit
during the four-year detailed planning period is 3 percent. As
of December 31, 2020, the carrying amount of the trademarks
and other rights allocated to the cash-generating unit Branded
Consumer Goods North America in the Beauty Care business
unit was 366 million euros (previous year: 400 million euros).
For impairment testing purposes, a cost of capital of 5.0 per-
cent and a terminal growth rate of 1.0 percent were applied.
The average annual increase in sales during the four-year de-
tailed planning period is 3 percent.
Given our continued active portfolio management, we antici-
pate achieving at least stable gross margins in all our business
units.
Of the impairment totaling 299 million euros recognized on
goodwill and trademarks and other rights in fiscal 2020,
238 million euros is attributable to assets classified as held for
sale as of the reporting date (please refer to the notes on pages
207 and 208). The remaining impairment of 61 million euros
is attributable to trademarks and other rights with indefinite
useful lives that were not held for sale, and relates essentially
to the write-off of discontinued trademarks in the Laundry &
Home Care business.
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As was also the case in the previous year, there was no need for
impairment of, nor to write up, any goodwill not classified as
held for sale.
Apart from the discontinued trademark rights, the trademarks
and other rights with indefinite useful lives with a total net
carrying amount of 2,771 million euros (previous year:
3,334 million euros) are established in their markets and will
continue to be intensively promoted. Moreover, there are no
other statutory, regulatory or competition-related factors that
limit the usage of our brand names.
A sensitivity analysis conducted in response to the COVID-19
pandemic assumed an increase of 1 percent in the weighted
cost of capital, a reduction of 0.5 percent in the terminal
growth rate, and a reduction of 10 percent in free cash flow
within the context of impairment testing. The analysis did
not reveal any need for impairment.
The company also intends to continue using the trademarks
and other rights disclosed as having definite useful lives. No
further impairment losses were recognized with respect to
trademarks and other rights with definite useful lives in 2020.
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2 Property, plant and equipment
Cost
in million euros
At Jan. 1, 2019
Acquisitions
Divestments
Additions to existing operations
Additions of right-of-use assets
Disposals
Reclassifications to assets held for sale
Reclassifications
Translation differences
At Dec. 31, 2019/Jan. 1, 2020
Acquisitions
Divestments
Additions to existing operations
Additions of right-of-use assets
Disposals
Reclassifications to assets held for sale
Reclassifications
Translation differences
At Dec. 31, 2020
Land, land
rights and
buildings
2,692
19
-2
46
110
-15
-18
55
34
2,921
3
–
50
139
-51
-18
68
-168
2,944
Plant and
machinery
3,747
1
–
138
5
-106
-22
200
41
4,004
1
–
156
17
-116
-34
190
-231
3,986
Factory and
office
equipment
1,211
1
–
69
24
-135
-1
39
7
1,215
–
–
70
26
-71
-9
45
-61
1,216
Assets in the
course of
construction
402
3
–
341
–
–
–
-294
-1
451
–
–
374
–
-2
–
-304
-21
499
Total
8,052
24
-2
594
139
-256
-41
–
81
8,591
4
–
649
182
-241
-61
–
-481
8,644
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Accumulated depreciation/impairment
in million euros
At Jan. 1, 2019
Divestments
Write-ups
Scheduled depreciation
Impairment
Disposals
Reclassifications to assets held for sale
Reclassifications
Translation differences
At Dec. 31, 2019/Jan. 1, 2020
Divestments
Write-ups
Scheduled depreciation
Impairment
Disposals
Reclassifications to assets held for sale
Reclassifications
Translation differences
At Dec. 31, 2020
Net carrying amounts
in million euros
At Dec. 31, 2020
Of which: right-of-use assets
At Dec. 31, 2019
Of which: right-of-use assets
Land, land
rights and
buildings
1,145
–
-2
164
2
-13
-7
–
1
1,290
–
–
167
9
-46
-10
–
-49
1,360
Land, land
rights and
buildings
1,584
437
1,631
419
Plant and
machinery
2,463
–
-1
252
16
-100
-16
–
-5
2,609
–
–
260
44
-105
-28
–
-123
2,658
Factory and
office
equipment
866
–
–
141
–
-133
–
–
43
917
–
–
136
2
-69
-9
–
-38
938
Assets in the
course of
construction
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Plant and
machinery
1,328
23
1,395
20
Factory and
office
equipment
278
40
298
46
Assets in the
course of
construction
499
–
451
–
Total
4,474
–
-3
557
18
-246
-23
–
39
4,816
–
–
563
56
-221
-47
–
-209
4,956
Total
3,688
500
3,775
485
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Property, plant and equipment includes land, land rights and
buildings, plant and machinery, factory and office equipment,
rights of use to corresponding leased assets, and assets in the
course of construction. Special considerations relating to the
recognition of right-of-use assets and separate disclosures re-
garding leases are discussed in the following section “Addi-
tional disclosures regarding leases.”
Additions are stated at purchase or manufacturing cost. The
latter includes direct costs and appropriate proportions of nec-
essary overheads. Borrowing costs for qualified assets per IAS
23 Borrowing Costs are currently not capitalized due to their
lack of materiality. Cost figures are shown net of investment
grants and allowances. As of December 31, 2020, investment
grants of 21 million euros (previous year: 19
were deducted from purchase and manufacturing costs. Some
of the grants are contingent upon certain terms and condi-
tions being met, such as location guarantees. The company is
sufficiently confident that these terms and conditions can be
satisfied. Acquisition-related incidental costs incurred in order
to make the asset ready for the intended use are capitalized.
An overview of the primary investment projects undertaken
during the fiscal year can be found on pages 121 and 122 in the
combined management report.
million euros)
At December 31, 2020, property, plant and equipment with a
carrying amount of 0 million euros had been pledged as secu-
rity for existing liabilities (previous year: 0 million euros).
The periods over which the assets are depreciated are based on
their estimated useful lives as set out on page 193. The depreci-
ation and impairment losses included in the cost of sales, sell-
ing and distribution expenses, administrative expenses and
research and development expenses in a ratio equivalent to the
use of the asset. Write-ups are recognized in other operating
income.
Of the property, plant and equipment impairments recognized
in fiscal 2020, a total of 5 million euros is attributable to assets
classified as held for sale as of the reporting date (please refer
to the notes on pages 207 and 208).
Additional disclosures regarding leases
In the course of its business operations, Henkel enters into
various lease agreements as a lessee. The underlying assets
primarily include office buildings and fixtures, production
facilities and warehouses – all of which are recognized under
land, land rights and buildings – as well as plant and machin-
ery, and the vehicles and IT inventory classified as factory and
office equipment.
Right-of-use assets are recognized initially at the value of the
lease liability plus any lease payments made at or prior to pro-
vision of the leased asset, less any lease incentives received.
Furthermore, additions include all initial direct costs in-
curred by the lessee together with the estimated cost of dis-
mantling or returning the leased asset to the condition, and
similar, required by the lease agreement at the end of the lease
term. In the case of short-term leases and leases involving assets
of low value, the Henkel Group exercises the option not to rec-
ognize a right-of-use asset or a lease liability.
In fiscal 2020, the Henkel Group recognized additions to right-
of-use assets in property, plant and equipment of 182 million
euros in total (previous year: 139 million euros), attributable
mainly to land, land rights and buildings. Acquisitions ac-
counted for additions of 3 million euros (previous year: 15 mil-
lion euros), attributable to land, land rights and buildings. The
additions were offset by scheduled depreciation of 136 million
euros (previous year: 133 million euros). As of December 31,
2020, right-of-use assets amounted to 500 million euros (pre-
vious year: 485 million euros).
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The Company
Shares and bonds
Corporate governance
The depreciation recognized separately for the various catego-
ries of assets in the consolidated statement of income for the
fiscal year is listed in the following table, together with further
disclosures of lease-related expenses and income affecting
Henkel as a lessee:
This rate is based on country-specific interest rates that are
observable in the market and which are adjusted with regard
to duration and credit risk. If no interest rates are observable
for the relevant durations, they are derived from linear inter-
polation.
Combined management report
Consolidated financial statements
Effects on the consolidated statement of income
of leases with Henkel as lessee
Further information
Credits
Contacts
Financial calendar
in million euros
Depreciation in the year under review
Of which: right-of-use land,
land rights and buildings
Of which: right-of-use plant
and machinery
Of which: right-of-use factory
and office equipment
Interest expenses on lease liabilities
Expenses relating to short-term leases
Expenses relating to leases of low-
value assets
2019
133
92
11
30
16
38
3
2020
136
95
12
29
16
20
4
Henkel paid 180 million euros in total for leases in fiscal 2020
(previous year: 184 million euros).
The Henkel Group uses the incremental borrowing rate to dis-
count lease payments when measuring its lease liabilities.
An analysis of the maturities of the lease liabilities of the
Henkel Group is included with the disclosures on financial
instruments in Note 23 on pages 227 to 252. In addition to the
future payments from leases discussed in the section, payment
commitments of 6 million euros (previous year: 122 million
euros) also exist with regard to leases of material relevance to
Henkel that have already been agreed but have not yet com-
menced and have therefore not yet been capitalized.
Some of Henkel’s leases for land, land rights and buildings
include optional lease periods. Contractually agreed payments
in these optional lease periods are in the mid-triple-digit mil-
lion euros range, as was also the case in the previous year.
They are not included in the measurement of the lease liability
because there is insufficient certainty that the option on the
lease periods will be exercised.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
3 Other financial assets
Analysis
in million euros
Receivables from non-consolidated subsidiaries
and associates
Financial receivables from third parties
Derivative financial instruments
Investments in non-consolidated subsidiaries
Investments in associates
Other investments
Receivable from Henkel Trust e.V.
Securities and time deposits
Of which: readily monetizable
Financial collateral provided
Sundry financial assets
Total
December 31, 2019
December 31, 2020
Non-current
Current
Total
Non-current
Current
–
26
38
9
–
36
–
–
–
–
16
125
–
112
76
–
–
–
621
425
412
26
75
1,335
–
138
114
9
–
36
621
425
412
26
91
1,460
–
15
7
6
0
57
–
0
0
–
14
99
0
208
99
–
–
–
497
422
408
74
72
1,372
Total
0
223
106
6
0
57
497
422
408
74
86
1,471
With the exception of investments, derivatives, securities and
time deposits, other financial assets are measured at amortized
cost.
Of the receivables from non-consolidated subsidiaries and
associates, 0 million euros (previous year: 0 million euros) is
attributable to non-consolidated subsidiaries.
Of the current financial receivables from third parties, 200 mil-
lion euros is attributable to receivables from third parties in
connection with EU emission rights swaps contracted by
Henkel for the purpose of liquidity management.
The receivable from Henkel Trust e.V. relates to pension pay-
ments made by Henkel AG & Co. KGaA to retirees, for which
reimbursement can be claimed from Henkel Trust e.V.
The securities and time deposits essentially comprise time
deposits and shares in investment funds and are generally
readily monetizable under our financial management arrange-
ments, with the exception of those securities and time depos-
its that are mandatory to cover our pension liabilities and can
therefore not be monetized at short notice.
Sundry non-current financial assets include, among others,
receivables from insurance companies.
Examples of sundry current financial assets include:
Receivables from sureties and guarantee deposits amount-
ing to 21 million euros (previous year: 21 million euros)
Receivables from suppliers amounting to 18 million euros
(previous year: 22 million euros)
Receivables from employees amounting to 6 million euros
(previous year: 9 million euros).
H e n k e l A n n u a l R e p o r t 2 0 2 0
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The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
4 Other assets
Analysis
in million euros
Tax receivables
Payments on account
Overfunding of pension obligations
Reimbursement rights related to employee benefits
Deferred charges
Sundry other assets
Total
1 Prior-year figures amended (please refer to the notes on page 188).
December 31, 2019¹
December 31, 2020
Non-current
10
–
83
113
24
1
231
Current
262
71
–
8
84
47
472
Total Non-current
8
–
114
105
13
0
240
273
71
83
121
108
48
703
Current
307
71
–
13
78
26
495
Total
316
71
114
118
91
26
735
5 Deferred taxes
Deferred taxes are recognized for temporary differences
between the valuation of an asset or a liability in the financial
statements and its tax base, for tax losses carried forward, and
for unused tax credits. This also applies to temporary differ-
ences in valuation arising through acquisitions, with the ex-
ception of deferred tax liabilities relating to goodwill.
Deferred tax liabilities on taxable temporary differences related
to shares in subsidiaries are recognized to the extent that a
reversal of this difference is expected in the foreseeable future
or cannot be controlled.
Changes in the deferred taxes in the statement of financial
position result in deferred tax expenses or income unless the
underlying item is directly recognized in other comprehensive
income. For items recognized directly in other comprehensive
income, the associated deferred taxes are also recognized in
other comprehensive income.
The valuation, recognition and disaggregation of deferred
taxes in respect of the various items in the statement of finan-
cial position are discussed in the disclosures on income taxes
in Note 32 on pages 256 to 258.
6 Inventories
In accordance with IAS 2 Inventories, reported under inven-
tories are those assets that are intended to be sold in the ordi-
nary course of business (finished products and merchandise),
those in the process of production for such sale (work in
progress) and those to be utilized or consumed in the course
of manufacture or the provision of services (raw materials and
supplies). Payments on account made for the purpose of pur-
chasing inventories are likewise disclosed under the inventories
heading.
When accounting for cash flow hedges under IFRS 9, the
measurement effects from hedging transactions for acquiring
non-financial assets are initially recognized in equity in the
hedge reserve, and included as part of the cost upon acquisition
of the asset. The IFRS 9 basis adjustment shown under invento-
ries relates to the results of currency hedges for the procurement
H e n k e l A n n u a l R e p o r t 2 0 2 0
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The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
of inventories in a foreign currency and of hedging certain com-
modity purchases against market price risks. Further information
can be found in the financial instruments report in Note 23 on
pages 227 to 252.
Inventories are measured at the lower of cost and net realizable
value. Inventories are measured using either the “first in, first
out” (FIFO) or the average cost method. Manufacturing cost in-
cludes not only the direct costs but also appropriate portions
of necessary overheads (for example goods inward department,
raw material storage, filling, costs incurred through to the
finished goods warehouse), production-related administrative
expenses, the costs of the pensions of people who are employed
in the production process, and production-related amortization/
depreciation. The overhead add-ons are calculated on the basis
of average capacity utilization. Not included, however, are
interest expenses incurred during the manufacturing period.
The net realizable value is determined as an estimated selling
price less costs yet to be incurred through to completion, and
less necessary selling and distribution costs. Write-downs to
the net realizable value are made if, at year-end, the carrying
amounts of the inventories are above their realizable market
values. The resultant valuation allowance as of December 31,
2020 amounted to 167 million euros (previous year: 179 million
euros). The carrying amount of inventories recognized at net
realizable value amounted to 447 million euros (previous year:
471 million euros). The carrying amount of inventories pledged
as security for liabilities was unchanged year on year at
0 million euros.
Analysis of inventories
in million euros
Raw materials and supplies
Work in progress
Finished products and merchandise
Payments on account for merchandise
IFRS 9 basis adjustment
Total
Dec. 31, 2019¹
546
118
1,493
29
1
2,187
Dec. 31, 2020
544
114
1,504
27
1
2,189
1 Prior-year figures amended (please refer to the notes on page 188).
7 Trade accounts receivable
Trade accounts receivable amounted to 3,106 million euros
(previous year: 3,415 million euros). They are due within one
year. Valuation allowances have been recognized in respect of
specific risks as appropriate. Expenses for valuation allowances
are reported under selling and distribution costs. Due to the
COVID-19 pandemic, valuation allowances increased in the year
under review from 91 million euros to 123 million euros, despite
an overall decrease in trade accounts receivable. For an expla-
nation of these valuation allowances and our risk management,
please consult pages 241 to 245.
Trade accounts receivable
in million euros
Trade accounts receivable, gross
Less: cumulative valuation allowances
on trade accounts receivable
Trade accounts receivable, net
Dec. 31, 2019¹
3,506
Dec. 31, 2020
3,229
91
3,415
123
3,106
1 Prior-year figures amended (please refer to the notes on page 188).
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The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Development of valuation allowances
on trade accounts receivable
in million euros
Valuation allowances at January 1
Additions/Releases
Derecognition of receivables
Currency translation effects
Other changes
Valuation allowances at December 31
2019
94
9
-17
1
4
91
2020
91
47
-9
-8
1
123
Further information
Credits
Contacts
Financial calendar
8 Cash and cash equivalents
Recognized under cash and cash equivalents are liquid funds,
sight deposits and other financial assets with an original term
of not more than three months. In accordance with IAS 7 State-
ment of Cash Flows, also recognized under cash equivalents
are shares in money market funds which, due to their first-class
credit rating and investment in extremely short-term money
market securities, undergo only minor value fluctuations and
can be readily converted within one day into known amounts
of cash. Utilized bank overdrafts are recognized in the statement
of financial position as liabilities to banks.
The volume of cash and cash equivalents increased compared to
the previous year from 1,460 million euros to 1,727 million euros.
Of this figure, 1,504 million euros (previous year: 1,305 million
euros) relates to cash and 223 million euros (previous year:
155 million euros) to cash equivalents. The change is shown in
the consolidated statement of cash flows. Prior-year figures
were amended (please refer to the notes on page 188).
9 Assets and liabilities held
for sale
Assets and liabilities held for sale are assets and liabilities that
can be sold in their current condition and for which sale is highly
probable. Disposal must be expected within one year from the
time of reclassification as held for sale. Such assets may be
individual assets, groups of assets (disposal groups) or business
operations (discontinued operations). Assets held for sale are
no longer subject to scheduled depreciation and amortization
and are instead recognized at the lower of carrying amount
and fair value less costs of disposal (level 3). The fair value
less costs of disposal is generally determined by current price
negotiations with potential buyers.
Active portfolio management is an essential element in deter-
mining the future strategic direction of the Henkel Group.
Year on year, assets held for sale increased by 189 million euros
to 228 million euros. The plans to sell businesses focusing on
consumer goods areas in all three operating segments as part
of these efforts resulted in the reclassification of assets to the
held-for-sale category as of December 31, 2020. The businesses
earmarked for sale essentially comprise trademark rights and
proportionate goodwill. Once they were classified as held for
sale, the assets were measured at the lower of carrying amount
and fair value less costs of disposal. An impairment expense of
238 million euros was recognized in fiscal 2020; this is allocated
to the respective expense items in the consolidated statement
of income where the scheduled depreciation or amortization
of these assets is also recognized. The proportionate goodwill
impairment is recognized in other operating expenses.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
In fiscal 2019, an activity carved out of the Adhesive Technolo-
gies portfolio was reclassified to assets held for sale. Although
the sale contract had already been signed by December 31, 2020,
completion of the sale within a year was unexpectedly not
possible due to pending official permits. At the end of fiscal
2020, these assets were stated in the amount of 15 million euros
(previous year: 19 million euros).
10 Issued capital
Issued capital
in million euros
Ordinary bearer shares
Preferred bearer shares
Capital stock
Dec. 31, 2019
260
178
438
Dec. 31, 2020
260
178
438
No liabilities were held for sale (previous year: 0 million euros).
Comprising:
259,795,875 ordinary shares, 178,162,875 non-voting preferred shares.
Assets and liabilities held for sale
in million euros
Intangible assets and property, plant
and equipment
Inventories and trade accounts
receivable
Cash and cash equivalents
Other assets
Provisions
Borrowings
Other liabilities
Net assets
Dec. 31, 2019
Dec. 31, 2020
34
5
–
–
–
–
–
39
222
6
–
–
–
–
–
228
All shares are fully paid in. The ordinary and preferred shares
are bearer shares of no par value, each of which represents a
nominal proportion of the capital stock amounting to 1 euro.
The liquidation proceeds are the same for all shares. The number
of ordinary shares issued remained unchanged year on year.
The number of preferred shares in circulation was also un-
changed year on year, at 174,482,323 as of December 31, 2020.
The resolution adopted by the Annual General Meeting on
April 13, 2015 authorizing the Personally Liable Partner, with
the approval of the Shareholders’ Committee and of the
Supervisory Board, to increase the capital of the corporation
through to April 12, 2020 by up to a nominal amount of
43,795,875 euros in total by issuing up to 43,795,875 new non-
voting preferred shares for cash and/or in-kind consideration
expired on April 12, 2020.
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The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
New authorized capital was created by resolution of the Annual
General Meeting on June 17, 2020 (Art. 6 (5) of our Articles of
Association). Under the new resolution, the Personally Liable
Partner is authorized, with the approval of the Shareholders’
Committee and of the Supervisory Board, to increase the capital
of the corporation at any time through to June 16, 2025, by up
to a nominal amount of 43,795,875 euros in total from the issu-
ance of up to 43,795,875 new non-voting preferred shares for
cash consideration (Authorized Capital 2020). The new shares
have exactly the same rights as the preferred shares already in
circulation in respect of eligibility for distribution of profits or
corporation assets. Shareholders must be granted pre-emptive
rights. Pursuant to Section 186 (5) sentence 1 AktG, the new
shares can be acquired by one or more banks or companies to
be nominated by the Personally Liable Partner on condition
that they offer them for purchase to the shareholders.
The authorization may be utilized to the full extent allowed
or once or several times in installments. The new non-voting
preferred shares participate in profit distributions from the
beginning of the fiscal year in which they are issued. To the
extent permitted by law, the Personally Liable Partner may,
with the approval of the Shareholders' Committee and of the
Supervisory Board and in derogation from Section 60 (2) AktG,
determine that the new shares shall participate in profits from
the beginning of a fiscal year that has already elapsed and for
which, at the time of their issuance, no resolution has yet been
passed by the Annual General Meeting on the appropriation of
retained earnings.
In addition, the Personally Liable Partner is authorized to pur-
chase ordinary and/or preferred shares of the corporation at
any time until April 7, 2024 up to a maximum proportion of
10 percent of the capital stock existing at the time the resolution
is adopted by the Annual General Meeting or at the time the
authorization is exercised, whichever is lower. Equity derivatives
(put and/or call options and/or forward contracts or a combi-
nation of same) can also be used for such purchase. The volume
of any and all shares purchased using such derivatives must
not exceed 5 percent of the capital stock existing at the time
the resolution is adopted by the Annual General Meeting or at
the time the authorization is exercised, whichever is lower.
The term of the derivatives must not exceed 18 months in each
case. The choice of derivative must ensure that the purchase of
treasury shares acquired through exercising the derivative is
not possible after April 7, 2024.
This authorization to purchase treasury shares can be exercised
for any legal purpose. To the exclusion of the pre-emptive rights
of existing shareholders, treasury shares may, in particular, be
transferred to third parties for the purpose of acquiring entities
or participating interests in entities. Treasury shares may also
be sold to third parties against payment in cash, provided that
the selling price is not significantly below the quoted market
price at the time of share disposal. Treasury shares may also be
offered for purchase or transferred to members of the corpora-
tion’s staff or managers of affiliated companies, particularly in
connection with share-based payment plans, including the
Long Term Incentive Plan 2020+. The shares may likewise be
used to satisfy warrants or conversion rights granted by the
corporation. The Personally Liable Partner is also authorized,
with the approval of the Shareholders’ Committee and of the
Supervisory Board, to cancel treasury shares without the need
for further resolution by the General Meeting.
Insofar as shares are issued or used to the exclusion of pre-
emptive rights, the proportion of capital stock represented
by such shares shall not exceed 10 percent.
11 Capital reserve
The capital reserve comprises the amounts received in previous
years in excess of the nominal value of preferred shares and
convertible warrant bonds issued by Henkel AG & Co. KGaA.
H e n k e l A n n u a l R e p o r t 2 0 2 0
2 1 0
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
12 Treasury shares
Treasury shares held by the corporation at December 31, 2020
were unchanged at 3,680,552 preferred shares (previous year:
3,680,552). This represents 0.84 percent of the capital stock
and a proportional nominal value of 3.7 million euros.
Details of the Global LTI Plan 2020+ are explained on pages 261
and 262.
attributable to shareholders of Henkel AG & Co. KGaA arising
from currency translation had decreased by a further 1,278 mil-
lion euros, from -928 million to -2,206 million euros.
15 Non-controlling interests
Recognized under non-controlling interests are equity shares
held by third parties measured on the basis of the proportion
of net assets they represent.
13 Retained earnings
Recognized in retained earnings are the following:
Amounts allocated in the financial statements of
Henkel AG & Co. KGaA in previous years
Amounts allocated from consolidated net income less
those amounts attributable to non-controlling interests
Buy-back of treasury shares by Henkel AG & Co. KGaA at
cost and the proceeds from their disposal
Actuarial gains and losses recognized in equity
The acquisition or disposal of ownership interests in
subsidiaries with no change in control
Valuation effects following application of the present
access method
Impacts of first-time application of IFRSs
14 Other components of equity
Reported under this heading are differences recognized in
equity arising from the currency translation of annual financial
statements of foreign subsidiaries, and also the effects arising
from the valuation in comprehensive income of financial
assets in the “fair value through other comprehensive income”
category and of derivative financial instruments included in
designated cash flow hedges and hedges of a net investment
in a foreign operation. As of December 31, 2020, the difference
16 Provisions for pensions and
similar obligations
Description of the pension plans
Employees in companies included in the consolidated financial
statements have entitlements under company pension plans
which are either defined contribution or defined benefit plans.
These take different forms depending on the legal, financial
and tax regimes of each country. The level of benefits provided
is based, as a rule, on the length of service and on the income of
the person entitled. Details of pension benefits for members
of the Management Board are provided in the explanation of
the remuneration policy and in the remuneration report on
pages 53 to 92.
In defined benefit plans, the liability for pensions and other
post-employment benefits is calculated at the present value
of the future obligations (projected unit credit method). This
actuarial method of calculation takes future trends in wages,
salaries and retirement benefits into account.
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The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
The majority of the beneficiaries of these pension plans are
located in Germany and the USA. The pension obligations are
primarily financed via various external trust assets that are
legally independent of Henkel.
Active employees of Henkel in Germany participate in a de-
fined contribution system, “Altersversorgung 2004 (AV 2004),”
which was newly formed in 2004. AV 2004 is an employer-
financed pension plan that reflects the personal income develop-
ment of employees during their career at Henkel and thus
provides a performance-related pension. Henkel guarantees a
minimum return on the company’s contributions. The benefit
essentially consists of an annuity payable upon attainment
of statutory retirement age plus a lump-sum payment if the
annuity threshold is exceeded in the employee’s service pe-
riod. In addition to retirement and disability pensions, the plan
benefits include surviving spouse and surviving child benefits.
Employees who started at Henkel after April 1, 2011, participate
in the pension plan “Altersversorgung 2011 (AV 2011).” AV 2011
is an employer-financed, fund-linked retirement plan funded
by contributions based on the income development of the em-
ployee. Henkel assures its employees that a lump-sum amount
is available upon retirement which is at least equivalent to the
level of principal contributions made by Henkel. Henkel pays
the pension contribution into an investment fund established
for the purpose of the company pension plan. Upon attaining
statutory retirement age, the employee can choose between
an annuity through transfer of the superannuation lump-sum
to a pension fund, or a one-time payment.
To provide protection under civil law of the pension entitle-
ments of future and current pensioners of Henkel AG & Co. KGaA
against insolvency, we have transferred the proceeds of the
bond issued in 2005 and certain other assets to Henkel Trust e.V.
The trustee invests the cash with which it has been entrusted
in the capital market in accordance with investment policies
laid down in the trust agreement. In addition, we also subsidize
medical benefits for active and retired employees resident
mainly in the USA. Under these programs, retirees are reim-
bursed for a certain percentage of their refundable medical
expenses. We recognize provisions during the employees’
service period and pay out the promised benefits when they
are claimed. The subsidies paid to active employees for medical
services are recognized as a current expense and are therefore
not included in the provisions for pensions and similar obli-
gations.
The defined contribution plans are structured in such a way
that the corporation pays contributions to institutions on the
basis of statutory or contractual terms or on a voluntary basis
and has no further obligations regarding the payment of
benefits to employees. The contributions for defined contri-
bution plans, excluding multi-employer plans, for the reporting
period amounted to 114 million euros (previous year:
106 million euros).
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The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Multi-employer plans
Henkel provides defined pension benefits that are financed
by more than one employer. The multi-employer plans are
treated as defined contribution plans because, due to the limited
share of the contribution volume in the plans, the information
available for each of the financing companies is insufficient
for defined benefit accounting. Within the Henkel Group,
benefits from multi-employer plans are provided for employ-
ees in the USA. Withdrawal from our multi-employer plans at
the present time would incur a one-time expense of around
18 million euros (previous year: around 19 million euros).
Payments into multi-employer plans in fiscal 2020 amounted
to 1 million euros (previous year: 1 million euros). We expect
contributions of around 1 million euros in fiscal 2021.
Henkel’s share in the overall plan is less than 1 percent.
Assumptions
Group-wide, the obligations from our pension plans are valued
by an independent external actuary at the end of the fiscal
year. The calculations at the end of the fiscal year are based
on the actuarial assumptions below. These are given as the
weighted average. The mortality rates used are based on pub-
lished statistics and experience relating to each country. In
Germany, the assumptions in both the fiscal year and the
previous year were based on the “Heubeck 2018G” mortality
table. In the USA, the assumptions in each case were based
on the modified “Pri-2012” mortality table. The valuation of
pension obligations in Germany was based essentially on the
assumption of a 1.7-percent increase in retirement benefits
(previous year: 1.7 percent).
The discount rate is based on yields in the market for high-
ranking corporate bonds on the respective date. The currency
and term of the underlying bonds are matched to the currency
and expected maturities of the post-employment pension
obligations.
Actuarial assumptions
in percent
Discount rate
Income trend
Retirement benefits trend
Expected increases in costs for medical benefits
Germany
2019
1.30
3.00
1.70
–
2020
1.00
3.00
1.70
–
USA
2019
3.20
3.00
–
6.00
Other countries1
2020
1.40
2.90
2.30
3.50
2019
1.80
2.90
2.20
3.70
2020
2.30
3.00
–
5.70
in years
Life expectancy at age 65 as of the
valuation date for a person currently
65 years old
40 years old
1 Weighted average
21.9
25.0
22.1
25.2
22.0
24.0
21.0
23.0
23.6
25.9
22.8
24.9
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The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Development of defined benefit obligations 2019
in million euros
At January 1, 2019
Changes in the scope of consolidation
Translation differences
Actuarial gains (-)/losses (+)
Of which: from changes in demographic assumptions
Of which: from changes in financial assumptions
Of which: from experience adjustments
Current service cost
Employee contributions
Gains (-)/losses (+) arising from the termination and curtailment of plans
Interest expense
Retirement benefits paid out of plan assets
Employer payments for pension obligations
Other changes
At December 31, 2019
Of which: obligations not covered by plan assets
Of which: obligations covered by plan assets
Of which: obligations covered by reimbursement rights
Development of plan assets 2019
in million euros
At January 1, 2019
Changes in the scope of consolidation
Translation differences
Employer contributions
Employee contributions
Retirement benefits paid out of plan assets
Planned income on plan assets
Remeasurements in equity
Other changes
At December 31, 2019
Germany
3,024
–
–
217
–
205
12
41
21
-8
54
-131
–
–
3,218
102
3,116
–
Germany
2,656
–
–
29
21
-131
57
388
–
3,020
USA
1,082
–
21
98
-8
108
-2
11
–
–
44
-80
-31
–
1,145
124
900
121
Other countries
1,169
–
33
93
-4
104
-7
24
1
–
27
-40
-9
3
1,301
97
1,204
–
USA
845
–
16
–
–
-80
34
123
–
938
Other countries
1,036
–
32
21
1
-40
24
99
-1
1,172
Total
5,275
–
54
408
-12
417
3
76
22
-8
125
-251
-40
3
5,664
323
5,220
121
Total
4,537
–
48
50
22
-251
115
610
-1
5,130
H e n k e l A n n u a l R e p o r t 2 0 2 0
214
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Development of asset ceiling 2019
in million euros
At January 1, 2019
Interest cost for asset ceiling
Remeasurements in equity
At December 31, 2019
Development of net obligation 2019
in million euros
Net obligation at January 1, 2019
Recognized through profit or loss
Current service cost
Gains (-)/losses (+) arising from the termination and curtailment of plans
Interest expense
Recognized in other comprehensive income
Actuarial gains (-)/losses (+)
Remeasurements in equity
Change in the effect of the asset ceiling
Other items recognized in equity
Employer payments
Changes in the scope of consolidation
Translation differences
Other changes
Net obligation at December 31, 2019
Overfunding of pension obligations
Recognized provision at December 31, 2019
Germany
–
–
–
–
USA
–
–
–
–
Other countries
14
–
4
18
Germany
368
USA
237
Other countries
147
41
-8
-4
217
-388
–
-29
–
–
–
197
–
197
11
–
10
98
-123
–
-31
–
5
–
207
41
248
24
–
4
93
-99
4
-30
–
1
4
148
42
190
Total
14
–
4
18
Total
752
76
-8
10
408
-610
4
-90
–
6
4
552
83
635
H e n k e l A n n u a l R e p o r t 2 0 2 0
215
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Development of defined benefit obligations 2020
in million euros
At January 1, 2020
Changes in the scope of consolidation
Translation differences
Actuarial gains (-)/losses (+)
Of which: from changes in demographic assumptions
Of which: from changes in financial assumptions
Of which: from experience adjustments
Current service cost
Employee contributions
Gains (-)/losses (+) arising from the termination and curtailment of plans
Interest expense
Retirement benefits paid out of plan assets
Employer payments for pension obligations
Other changes
At December 31, 2020
Of which: obligations not covered by plan assets
Of which: obligations covered by plan assets
Of which: obligations covered by reimbursement rights
Development of plan assets 2020
in million euros
At January 1, 2020
Changes in the scope of consolidation
Translation differences
Employer contributions
Employee contributions
Retirement benefits paid out of plan assets
Planned income on plan assets
Remeasurements in equity
Other changes
At December 31, 2020
Germany
3,218
–
–
134
–
133
1
39
21
-8
41
-127
-4
2
3,316
108
3,208
–
Germany
3,020
–
–
50
21
-127
39
167
–
3,170
USA
1,145
–
-101
108
-5
115
-2
12
–
–
34
-65
-25
–
1,108
107
883
118
USA
938
–
-85
–
–
-65
28
119
–
935
Other countries
1,301
1
-45
71
-32
120
-17
26
1
-8
22
-34
-9
-26
1,300
123
1,177
–
Other countries
1,172
–
-35
17
1
-34
19
82
-26
1,196
Total
5,664
1
-146
313
-37
368
-18
77
22
-16
97
-226
-38
-24
5,724
338
5,268
118
Total
5,130
–
-120
67
22
-226
86
368
-26
5,301
H e n k e l A n n u a l R e p o r t 2 0 2 0
216
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Development of asset ceiling 2020
in million euros
At January 1, 2020
Interest cost for asset ceiling
Remeasurements in equity
At December 31, 2020
Development of net obligation 2020
in million euros
Net obligation at January 1, 2020
Recognized through profit or loss
Current service cost
Gains (-)/losses (+) arising from the termination and curtailment of plans
Interest expense
Recognized in other comprehensive income
Actuarial gains (-)/losses (+)
Remeasurements in equity
Change in the effect of the asset ceiling
Other items recognized in equity
Employer payments
Changes in the scope of consolidation
Translation differences
Other changes
Net obligation at December 31, 2020
Overfunding of pension obligations
Recognized provision at December 31, 2020
Germany
–
–
–
–
USA
–
–
–
–
Other countries
18
–
-4
14
Germany
197
USA
207
Other countries
148
39
-8
2
134
-167
–
-54
–
–
2
145
–
145
12
–
6
108
-119
–
-25
–
-16
–
173
58
231
26
-8
3
71
-82
-4
-26
1
-10
–
119
56
175
Total
18
–
-4
14
Total
552
77
-16
11
313
-368
-4
-105
1
-26
2
437
114
551
H e n k e l A n n u a l R e p o r t 2 0 2 0
217
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Analysis of reimbursement rights
in million euros
At January 1
Changes in the scope of consolidation
Translation differences
Employer contributions
Employee contributions
Retirement benefits paid
Interest income
Remeasurements in equity
At December 31
2019
111
–
1
1
–
-10
5
13
121
2020
121
–
-11
1
–
-9
4
12
118
Other changes in the present value of pension benefits and in
plan assets relate to the reversal of a pension provision in Aus-
tria. The same reversal resulted in gains of around 8 million
euros from the termination of pension plans. In Germany, the
effect from terminating pension plans was caused by a change
in the plan from annuity commitments to lump-sum benefits.
The total present value (defined benefit obligation – DBO) is
comprised of:
2,011 million euros (previous year: 1,978 million euros) for
active employees,
1,007 million euros (previous year: 971 million euros) for
former employees with vested benefits, and
2,706 million euros (previous year: 2,715 million euros) for
retirees.
The average weighted duration of pension obligations is
14 years (previous year: 14 years) for Germany, 9 years (previ-
ous year: 8 years) for the USA and 17 years (previous year:
18 years) for other countries.
In determining net liability, we take into account amounts
that are not recognized due to asset ceiling restrictions. If the
fair value of the plan asset item exceeds the obligations arising
from the pension benefits, an asset is recognized only if the
reporting entity can also derive economic benefit from these
assets, for example in the form of return flows or a future
reduction in contributions (“Asset Ceiling” per IAS 19.58 ff.).
In the reporting period, we recorded an amount of 14 million
euros as an asset ceiling (previous year: 18 million euros).
Within our consolidated statement of income, current service
costs are allocated on the basis of cost of sales to the respective
function. Only the balance of interest expense for the defined
benefit obligation and interest income for the fund assets is
reported in net interest result. All gains/losses from the termi-
nation and curtailment of plans are recognized in other oper-
ating income/expenses. Employer contributions to state pen-
sion insurance are included as “Social security contributions
and staff welfare costs” under Note 35 on page 261. In 2020, ad-
ditions to plan assets totaled 67 million euros (previous year:
50 million euros). Payments into pension funds in fiscal 2021
are expected to total 53 million euros.
The reimbursement rights covering a portion of the pension
obligations in the USA are assets that are not protected against
insolvency and therefore are not classified as plan assets un-
der IAS 19.
The reimbursement rights indicated are available to the Group
in order to cover the expenditures required to fulfill the re-
spective pension obligations. Reimbursement rights and the
associated pension obligations must, according to IAS 19, be
shown unnetted in the statement of financial position.
H e n k e l A n n u a l R e p o r t 2 0 2 0
218
The Company
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Corporate governance
Combined management report
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Further information
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Financial calendar
Analysis of plan assets
in million euros
Shares
Europe
USA
Others
Bonds and hedging instruments
Government bonds
Corporate bonds
Derivatives
Alternative investments
Cash
Liabilities1
Other assets
Total
Quotation
on active
markets
1,157
361
213
583
3,741
2,053
1,688
–
–
–
–
–
4,898
Dec. 31, 2019
No quotation
on active
markets
–
–
–
–
49
–
–
49
427
193
-621
184
232
Total
1,157
361
213
583
3,790
2,053
1,688
49
427
193
-621
184
5,130
Quotation
on active
markets
1,154
377
215
562
3,727
1,909
1,818
–
–
–
–
–
4,881
Dec. 31, 2020
No quotation
on active
markets
–
–
–
–
123
–
–
123
418
213
-497
163
420
Total
1,154
377
215
562
3,850
1,909
1,818
123
418
213
-497
163
5,301
1 Liability to Henkel AG & Co. KGaA from the assumption of pension payments for Henkel Trust e.V.
The objective of the investment strategy for the global plan
assets is the long-term security of pension payments. This is
ensured by comprehensive risk management that takes into
account the asset and liability portfolios of the defined benefit
pension plans. Henkel pursues a liability-driven investment
(LDI) approach in order to achieve the investment objective.
This approach takes into account the structure of the pension
obligations and manages the funding ratio of the pension
plans. To improve the funding ratio, Henkel invests plan as-
sets in a diversified portfolio for which the expected long-term
yield is above the interest costs of the pension obligations.
In order to cover the risks arising from trends in wages, salaries
and life expectancies, and to close the potential deficit between
plan assets and pension obligations over the long term, addi-
tional investments are made in a return-enhancing portfolio
as an add-on instrument that contains assets such as equities,
private equity and real estate. The target portfolio structure of
the plan assets is essentially determined in asset-liability
studies. These studies are conducted regularly with the help
of external advisors who assist Henkel in the investment of
plan assets. They examine the actual portfolio structure, tak-
ing into account current capital market conditions, invest-
ment principles and the obligation structure, and can suggest
adjustments be made to the portfolio.
The expected long-term yield for individual plan assets is de-
rived from the target portfolio structure and the expected long-
term yields for the individual asset classes.
Risks associated with pension obligations
Our internal pension risk management monitors the risks of
all pension plans Group-wide in compliance with local legal
regulations. As part of the monitoring process, guidelines on
the control and management of risks are adopted and continu-
ously developed; these guidelines mainly govern funding lev-
els, portfolio structure and actuarial assumptions. The objec-
tive of the financing strategy within the Group is to ensure
that plan assets cover 90 to 100 percent of the present value
of the funded pension obligations. The contributions and
H e n k e l A n n u a l R e p o r t 2 0 2 0
2 1 9
The Company
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Corporate governance
Combined management report
Consolidated financial statements
Further information
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Contacts
Financial calendar
investment strategies are intended to ensure nearly complete
coverage of the plans for the duration of the pension obligations.
Henkel’s pension obligations are exposed to various market
risks. These risks are counteracted by the required funding
level and the structure of pension benefits. The risks relate
primarily to changes in market interest rates, inflation, and
life expectancy, as well as general market fluctuations. Pen-
sion obligations based on contractual provisions in Germany
generally entail lifelong benefits payable when the employee
reaches retirement age or in the case of incapacity or death.
In order to reduce the risks arising from the payment of life-
long benefits as well as from inflation, pension benefits have
been gradually converted since 2004 to what are known as
modular benefits with a pension option, with the fund availa-
ble being initially divided into an annuity and a lump-sum
portion. Newly hired employees since 2011 receive a commit-
ment based primarily on the lump-sum benefit. Generally,
lump-sum benefits may also be paid out as an annuity through
a pension fund. All benefits in Germany are financed through
a provident fund (Vorsorgefonds) established for the purpose
of the occupational pension plan. Benefits for new employees
since 2011, as well as a portion of the entitlements vested
since 2004, are linked to the performance of this provident
fund, resulting in a reduction in overall risk to the Group.
The described adjustments within the pension structure re-
duce the financial risk arising from pension commitments in
Germany. By linking the benefit to the capital investment,
the net risk is also largely eliminated. An increase in the long-
term inflation assumption would mainly affect the expected
increase in pensions and the expected trend in pension-eligi-
ble salaries.
The pension obligations in the USA are based primarily on
three retirement plans that are all closed to new employees.
New employees receive pension benefits based on a defined
contribution plan. The pension benefits generally have a
lump-sum option which is usually exercised. When a pension
becomes payable, the amount granted is determined on the
basis of current market interest rates. As a result, the impact
of a change to the interest rate used in the calculation is low
compared to pension commitments entailing lifelong bene-
fits. Additionally, in the USA, pensions paid once are not ad-
justed by amount, thus there are no direct risks during the
pension payment period arising from pending annuity adjust-
ments. Inflation risks therefore result mainly from the salary
adjustments awarded.
In addition to the pension obligation risks already presented,
there are specific risks associated with multi-employer plans.
In the Henkel Group, these relate solely to the USA. The contri-
butions to these plans are determined mainly through an allo-
cation process based on the pension-eligible income of active
employees. Restructuring contributions may also be required
in order to close gaps in coverage. The risks of such plans arise
largely from higher future contributions to close coverage gaps
or could occur through discontinuation by other companies
obligated to make contributions.
The effects of changes to assumptions with respect to medical
benefits for employees and retirees in the USA are shown in
the sensitivity analysis.
The analysis of our Group-wide pension obligations revealed
no extraordinary risks.
H e n k e l A n n u a l R e p o r t 2 0 2 0
2 2 0
The Company
Shares and bonds
Cash flows and sensitivities
In the next five years, the following payments from pension
plans are expected:
Corporate governance
Future payments for pension benefits
Combined management report
Germany
USA
in million euros
2021
2022
2023
2024
2025
158
139
148
152
160
116
89
86
86
82
Other
countries
39
39
41
42
44
Total
313
267
275
280
286
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
The future level of the funded status and thus of the pension
obligations depends on the development of the discount rate,
among other factors. Companies based in Germany and the
USA account for 77 percent of our pension obligations. The
medical costs incurred after retirement by former employees
of our subsidiaries in the USA are also recognized in the pen-
sion obligations for defined benefit plans. A rate of increase of
5.7 percent (previous year: 6.0 percent) was assumed for the
medical costs. We expect this rate of increase to fall gradually
to 4.5 percent by 2037 (previous year: 4.5 percent by 2037). The
effects of a change in material actuarial assumptions for the
present value of pension obligations are as follows:
Sensitivities – Present value of pension obligations at December 31, 2019
in million euros
Present value of obligations
In the event of:
Rise in the discount rate by 0.5 pp
Reduction in the discount rate by 0.5 pp
Rise in future income increases by 0.5 pp
Reduction in future income increases by 0.5 pp
Rise in retirement benefits increases by 0.5 pp
Reduction in retirement benefits increases by 0.5 pp
Rise in medical cost increases by 0.5 pp
Reduction in medical cost increases by 0.5 pp
pp = percentage points
Germany
3,218
3,026
3,435
3,218
3,218
3,361
3,087
3,218
3,218
USA
1,145
1,098
1,194
1,150
1,141
1,145
1,145
1,147
1,143
Other
countries
1,301
1,191
1,429
1,323
1,281
1,374
1,238
1,300
1,301
Total
5,664
5,315
6,058
5,691
5,640
5,880
5,470
5,665
5,662
H e n k e l A n n u a l R e p o r t 2 0 2 0
221
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Sensitivities – Present value of pension obligations at December 31, 2020
in million euros
Present value of obligations
In the event of:
Rise in the discount rate by 0.5 pp
Reduction in the discount rate by 0.5 pp
Rise in future income increases by 0.5 pp
Reduction in future income increases by 0.5 pp
Rise in retirement benefits increases by 0.5 pp
Reduction in retirement benefits increases by 0.5 pp
Rise in medical cost increases by 0.5 pp
Reduction in medical cost increases by 0.5 pp
pp = percentage points
Germany
3,316
3,123
3,535
3,317
3,316
3,458
3,187
3,316
3,316
USA
1,108
1,061
1,156
1,111
1,103
1,107
1,107
1,109
1,106
Other
countries
1,300
1,187
1,412
1,319
1,278
1,355
1,236
1,298
1,298
Total
5,724
5,371
6,103
5,747
5,697
5,920
5,530
5,723
5,720
The extension of life expectancy in Germany by one year
would increase the present value of pension obligations by
4 percent (previous year: 4 percent). In the USA, an extension
of life expectancy by one year would increase the present
value of pension obligations by 2 percent (previous year:
2 percent).
It should be noted with respect to the sensitivities presented
that, due to mathematical effects, the percentage change is not
and does not need to be linear. Thus the percentage increases
and decreases do not vary with the same absolute amount.
Each sensitivity is independently calculated with no scenario
analysis.
H e n k e l A n n u a l R e p o r t 2 0 2 0
2 2 2
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
17 Other provisions
Development in 2020
in million euros
Restructuring provisions
Of which: non-current
Of which: current
Sales provisions
Of which: non-current
Of which: current
Personnel provisions
Of which: non-current
Of which: current
Sundry provisions
Of which: non-current
Of which: current
Total
Of which: non-current
Of which: current
At December
31, 2019¹
237
84
153
1,023
7
1,016
349
66
283
351
150
201
1,960
307
1,653
Acquisitions
Utilized
Released
Added Other changes
0
0
0
0
0
0
1
0
1
0
0
0
2
0
2
-99
-21
-78
-722
-0
-722
-224
-7
-217
-89
-13
-76
-1,134
-41
-1,093
-22
-5
-17
-30
-0
-30
-20
-2
-18
-38
-7
-31
-111
-14
-97
126
27
100
991
0
991
347
15
332
153
39
114
1,618
81
1,537
-14
3
-17
-47
-1
-45
-16
-4
-11
-14
-0
-14
-91
-3
-87
At December
31, 2020
228
87
141
1,215
6
1,209
438
69
370
363
168
195
2,245
329
1,915
1 Prior-year figures amended (please refer to the notes on page 188).
Provisions are recognized for obligations toward third parties
where the outflow of resources is probable and the expected
obligation can be reliably estimated. Provisions are measured
to the best estimate of the expenditures required in order
to meet the current obligation as of the reporting date. Price
increases expected to take place prior to the time of perfor-
mance are included in the calculation. Provisions in which the
interest effect is material are discounted to the reporting date
at a pre-tax interest rate. For obligations in Germany, we have
applied interest rates of between 0.0 and 1.4 percent (previous
year: 0.1 and 1.5 percent).
Other changes in provisions include changes in the scope of
consolidation, translation differences, compounding effects,
and adjustments to reflect changes in maturity as time passes.
Provisions are recognized in respect of restructuring measures,
provided that work has begun on the implementation of a
detailed, formal plan or such a plan has already been commu-
nicated. Additions to the restructuring provisions relate to the
optimization of our production and logistics structures, and
of our sales and distribution structures.
Sales provisions cover expected refunds to customers and
risks arising from pending transactions. Commitments to
customers result in cash outflows in the following period.
Personnel provisions essentially cover expenditures likely to
be incurred by the Group for variable, performance-related
remuneration components.
Sundry provisions include, for example, provisions for war-
ranties in production and engineering. The figure also in-
cludes provisions to cover the risk arising from legal disputes
and proceedings, representing not just the cash outflows for
the probable amount but also the anticipated cost of legal –
H e n k e l A n n u a l R e p o r t 2 0 2 0
223
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
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Contacts
Financial calendar
for example civil-law – proceedings. The pending judicial and
arbitrational court proceedings and administrative actions
relate in particular to issues of product liability, product defi-
ciency, competition law, infringement of proprietary rights, pa-
tent law, tax law, environmental protection and legacy reme-
diation.
The course and outcomes of legal disputes are inherently un-
certain and unpredictable. Based on the knowledge currently
available, no material future impact, negative or otherwise, on
the net assets, financial position and results of operations of
the corporation is expected.
18 Borrowings
Analysis
in million euros
Bonds
Commercial paper1
Liabilities to banks2
Total
December 31, 2019
December 31, 2020
Non-current
1,932
–
–
1,932
Current
543
1,448
35
2,026
Total
2,475
1,448
35
3,958
Non-current
1,666
–
0
1,666
Current
704
690
24
1,418
Total
2,370
690
24
3,084
1 From the euro and US dollar commercial paper program (total volume: 2 billion US dollars and 2 billion euros).
2 Obligations with floating rates of interest or interest rates pegged for less than one year.
H e n k e l A n n u a l R e p o r t 2 0 2 0
224
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Bonds
Issuer
in million euros
Henkel AG & Co. KGaA
Henkel AG & Co. KGaA
Henkel AG & Co. KGaA
Henkel AG & Co. KGaA
Henkel AG & Co. KGaA
Henkel AG & Co. KGaA
Henkel AG & Co. KGaA
Henkel AG & Co. KGaA
Henkel AG & Co. KGaA
Total
Type
Nominal value
600 million US dollars
Bond
700 million euros
Bond
Bond
300 million GB pounds2
Bond 400 million GB pounds2
Bond
100 million GB pounds2
Bond 330 million Swiss francs2
70 million US dollars2
Bond
25 million euros
Bond
350 million GB pounds2
Bond
Market values
including accrued
interest1
Carrying amounts
excluding accrued
interest
Market values
excluding accrued
interest1
Dec. 31, 2019 Dec. 31, 2020 Dec. 31, 2019 Dec. 31, 2020 Dec. 31, 2019 Dec. 31, 2020
–
701
338
452
113
311
57
25
408
2,407
–
701
337
451
113
310
57
25
407
2,403
534
699
351
470
–
–
–
–
411
2,465
539
703
355
475
–
–
–
–
411
2,483
–
700
333
445
111
305
57
25
389
2,366
533
703
355
474
–
–
–
–
410
2,475
Interest rate p.a.
Maturity
2019
2.0%
0.0%
0.875%
1.0%
–
–
–
–
1.25%
2020
2.0%
0.0%
0.875%
1.0%
1.0%
0.2725%
1.042%
0.12%
1.25%
6/12/2020
9/13/2021
9/13/2022
9/30/2022
9/30/2022
4/28/2023
7/7/2025
7/10/2025
9/30/2026
1 Market value of the bonds derived from the stock market price at December 31.
2 Cross-currency interest rate swaps are in place to convert the interest and principal payments on the bonds denominated in British pounds, Swiss francs and US dollars into euro payments.
In the year under review, we added a second tranche of 100 mil-
lion British pounds to our British pound bond maturing in
2022, increasing the total nominal value to 500 million British
pounds. A further bond with a nominal volume of 330 million
Swiss francs was issued in April 2020. In addition, Henkel
placed a plastic waste reduction bond in July 2020 consisting
of two tranches of 70 million US dollars and 25 million euros
respectively. The reclassification of one bond with a nominal
volume of 700 million euros to current borrowings caused a
corresponding reduction in non-current liabilities. The sched-
uled redemption of a bond with a nominal volume of 600 mil-
lion US dollars led to a reduction in current borrowings in
June 2020. At the same time, our commercial paper borrow-
ings decreased by 758 million euros to 690 million euros.
H e n k e l A n n u a l R e p o r t 2 0 2 0
225
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
19 Other financial liabilities
Analysis
in million euros
Lease liabilities
Liabilities to non-consolidated subsidiaries and associates
Liabilities to customers
Derivative financial instruments
Sundry financial liabilities
Total
December 31, 2019
December 31, 2020
Non-current
423
–
–
21
124
568
Current
128
7
65
79
13
292
Total Non-current
443
–
–
44
317
804
551
7
65
100
137
860
Current
117
5
58
75
10
264
Total
560
5
58
119
326
1,068
Lease liabilities increased slightly year on year by 9 million
euros to 560 million euros. For further details of lease liability
measurement, please refer to Note 2 on pages 202 and 203.
Of the liabilities to non-consolidated subsidiaries and associ-
ates, 5 million euros (previous year: 7 million euros) is attrib-
utable to non-consolidated subsidiaries.
Sundry financial liabilities include a liability of 122 million eu-
ros (previous year: 115 million euros) for the put option granted
to the non-controlling shareholders of eSalon.com LLC, the
subsidiary we acquired in 2019. This item also includes a lia-
bility for the put option granted to the non-controlling share-
holders of Henkel Beauty & IB Holding GmbH. Henkel Beauty
& IB Holding GmbH holds the business comprising the pre-
mium direct-to-consumer brands HelloBody, Banana Beauty,
and Mermaid+Me acquired in the year under review. As of
December 31, 2020, the carrying amount of the liability was
191 million euros.
H e n k e l A n n u a l R e p o r t 2 0 2 0
226
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
20 Other liabilities
Analysis
December 31, 2019¹
December 31, 2020
in million euros
Other tax liabilities
Liabilities to employees
Liabilities relating to employee deductions
Liabilities in respect of social security
Sundry other liabilities
Total
Non-current
2
4
–
–
8
14
1 Prior-year figures amended (please refer to the notes on page 188).
Current
186
39
40
19
49
333
Total
188
43
40
19
57
347
Non-current
3
4
11
–
9
27
Current
189
37
46
17
63
352
Total
192
41
57
17
73
380
Sundry other liabilities primarily comprise various income
deferrals for other accounting periods amounting to 21 million
euros (previous year: 15 million euros) and payments on ac-
count received in the amount of 6 million euros (previous
year: 3 million euros).
21 Trade accounts payable
Trade accounts payable increased from 3,819 million euros to
3,953 million euros. In addition to purchase invoices, they also
relate to accruals for invoices outstanding in respect of goods
and services received. They are due within one year.
22 Income tax liabilities
Income tax liabilities include tax obligations and uncertain
tax positions. The tax treatment of certain items and transac-
tions is, in part, dependent on future recognition by the tax
authorities or tax judiciary. Insofar as it is deemed likely that
the tax authorities will not accept a tax position, this is taken
into consideration when determining the income tax liabilities
and other tax items, with the most probable or expected amount
then being applied (per IAS 12 and IFRIC 23). The same assump-
tions are applied to both current and deferred taxes when ac-
counting for uncertain tax positions.
H e n k e l A n n u a l R e p o r t 2 0 2 0
2 2 7
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
23 Financial instruments report
How Henkel recognizes and measures financial instruments
A financial instrument is any contract that gives rise to a finan-
cial asset of one entity and a financial liability or equity instru-
ment of another entity.
Classification of financial assets to one of the measurement
categories is initially based on the structure of the contractual
cash flows. The classification of financial assets in respect of
which cash flows occur at fixed points in time and are com-
prised entirely of principal and interest payments is then dic-
tated by the business model in which they are held.
Within Henkel Group, financial instruments are reported in
the statement of financial position under trade accounts re-
ceivable, trade accounts payable, borrowings, other financial
assets, other financial liabilities, and cash and cash equiva-
lents.
Financial instruments are recognized once Henkel becomes a
party to the contractual provisions of the financial instrument
and thereby acquires rights or enters into comparable obliga-
tions relating to same. The recognition of financial assets
takes place at the settlement date, with the exception of deriv-
ative financial instruments, which are recognized at the trade
date. All financial instruments are initially reported at their
fair value. Only those trade accounts receivable without any
significant financing component are recognized at transaction
price as defined in IFRS 15 Revenue from Contracts with Cus-
tomers. Transaction costs are only capitalized if the financial
instruments are not subsequently remeasured at fair value
through profit or loss.
IFRS 9 specifies three categories for measuring financial assets:
Measured at amortized cost
Measured at fair value through profit or loss
Measured at fair value through other comprehensive income
Financial instruments held so as to collect contractual cash
flows are recognized at amortized cost using the effective
interest method. With the exception of derivative financial
instruments, other investments, and certain cash deposits
recognized as securities and time deposits and as cash equiva-
lents, all financial assets fulfill these criteria and are measured
at amortized cost.
If the business model essentially requires the assets to be held
– albeit with their sale remaining possible where necessary to
cover liquidity needs, for example – said assets are recognized
at fair value through other comprehensive income.
Financial instruments in respect of which cash flows are com-
prised entirely of principal and interest payments but which
are not held within one of the two aforementioned business
models, are recognized at fair value through profit or loss.
In addition, a risk provision must be accrued in the amount of
expected credit losses for financial assets that are measured at
amortized cost or at fair value through other comprehensive
income. For more details, please refer to the notes on trade ac-
counts receivable on pages 206 and 207 and on credit risk on
pages 241 to 246.
H e n k e l A n n u a l R e p o r t 2 0 2 0
228
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Financial assets of which the cash flows are not comprised en-
tirely of principal and interest payments are in general recog-
nized at fair value through profit or loss. At Henkel this is the
case with derivative financial assets and shares in open-end
investment funds held to manage liquidity. As a rule, Henkel
exercises its right to choose to recognize equity instruments
at fair value through other comprehensive income. This ap-
proach is commensurate with the fact that, as a rule, the cor-
poration does not plan to sell the assets to benefit from
short-term changes in their fair value. If these equity instru-
ments are, nevertheless, sold or derecognized for some other
reason, the valuation effects accumulated up to then in other
comprehensive income are reclassified to retained earnings
rather than the consolidated statement of income.
Financial liabilities must be allocated to one of the following
measurement categories:
Measured at amortized cost
Measured at fair value through profit or loss
As a rule, Henkel recognizes financial liabilities at amortized
cost using the effective interest method, apart from derivative
financial liabilities, which are measured at fair value through
profit or loss.
Hedge accounting is applied in individual cases – where possi-
ble and economically sensible – in order to avoid profit and
loss variations arising from fair value changes in derivative
financial instruments. Fair value and cash flow hedges are
designated within the Group depending on the type of under-
lying and the risk being hedged. Details relating to the hedging
contracts transacted within the Group and how the fair values
of the derivatives are determined are provided on pages 235
to 241.
Henkel currently does not exercise the fair value option for
financial assets, nor for financial liabilities. In the case of al-
ready contracted future purchases of non-financial assets con-
taining embedded derivatives, Henkel exercises the option on
a case-by-case basis to recognize the entire contract at fair
value through profit or loss.
The following table summarizes the allocation of items on the
statement of financial position to the financial instrument
classes and compares the carrying amounts of the financial
assets and liabilities with their respective fair values:
H e n k e l A n n u a l R e p o r t 2 0 2 0
2 2 9
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Comparison of carrying amounts and fair values of financial instruments
in million euros
Financial assets
Trade accounts receivable
Other financial assets
Financial instruments class
(Valuation hierarchy of fair values)
Amortized cost
Receivables from non-consolidated
subsidiaries and associates
Financial receivables from third parties
Derivative financial instruments not included
in a designated hedging relationship
Derivative financial instruments included
in a designated hedging relationship
Investments in non-consolidated
subsidiaries and associates
Other investments
Amortized cost
Amortized cost
Fair value through profit or loss (level 2)
Derivatives included in a designated hedging
relationship (level 2)
Not assigned to any valuation category
under IFRS 9
Fair value through other comprehensive
Receivables from Henkel Trust e.V.
Securities and time deposits
Securities and time deposits
Securities and time deposits
Securities and time deposits
Financial collateral provided
Sundry financial assets
Cash and cash equivalents
Cash and cash equivalents
Total
income (level 3)
Amortized cost
Amortized cost
Fair value through other comprehensive
income (level 1)
Fair value through profit or loss (level 1)
Fair value through profit or loss (level 2)
Amortized cost
Amortized cost
Amortized cost
Fair value through profit or loss (level 2)
1 Prior-year figures amended (please refer to the notes on page 188).
TABLE CONTINUED ON NEXT PAGE
Dec. 31, 2019¹ Dec. 31, 2019 Dec. 31, 2020 Dec. 31, 2020
Fair value
Fair value
Carrying
amount
3,415
1,460
Carrying
amount
3,106
1,471
0
138
60
54
9
36
621
8
4
13
400
26
91
1,347
113
6,335
0
223
67
39
6
57
497
5
2
14
401
74
86
1,566
161
6,303
60
54
36
4
13
400
113
67
39
57
2
14
401
161
H e n k e l A n n u a l R e p o r t 2 0 2 0
2 3 0
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Financial instruments class
(Valuation hierarchy of fair values)
Dec. 31, 2019¹
Carrying
amount
Dec. 31, 2019 Dec. 31, 2020 Dec. 31, 2020
Fair value
Fair value
Comparison of carrying amounts and fair values of financial instruments
in million euros
Financial liabilities
Borrowings
Bonds
Other borrowings
Trade accounts payable
Other financial liabilities
Lease liabilities
Liabilities to non-consolidated
subsidiaries and associates
Liabilities to customers
Derivative financial instruments not included
in a designated hedging relationship
Derivative financial instruments included
in a designated hedging relationship
Derivative financial instruments included
in a designated hedging relationship
Sundry financial liabilities
Sundry financial liabilities
Sundry financial liabilities
Sundry financial liabilities
Amortized cost (level 1)
Amortized cost
Amortized cost
Not assigned to any valuation category
under IFRS 9
Amortized cost
Amortized cost
Fair value through profit or loss (level 2)
Derivatives included in a designated
hedging relationship (level 2)
Derivatives included in a designated
hedging relationship (level 3)
Amortized cost (level 3)
Amortized cost
Fair value through profit or loss (level 3)
Not assigned to any valuation category
under IFRS 9
Total
1 Prior-year figures amended (please refer to the notes on page 188).
2,483
56
44
–
109
–
3,958
2,475
1,483
3,819
860
551
7
65
56
44
–
115
22
–
–
8,637
Carrying
amount
3,084
2,370
714
3,953
1,068
560
5
58
64
55
–
313
13
-11
12
8,106
2,407
64
55
–
322
-11
IFRS 13 Fair Value Measurement defines fair value as the price
that would be payable in a principal market – or in the most
favorable market, in the absence of the former – if an asset
were to be sold or a liability transferred. Valuation parameters
as close to market reality as possible must be used as input
factors to determine fair value. The fair value hierarchy priori-
tizes the input factors used in the valuation methods in three
descending levels, depending on market proximity:
Level 1: Fair values which are determined on the basis of
quoted, unadjusted prices in active markets
Level 2: Fair values which are determined on the basis of
parameters for which either directly or indirectly derived
market prices are available
Level 3: Fair values which are determined on the basis of
parameters for which the input factors are not derived from
observable market data
H e n k e l A n n u a l R e p o r t 2 0 2 0
231
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
The fair value of securities and time deposits classified as level
1 is based on quoted market prices as of the reporting date. Ob-
servable market data are used to measure the fair value of level
2 securities, time deposits and cash equivalents. If bid and ask
prices are available, the mid price is used to determine the fair
value. When using the discounted cash flow method to deter-
mine fair values, the contractually specified cash flows are
discounted using currency-specific yield curves. When meas-
uring derivative financial instruments, the credit risk is
determined by netting all financial assets, liabilities, collateral
received and collateral provided for each counterparty to deter-
mine the net credit exposure. An explanation of the method
used to determine the fair values of derivative financial instru-
ments can be found on pages 235 to 241.
The changes in the fair values of the level 3 financial instru-
ments are discussed in the following:
Development of level 3 assets and liabilities 2019
in million euros
Carrying amount at January 1, 2019
Purchases
Gains/losses (realized) recognized in operating
profit or loss
Of which: attributable to assets and liabilities
held at the end of the reporting period
Gains/losses recognized in other changes in equity
Foreign exchange effects/Other changes
Carrying amount at December 31, 2019
Derivative financial
instruments
included in a
designated hedging
relationship
-1
–
–
–
1
–
-0
Other
investments
Contingent
purchase price
commitments
Puttable
instruments
for minority
shareholders
Contracts with
embedded
derivatives
20
23
–
–
-8
1
36
33
–
-26
-16
–
1
8
29
-21
–
–
-8
–
–
–
–
–
–
–
–
–
H e n k e l A n n u a l R e p o r t 2 0 2 0
2 3 2
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Development of level 3 assets and liabilities 2020
in million euros
Carrying amount at January 1, 2020
Purchases
Gains/losses (realized) recognized in operating
profit or loss
Of which: attributable to assets and liabilities
held at the end of the reporting period
Gains/losses recognized in other changes in equity
Foreign exchange effects/Other changes
Carrying amount at December 31, 2020
Derivative financial
instruments
included in a
designated hedging
relationship
-0
–
–
–
0
–
–
Other
investments
Contingent
purchase price
commitments
Puttable
instruments
for minority
shareholders
Contracts with
embedded
derivatives
36
20
–
–
3
-2
57
8
–
-8
-8
–
–
–
–
–
–
–
–
–
–
–
12
-0
-0
–
–
11
The derivative financial instruments categorized as level 3 are
commodity forwards accounted for using hedge accounting.
In the absence of forward quotes on the market, the fair value
is determined on the basis of bids obtained from several banks
for new contracts involving similar products.
Changes in the fair values determined using this procedure are
included in full in other comprehensive income in the hedge
reserve. Reclassification of the corresponding amounts to the
cost of hedged inventories is performed when the derivatives
are realized.
Other investments include investments in companies and in-
vestment funds that are currently not intended for sale. The
carrying amounts of the investments in companies totaled
23 million euros (previous year: 16 million euros). Shares in in-
vestment funds amounted to 34 million euros (previous year:
20 million euros). The fair value of other investments is based
either on information derived from recent financing transac-
tions, on a cost-based method or on valuation using the dis-
counted cash flow method taking into account the free cash
flow of the investee. Appropriate risk-adjusted costs of capital
are applied when using the discounted cash flow method.
The individual other investments are of minor importance
for the presentation of the net assets and results of operations
of the Henkel Group. If any conceivably realistic changes were
to occur in the valuation parameters, the change in the carry-
ing amounts revealed by sensitivity analysis would not exceed
a range in the mid-single-digit euro millions. The changes
would be included in full in the overall figure for other changes
in equity recognized in other comprehensive income. No valu-
ation results recognized in equity were reclassified to retained
earnings in the year under review, nor in the previous year.
The fair value of the performance-related purchase price
component pertaining to the acquisition of the outstanding
non-controlling shares in our subsidiary in the United Arab
Emirates is determined on the basis of the expected trend in
earnings before interest, taxes, depreciation and amortization,
impairment losses and write-ups (EBITDA) that was relevant
to payment of the contingent purchase price component. In
addition to the EBITDA, the exchange rate of the UAE dirham is
a further material valuation parameter.
H e n k e l A n n u a l R e p o r t 2 0 2 0
233
The liabilities recognized in sundry financial liabilities for the
put options granted to the non-controlling shareholders of
eSalon.com LLC and Henkel Beauty & IB Holding GmbH are
measured at amortized cost. The fair values indicated in the
notes, which are allocable to level 3, correspond to the present
value of the expected obligation in each case. The liabilities
are calculated using multiple methods based on the sales of
the company and an adjustment to net working capital, and
discounted at the current market interest rate for comparable
debt instruments. In addition to the sales of the company, the
average annual growth rate in sales that forms the basis for
determining the multiplier is a further material valuation
parameter. In the case of the liability to the non-controlling
shareholders of eSalon.com LLC, the exchange rate of the US
dollar is also a material valuation parameter.
We did not perform any reclassifications between the valuation
categories or IFRS 7 classes, or transfers within the fair value
hierarchy, either in the reporting period or in the comparative
prior-year period.
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
At December 31, 2020, the fair value of the liability was 0 million
euros. The income from reducing the liability was recognized
through profit in the income statement. A conceivably realis-
tic change in the valuation parameters would not change the
fair value.
The Virtual Power Purchase Agreement entered into in the year
under review as part of our sustainability strategy is recognized
in total at fair value through profit or loss due to the embedded
derivative it contains. The fair value allocated to level 3 is de-
rived from the present value of the expected cash flows from
the contract. In this case, the material valuation parameters
are the anticipated electricity prices and the US dollar interest
rate used for discounting.
If the anticipated electricity prices had been 10 percent higher
or lower on the valuation date, the fair value of the agreement
would have been 0 million euros higher or lower. An increase
of 100 basis points in the US dollar interest rate would lead to
a reduction in the fair value of -1 million euros, whereas a cor-
responding decrease would lead to an increase in the fair value
of 1 million euros.
At the time of initial recognition, the fair value of the contract
was higher than the transaction price. The corresponding dif-
ference of 12 million euros was deferred. Once the wind farm
on which the Virtual Power Purchase Agreement is based starts
operating, the difference will be recognized pro rata temporis
in the statement of income over the term of the agreement.
Since the wind farm has not yet started operating, no income
was recognized in the year under review. The deferred differ-
ence is recognized in the statement of financial position to-
gether with the positive or negative fair value of the agreement
under sundry financial assets or sundry financial liabilities.
The changes in fair value and deferred amount are captured in
other operating income or other operating expenses in the
statement of income.
H e n k e l A n n u a l R e p o r t 2 0 2 0
234
The Company
Shares and bonds
Net gains and losses from financial instruments by category
The net gains and losses from financial instruments can be
allocated to the following categories:
Corporate governance
Net results by measurement category 2019
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Interest
Valuation
allowances
Payments
received for
written-off and
derecognized
financial
instruments
Fees
Other effects
recognized
through profit
or loss
Valuation
effects recog-
nized through
other compre-
hensive
income
13
–
–
1
-87
-73
-19
–
–
–
–
-19
2
–
–
–
–
2
–
–
–
–
-5
-5
8
–
–
102
-12
98
–
1
-8
-80
–
-87
Reclassi-
fications
of valuation
effects recog-
nized through
other compre-
hensive
income
–
–
–
76
–
76
Total
net results
4
1
-8
99
-104
-8
in million euros
Financial assets measured at amortized cost
Financial assets measured at fair value
through other comprehensive income
(debt instruments)
Financial assets measured at fair value
through other comprehensive income
(equity instruments)
Financial assets and liabilities measured
at fair value through profit or loss1
Financial liabilities measured at amortized cost
Total net results 2019
1 Including designated hedging instruments.
H e n k e l A n n u a l R e p o r t 2 0 2 0
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
235
Total
net results
-43
1
2
-23
-61
-124
Net results by measurement category 2020
in million euros
Financial assets measured at amortized cost
Financial assets measured at fair value
through other comprehensive income
(debt instruments)
Financial assets measured at fair value
through other comprehensive income
(equity instruments)
Financial assets and liabilities measured
at fair value through profit or loss1
Financial liabilities measured at amortized cost
Total net results 2020
1 Including designated hedging instruments.
Interest
Valuation
allowances
Payments
received for
written-off and
derecognized
financial
instruments
Fees
Other effects
recognized
through profit
or loss
Valuation
effects recog-
nized through
other compre-
hensive
income
12
0
–
-11
-44
-44
-61
–
–
–
–
-61
1
–
–
–
–
1
–
–
–
–
-3
-3
6
–
–
-52
-13
-59
–
1
2
63
–
66
Reclassi-
fications
of valuation
effects recog-
nized through
other compre-
hensive
income
–
–
–
-24
–
-24
Reconciliation of net results to financial result
in million euros
Total net results
Less/plus results included in operating profit
or in other comprehensive income
Foreign exchange effects
Interest expense of pension obligations
less interest income from plan assets and
reimbursement rights
Other financial result
(not related to financial instruments)
Financial result
2019
-8
24
-98
-7
1
-88
2020
-124
10
21
-8
8
-94
No gains or losses were realized in the fiscal year from derec-
ognized financial assets measured at amortized cost.
Derivative financial instruments and hedge accounting
Derivative financial instruments are measured at their fair
value at the reporting date. Recognition of the gains and losses
arising from fair value changes of derivative financial instru-
ments is dependent upon whether hedge accounting rules are
applicable. The Group ensures that its hedge accounting is
consistent with the Group risk management objectives and
strategy, and that a qualitative and forward-looking approach
is adopted when assessing the effectiveness of its hedging
transactions.
Hedge accounting is not applied for derivative financial in-
struments as long as their valuation is offset by direct com-
pensatory changes in the fair values of the hedged items or the
requirements for hedge accounting are not fulfilled. We recog-
nize directly in the statement of income the fair value changes
in these derivatives which, in economic terms, represent ef-
fective hedges within the framework of the Group strategy.
H e n k e l A n n u a l R e p o r t 2 0 2 0
236
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
In hedge accounting, derivative financial instruments are
classified as instruments for hedging fair value (fair value
hedge), as instruments for hedging future cash flows (cash
flow hedge) or as instruments for hedging a net investment in
a foreign subsidiary (hedge of a net investment in a foreign
operation). When closing the transaction, Henkel documents
the relationship between the hedging instrument and the
hedged item, together with the risk management objectives
and strategies of the hedging transactions. All derivatives
classified as hedging instruments are tied to specific commit-
ted and planned transactions. Henkel uses acknowledged
methods – such as the dollar offset method or the hypothet-
ical derivative method – to determine the effective portion of
the hedges and any ineffective portions.
The following table provides an overview of the derivative
financial instruments utilized and recognized within the
Group, and their fair values:
Derivative financial instruments
in million euros
Currency risk
Currency forwards1
Of which: for hedging loans within
the Group
Of which: designated as cash flow hedges
Cross-currency interest rate swaps3
Of which: designated as cash flow hedges
Interest rate risk
Interest rate swaps4
Of which: designated as cash flow hedges
Commodity price risk
Commodity forwards
Of which: designated as cash flow hedges
Share price risk
Equity forward contracts
Of which: designated as cash flow hedges
Total derivative financial instruments
Nominal value
Positive fair value2
Negative fair value2
Dec. 31, 2019
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2020
6,334
2,823
1,580
1,234
1,234
979
979
3
3
35
35
8,585
7,279
3,159
1,996
1,642
1,642
–
–
–
–
–
–
8,921
71
52
11
43
43
–
–
–
–
–
–
114
99
21
32
7
7
–
–
–
–
–
–
106
-69
-35
-13
-13
-13
-11
-11
0
0
-7
-7
-100
-75
-39
-11
-44
-44
–
–
–
–
–
–
-119
1 Maturity less than 1 year.
2 Fair values including accrued interest and excluding valuation allowance for counterparty credit risk of 0 million euros (previous year: 0 million euros).
3 Nominal value: 1,150 million British pounds, 330 million Swiss francs and 70 million US dollars (previous year: 1,050 million British pounds).
4 Nominal value previous year: 1.1 billion US dollars.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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We determine the fair value of currency forwards and cross-
currency interest rate swaps on the basis of the reference rates
issued by the European Central Bank for the reporting date,
taking into account forward premiums/forward discounts for
the remaining term of the respective contract versus the con-
tracted foreign exchange rate. Currency options are measured
using price quotations or recognized models for the determi-
nation of option prices. The fair value of equity forward con-
tracts is measured on the basis of the closing price of Henkel
preferred shares on the reporting date, taking into account for-
ward premiums/forward discounts for the remaining term of
the respective contract versus the contracted forward share
price. Interest rate swaps are measured on the basis of dis-
counted cash flows expected in the future, taking into account
market interest rates applicable for the remaining term of the
contracts. These are indicated for the two most important cur-
rencies in the following table. It shows the interest rates
quoted on the interbank market in each case on December 31.
Interest rates in percent p.a.
At December 31
Term
1 month
3 months
6 months
1 year
2 years
5 years
10 years
Euro
US dollar
2019
-0.44
-0.38
-0.32
-0.25
-0.29
-0.13
0.21
2020
-0.55
-0.55
-0.53
-0.53
-0.52
-0.46
-0.26
2019
1.76
1.91
1.91
2.00
1.68
1.72
1.88
2020
0.14
0.24
0.26
0.19
0.20
0.43
0.92
In measuring derivative financial instruments, counterparty
credit risk is taken into account with an adjustment to the
unsecured fair values concerned, determined on the basis of
credit risk premiums. The adjustment relating to fiscal 2020
amounts to 0 million euros (previous year: 0 million euros).
Changes in credit risk are recognized through profit or loss in
the financial result.
Depending on their fair value and their maturity on the report-
ing date, derivative financial instruments are included in cur-
rent or non-current financial assets (positive fair value) or in
current or non-current financial liabilities (negative fair
value).
Most of the currency forwards served to hedge risks arising
from trade accounts receivable and payable, and those pertain-
ing to Group financing.
FFaaiirr vvaalluuee hheeddggeess
A fair value hedge hedges fluctuations in the fair value of
recognized assets and liabilities or unrecognized firm com-
mitments from which a specific risk arises. The changes in
the fair values of the hedging instruments and of the hedged
item from the hedged risk are simultaneously recognized in
profit or loss.
The Henkel Group did not use any fair value hedges in fiscal
2020, nor in the previous year.
CCaasshh ffllooww hheeddggeess
A cash flow hedge hedges fluctuations in future cash flows
from recognized assets and liabilities, unrecognized firm com-
mitments, and highly probable forecast transactions, from
which a specific risk arises. The Henkel Group uses them to
hedge currency, interest rate, and commodity and share price
risks. The effective portion of the change in fair value of the
cash flow hedge is initially recognized in the cash flow hedge
reserve in equity. The ineffective portion of the change in
value is recognized directly through profit or loss in the finan-
cial result or operating profit, depending on the hedged item.
Henkel exercises its right to choose to also initially recognize
changes in value of non-designated components of hedging
instruments – such as the forward component and foreign
currency basis spreads of currency forwards and the foreign
currency basis spreads of cross-currency interest rate swaps –
in the hedging cost reserve in equity. Amounts recognized in
the reserves are released through profit or loss in the same
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period in which the hedged transaction impacts profit or loss.
If a cash flow hedge results in the recognition of a non-finan-
cial asset, the amounts recognized in equity are included as
part of the acquisition cost when the asset is recognized
(“basis adjustment”).
Cash flow hedge reserve (net of deferred taxes)
At
Jan. 1
Hedge
results
Reclassifi-
cations
to the
statement
of income
in million euros
2020
2019
-224
-232
70
-62
-39
71
Reclassifi-
cations to
invento-
ries
(basis
adjust-
ment)
1
-1
Hedging cost reserve (net of deferred taxes)
At
Jan. 1
Hedge
results
Reclassifi-
cations
to the
statement
of income
in million euros
2020
2019
-15
-2
-8
-20
16
7
Reclassifi-
cations to
invento-
ries
(basis
adjust-
ment)
0
0
At
Dec. 31
-192
-224
At
Dec. 31
-7
-15
The reserves stated in equity essentially relate to currency
hedges for past acquisitions and planned inventory purchases,
and for our foreign currency bonds. The cash flow hedge reserve
reported as of December 31, 2020 in the amount of -237 million
euros (previous year: -235 million euros) was attributable to
results from hedges that were no longer subject to hedge ac-
counting.
Currency risk
As part of its risk management, the Henkel Group hedges
fluctuations in cash flows of planned sales and inventory pur-
chases in foreign currencies against currency risk. Currency
forwards or recognized receivables and payables are used as
hedging instruments. They are all due within one year. In the
case of currency forwards, no ineffectiveness arises, since the
Group only designates the spot component as the hedging in-
strument. Changes in the non-designated components of the
derivatives over their duration are recognized in the hedging
cost reserve. The hedge ratio is determined individually, de-
pending on the relevant strategy for each currency. The hedg-
ing rates for major currencies are shown in the following table:
Hedging rates for sales and inventory purchases
in million euros
US dollar
Chinese yuan
Canadian dollar
Polish zloty
British pound
2020
Nominal
555
52
43
36
33
Weighted
hedging rate
1.19
8.05
1.55
4.47
0.91
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An addition of 56 million euros (previous year: -53 million euros)
to the reserves (net of deferred taxes) relates to currency
hedges of planned inventory purchases and currency hedges
of planned sales as protection against fluctuating spot rates.
Of the changes in the values of hedging instruments recog-
nized in equity in the reporting period, 35 million euros
(previous year: -48 million euros) was reclassified to cost of
hedged inventories without affecting profit or loss or – within
the framework of hedging planned sales – to operating result
through profit or loss. The positive and negative fair values of
the derivatives contracted as a currency hedge of planned in-
ventory purchases and as a currency hedge of planned sales
amounted to 32 million euros (previous year: 11 million euros)
and -11 million euros (previous year: -13 million euros). The
cash flows from these currency derivatives, like the cash flows
from the hedged inventory purchases and the hedged sales,
are expected to occur and affect operating profit in the next
fiscal year when the inventories are used and the sales revenue
is realized.
In addition to the currency derivatives, foreign currency trade
accounts payable are designated as hedging instruments for
planned sales. The carrying amount of the liabilities desig-
nated as hedging instruments amounted to 472 million euros
(previous year: 524 million euros). The cash flows from these
liabilities and the cash flows from the hedged sales are ex-
pected to occur and affect operating profit in the next fiscal
year. The hedge transactions did not result in any ineffective-
ness.
In addition, cross-currency interest rate swaps are used to
hedge currency risks arising in connection with interest and
redemption payments in foreign currencies relating to Group
funding. Fixed payments in foreign currencies are converted
into fixed payments in euros through cross-currency inter-
est rate swaps. The hedging rates for the bonds issued in for-
eign currencies are shown in the table below:
Bond hedging rates
Bond maturity
9/13/2022
9/30/2022
9/30/2022
4/28/2023
7/7/2025
9/30/2026
2020
Nominal Weighted hedging
rate in euros
0.84
0.88
0.85
1.05
1.12
0.88
300 million GB pounds
400 million GB pounds
100 million GB pounds
330 million Swiss francs
70 million US dollars
350 million GB pounds
The hedging instruments have been structured and desig-
nated such that the occurrence of ineffectiveness has been
eliminated. Changes in the non-designated foreign currency
basis spreads over their duration are recognized in the hedging
cost reserve. The cash flows from the cross-currency interest
rate swap that are attributable to the interest payments were
recognized proportionately for the reporting period through
profit or loss as an interest expense. The term of the cross-cur-
rency interest rate swaps is matched to the term of the respec-
tive bond.
Interest rate risk
Until the beginning of December 2020, interest rate swaps with
a nominal volume of 1,100 million US dollars hedged part of
the risk of interest rate changes in connection with our com-
mercial paper program. The swaps were designated as cash
flow hedges. Because of the revolving nature of our commer-
cial paper borrowings, the interest payments in US dollars are
variable and were converted into fixed-interest payments
through the interest rate swaps. The interest rate risk was not
hedged at the reporting date.
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Commodity price risk
Payments for planned commodity purchases are selectively
hedged against fluctuations due to changes in the purchase
prices of the raw materials. Commodity forwards are used to
hedge this risk. They are all due within one year. The Group
only designates the commodity price component of the
planned raw material purchases. Other price components,
such as transportation costs, are not designated. Accordingly,
no ineffectiveness arises.
During fiscal 2020, the Henkel Group hedged exposure in
connection with clearly identifiable ethylene components.
During the process of accounting for the designated hedging
instruments, positive changes of 0 million euros (previous
year: 1 million euros) in the value of the derivatives designated
as hedges (net of deferred taxes) were added to the cash flow
hedge reserve. Once the hedges expired, the total loss recog-
nized in equity amounting to 0 million euros (previous year:
3 million euros) was reclassified to cost of hedged inventories
without affecting profit or loss (basis adjustment). As of De-
cember 31, 2020, there were no hedging contracts covering
commodity price exposure.
Share price risk
Until payment of the incentive from the final cycle of the
Global Long Term Incentive Plan (LTI Plan) 2013 in July 2020,
equity forward contracts were used to hedge against potential
fluctuations in future payroll costs for planned payouts due to
fluctuations in the price of Henkel shares. In these cases, no
ineffectiveness arose, since only the spot component of the
equity forward contracts was designated as the hedging instru-
ment.
In the year under review, hedging this planned exposure led
to an addition to the cash flow hedge reserve amounting to
(net of deferred taxes) -4 million euros (previous year: -6 million
euros). Once the hedge expired, the total loss of -4 million
euros recognized in equity until then was reclassified to oper-
ating profit as an expense.
HHeeddggeess ooff aa nneett iinnvveessttmmeenntt iinn aa ffoorreeiiggnn ooppeerraattiioonn
The accounting treatment of hedges of a net investment in a
foreign operation against translation risk is similar to that ap-
plied to cash flow hedges. The gain or loss arising from the ef-
fective portion of the hedging instrument is recognized in the
reserve for hedges of a net investment in a foreign operation;
the ineffective portion is recognized directly through profit
or loss. Henkel exercises its right to choose to also recognize
changes in value of the foreign currency basis spreads of cur-
rency forwards that are not designated as hedging instruments
in equity. The gains or losses recognized directly in equity in
connection with the hedges of a net investment in a foreign
operation remain there until disposal or partial disposal of
the net investment. The changes in non-designated foreign
currency basis spreads that are recognized in equity are reclas-
sified pro rata temporis over the term of the hedge to the state-
ment of income.
The reserve for hedges of a net investment in a foreign opera-
tion relates essentially to translation risks arising from net in-
vestments in Swiss francs, US dollars, Chinese yuans, Russian
rubles, Thai bahts and British pounds, for which most of the
associated hedging instruments expired in previous years.
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Reserve for hedges of a net investment
in a foreign operation (net of deferred taxes)
At
Jan. 1
Addition
(recog-
nized
in equity)
35
35
1
–
Disposal
(recog-
nized
through
profit or
loss)
0
–
At
Dec. 31
36
35
in million euros
2020
2019
Reserve for cost of hedges of a net investment
in a foreign operation (net of deferred taxes)
At
Jan. 1
Addition
(recog-
nized
in equity)
–
–
0
–
Disposal
(recog-
nized
through
profit or
loss)
0
–
At
Dec. 31
0
–
in million euros
2020
2019
Risks arising from financial instruments, and risk
management
As a globally active corporation, Henkel is exposed in the course
of its ordinary business operations to credit risks, liquidity risks
and market risks (currency translation, interest rate and other
price risks). The purpose of financial risk management is to re-
strict the exposure arising from operating activities through the
use of selective derivative and non-derivative hedging instru-
ments. Henkel uses derivative financial instruments exclusively
for the purposes of risk management. Without these instru-
ments, Henkel would be exposed to higher financial risks.
Changes in exchange rates, interest rates or commodity prices
can lead to significant fluctuations in the fair values of the deriv-
atives used. These variations in fair value should not be regarded
in isolation from the hedged items, as derivative and hedged
item constitute a unit in terms of countervailing fluctuations.
Management of currency, interest rate and liquidity risks is
based on the treasury guidelines introduced by the Manage-
ment Board, which are binding on the entire corporation.
These guidelines define the targets, principles and compe-
tences of the Corporate Treasury unit. They also describe the
fields of responsibility and establish the distribution of these
responsibilities between Corporate Treasury and Henkel’s sub-
sidiaries. The Management Board is regularly and comprehen-
sively informed of all major risks and of all relevant hedging
transactions and arrangements. A description of the objectives
and fundamental principles adopted in capital management
can be found in the combined management report on pages
126 and 127. There were no major risk clusters in the reporting
period. Appropriate details are provided in the description of
the individual risks.
CCrreeddiitt rriisskk
In the course of its business activities with third parties, the
Henkel Group is exposed to global credit risk arising from both
its operating business and its financial investments. This
risk derives from the possibility of the contractual party not
fulfilling its obligations.
The maximum credit risk arising from financial assets not
subject to the impairment rules of IFRS 9 – irrespective of any
collateral provided – is reflected by the carrying amounts of
the financial assets recognized in the statement of financial
position and presented as follows:
Maximum risk position
in million euros
Financial assets measured at fair value
through profit or loss
Derivative financial instruments included
in a designated hedging relationship
Equity instruments measured at fair
value through other comprehensive
income
Total carrying amounts
Dec. 31, 2019 Dec. 31, 2020
586
54
36
676
642
39
57
738
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Given that collateral has been provided, the actual credit risk
is significantly lower and is discussed in detail in the follow-
ing. Other financial assets include 497 million euros (previous
year: 621 million euros) representing a receivable from Henkel
Trust e.V. This constitutes the largest single item under the
financial assets heading. Given the investment structure and
rules of Henkel Trust e.V., the credit risk is very minor. Further
details of risk clusters are discussed in the following.
Under IFRS 9, valuation allowances for expected credit losses
(“expected loss model”) must be recognized for all financial
assets measured at amortized cost and for all debt instruments
measured at fair value through other comprehensive income.
IFRS 9 provides a three-level method for this purpose. Risk
provisions are accrued on the basis either of the 12 months ex-
pected losses (level 1), or of the lifetime expected losses if the
credit risk has increased significantly since initial recognition
(level 2), or if the asset is credit-impaired (level 3). The simpli-
fied approach is adopted, however, for most of the financial
assets, including trade accounts receivable with no material
financing component. As such, the expected credit losses
are always determined for the full lifetime of the financial
instruments.
To calculate the expected credit losses, counterparties are
grouped by similar credit default risks. Individual valuation
allowances are made on a case-by-case basis in response to
specific circumstances and risk indicators. Both empirical
data such as historical default rates and forward-looking infor-
mation such as individual and macroeconomic circumstances
are considered when determining the amounts of the valuation
allowances. If a counterparty’s credit rating is deemed to be
impaired – following noticeable changes in payment behavior
or application for bankruptcy, for example – all outstanding
amounts relating to that counterparty are subjected to a valu-
ation allowance. The expected default is determined on the
basis of individual assessment. Valuation allowances and
increases thereto are always recognized through profit or loss.
If the expected credit losses decrease, a corresponding amount
of the risk provision is reversed through profit or loss.
A financial asset is derecognized if it is reasonably judged to be
unlikely that the corresponding cash flows will be recoverable
in part or in whole, for example after completion of insolvency
proceedings or after consideration of other local legal circum-
stances. If an outstanding receivable is judged to be unrecov-
erable, the valuation allowance already in place is utilized and
the derecognition of the remaining net amount outstanding
results in an expense.
Trade accounts receivable and other financial assets in Henkel’s
operating business
In its operating business, Henkel is confronted by progressive
concentration on the customer side, as reflected in the receiv-
ables from individual customers. As of December 31, 2020,
the USA and China represented the highest risk concentration
at country level. Outstanding trade accounts receivable from
customers based in the USA accounted for 17 percent of all
trade accounts receivable on the reporting date. Trade accounts
receivable from customers based in China accounted for
13 percent. The risk concentration at individual customer
level was much lower. Receivables from customers with a high
credit risk rating accounted for about 11 percent of all trade
accounts receivable. These risks are monitored regularly at
the global and regional level and steps are taken to mitigate
exposure.
Our credit risk management system operating on the basis of
a globally applied credit policy ensures that credit risks are
constantly monitored and credit losses minimized. This pol-
icy, which applies to both new and existing customers, gov-
erns the allocation of credit limits and compliance with those
limits, individual analyses of customers’ creditworthiness
based on both internal and external financial information, risk
classification, and continuous monitoring of the risk of bad
debts at the local level. We also monitor our key customer
relationships at the regional and global level. In addition,
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safeguarding measures are implemented on a selective basis
for particular countries and customers inside and outside the
eurozone.
Collateral received and other safeguards include country-spe-
cific and customer-specific protection afforded by credit insur-
ance, letters of credit in the export business and, for example,
sureties, guarantees and cover notes. Since the beginning of
2020, the credit risk associated with trade accounts receivable
has, moreover, been reduced globally through excess-of-loss
credit insurance. The insurance covers trade accounts receiva-
ble starting at a specific amount and includes an aggregate
first loss deductible as well as a small percentage deductible.
When determining the valuation allowances on trade accounts
receivable, greater default probabilities were assumed in some
cases compared to year-end 2019 to reflect the anticipated fi-
nancial difficulties that some of our customers may face in
connection with the COVID-19 pandemic. They were based on
expert estimates of the economic impacts of the pandemic and
on in-house and external data regarding the financial status of
individual customers or customer groups.
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Valuation allowances on trade accounts receivable by risk category as of December 31, 2019
Risk categories
Low risk
Moderate risk
High risk
Individual assessment
Default
SMEs and microbusinesses
Total
Equivalent
to S&P rating
Probability
of default
A- to AA
BBB- to BB+
C to B+
n/a
D
n/a
0.1%
0.3% to 0.8%
4.1% to 24.8%
individual
100%
4.0%
Gross before
deduction of
collateral and
value-added tax
in million euros
1,646
1,073
327
17
60
192
3,315
Net for deter-
mining the
valuation
allowance in
million euros
1,045
653
212
16
57
151
2,134
Valuation
allowance in
million euros
2
3
21
4
55
6
91
Valuation allowances on trade accounts receivable by risk category as of December 31, 2020
Risk categories
Low risk
Moderate risk
High risk
Individual assessment
Default
SMEs and microbusinesses
Total
Equivalent
to S&P rating
Probability
of default1
A- to AA
BB- to BBB+
C to B+
n/a
D
n/a
0.1%
0.3% to 0.8%
3.6% to 23.3%
individual
100%
5.2%
Gross before
deduction of
collateral and
value-added tax
in million euros
1,632
867
342
18
72
139
3,070
Net for deter-
mining the
valuation
allowance in
million euros
694
391
212
13
69
116
1,495
Valuation
allowance in
million euros
8
7
22
9
68
7
123
1 Average probability of default before analysis on a case-by-case basis and adjustments due to the COVID-19 pandemic.
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Of the gross amount before deduction of collateral and value-
added tax of 3,070 million euros (previous year: 3,315 million
euros), positions worth 1,575 million euros (previous year:
1,181 million euros) were deducted for which no valuation al-
lowances were required. Of this figure, 1,341 million euros
(previous year: 941 million euros) relates to collateral received
and 233 million euros (previous year: 240 million euros) to re-
fundable value-added tax. Accordingly, the net base for deter-
mining valuation allowances was 1,495 million euros (previ-
ous year: 2,134 million euros).
The carrying amount of trade accounts receivable, the term of
which was renegotiated because they would have otherwise
been more than 30 days overdue, was 4 million euros (previ-
ous year: 5 million euros). Receivables of 68 million euros
(previous year: 56 million euros) were written off in full, but
not yet derecognized as they are still subject to ongoing col-
lection proceedings.
Apart from financial receivables from third parties amounting
to 223 million euros (previous year: 138 million euros), no val-
uation allowances exist in respect of other financial assets in
our operating business because the credit risk is considered to
be very low. A valuation allowance of 8 million euros (previous
year: 3 million euros) exists for financial receivables from
third parties.
Financial investments
Credit risks also arise from financial investments such as cash
at banks, securities and the positive fair value of derivatives.
Such exposure is limited by our Corporate Treasury specialists
through the selection of counterparties with strong credit rat-
ings, and limitations on the amounts allocated to individual
investments. In financial investments and derivatives trading
with German and international banks, we only enter into
transactions with counterparties of high financial standing.
We invest primarily in securities from issuers with an invest-
ment grade rating. Our cash deposits can be liquidated at short
notice. Our financial investments are broadly diversified
across various counterparties and various financial assets.
Credit ratings and investment limits are continuously moni-
tored and steps taken if fixed thresholds for ratings and credit
default swaps (CDS) are exceeded. To minimize the credit risk,
we agree netting arrangements to offset bilateral receivables
and obligations with counterparties. We additionally enter
into collateral agreements with relevant banks, on the basis of
which reciprocal sureties are established twice a month to se-
cure the fair values of contracted derivatives and other claims
and obligations. The netting arrangements only provide for a
contingent right to offset transactions conducted with a con-
tractual party. Accordingly, associated amounts can be offset
only under certain circumstances, such as the insolvency of
one of the contractual parties. Thus, the netting arrangements
do not meet the offsetting criteria under IAS 32 Financial
Instruments: Presentation. The following table provides an
overview of financial assets and financial liabilities from
derivatives that are subject to netting, collateral or similar
arrangements:
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Financial assets and financial liabilities from derivatives subject to netting, collateral, or similar arrangements
At December 31
in million euros
Financial assets
Financial liabilities
Gross amount recog-
nized in the statement
of financial position1
Amount eligible
for offsetting
Financial collateral
received/provided
Net amount
2019
114
100
2020
106
119
2019
67
67
2020
76
76
2019
28
26
2020
17
74
2019
19
7
2020
13
-31
1 Fair values excluding valuation allowance of 0 million euros relating to counterparty credit risk (previous year: 0 million euros).
In addition to netting and collateral arrangements, investment
limits are set, based on the ratings of the counterparties, in
order to minimize credit risk. These limits are monitored and
adjusted regularly. When determining the limits, we also apply
certain other indicators, such as the pricing of credit default
swaps by the banks. A valuation allowance of 0 million euros
exists to cover the remaining credit risk relating to the positive
fair values of derivatives (previous year: 0 million euros).
In the case of financial assets held by Henkel in connection
with EU emission rights swap contracts, the underlying emis-
sion rights are provided as collateral to the Henkel Group.
They may be utilized even if the debtor is not in default of
payment, since Henkel is only committed to returning the
same number and specification of emission rights. The fair
value of the non-financial assets held as collateral as of Decem-
ber 31, 2020 was 232 million euros (previous year: 101 million
euros). Because the financial assets are fully backed, the credit
risk was classified as absolutely minor, and no valuation
allowance was recognized.
LLiiqquuiiddiittyy rriisskk
Liquidity risk is defined as the risk of an entity failing to meet
its financial obligations at any given time. We mitigate this
risk through our long-term management strategy of using fi-
nancing instruments by issuing bonds in different currencies
with variously staggered terms up to six years. With the help of
our existing debt issuance program in the amount of 10 billion
euros, this is also possible on a short-term and flexible basis.
We predominantly invest cash in financial assets traded in a
liquid market in order to ensure that they can be sold at any
time to generate cash or to manage liquidity in the short term.
We also use our US dollar and euro commercial paper program
for short-term liquidity management. In order to ensure the fi-
nancial flexibility of Henkel at any time, the liquidity within
the Group is largely centralized and managed through the use
of cash pools. In addition, the Henkel Group has at its disposal
a confirmed credit line of 1.5 billion euros with a term through
to 2025. The individual subsidiaries additionally have at their
disposal bilateral loan commitments of 0.1 billion euros with a
revolving term of up to one year. Our credit rating is regularly
assessed by the rating agencies Standard & Poor’s and Moody’s.
We intend to maintain our ratings within a “single A” target
corridor.
Our liquidity risk can therefore be regarded as very low.
H e n k e l A n n u a l R e p o r t 2 0 2 0
2 4 7
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
The maturity structure of the original and derivative financial
liabilities within the scope of IFRS 7 based on undiscounted
cash flows, and thus the risk concentration in relation to li-
quidity risk, is shown in the following table:
Cash flows from financial liabilities 2019
in million euros
Bonds
Commercial paper1
Liabilities to banks
Lease liabilities
Trade accounts payable
Sundry financial instruments2
Original financial instruments
Expected inflow from interest rate and
cross-currency interest rate swaps
Expected outflow for interest rate and
cross-currency interest rate swaps
Other derivative financial instruments
Derivative financial instruments
Total
Dec. 31, 2019
Carrying
amounts
2,475
1,448
35
551
3,819
209
8,537
25
75
100
8,637
Remaining term
Between
1 and 5 years
More than
5 years
1,549
–
–
255
–
125
1,929
359
359
–
–
1,929
419
–
–
208
–
–
627
–
–
–
–
627
Up to
1 year
554
1,452
35
122
3,819
85
6,067
993
1,008
75
90
6,157
Dec. 31, 2019
Total
cash flow
2,522
1,452
35
585
3,819
210
8,623
1,352
1,367
75
90
8,713
1 From the euro and US dollar commercial paper program (total volume: 2 billion euros and 2 billion US dollars).
2 Sundry financial instruments include amounts due to customers, and finance bills.
H e n k e l A n n u a l R e p o r t 2 0 2 0
248
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Cash flows from financial liabilities 2020
in million euros
Bonds
Commercial paper1
Liabilities to banks
Lease liabilities
Trade accounts payable
Sundry financial instruments2
Original financial instruments
Expected inflow from interest rate and
cross-currency interest rate swaps
Expected outflow for interest rate and
cross-currency interest rate swaps
Other derivative financial instruments
Derivative financial instruments
Total
Dec. 31, 2020
Carrying
amounts
2,370
690
24
560
3,953
389
7,987
44
75
119
8,106
Remaining term
Between
1 and 5 years
More than
5 years
1,318
–
0
294
–
320
1,933
1,267
1,309
–
42
1,975
393
–
–
204
–
–
597
–
–
–
–
597
Up to
1 year
713
690
24
132
3,953
73
5,584
12
2
75
65
5,649
Dec. 31, 2020
Total
cash flow
2,424
690
24
629
3,953
393
8,114
1,279
1,311
75
107
8,221
1 From the euro and US dollar commercial paper program (total volume: 2 billion euros and 2 billion US dollars).
2 Sundry financial instruments include amounts due to customers, and finance bills.
MMaarrkkeett rriisskk
Market risk exists where the fair value or future cash flows of a
financial instrument may fluctuate due to changing market
prices. Market risks primarily take the form of currency risk,
interest rate risk and commodity price risk.
The Corporate Treasury unit manages currency exposure and
interest rates centrally for the Group and is therefore responsi-
ble for all transactions involving financial derivatives and
other financial instruments. Trading, Treasury Controlling
and Settlement (front, middle and back offices) are separated
both physically and in terms of organization. The parties to
the contracts are German and international banks which
Henkel monitors regularly, in accordance with Corporate
Treasury guidelines, for creditworthiness and the quality of
their quotations. Financial derivatives are used to manage cur-
rency exposure, interest rate and other price risks in connec-
tion with operating activities and the resultant financing re-
quirements, again in accordance with the Corporate Treasury
guidelines. Derivative financial instruments are entered into
solely for hedging purposes.
The currency and interest rate risk management of the Group
is supported by an integrated treasury system which is used to
identify, measure and analyze the Group’s currency exposure
and interest rate risks. In this context, “integrated” means
that the entire process from the conclusion of financial trans-
actions to their entry in the accounts is covered. Much of the
currency trading takes place on internet-based, multibank
trading platforms. These foreign currency transactions are
automatically transferred into the treasury system. The cur-
rency exposure and interest rate risks reported by all subsidi-
aries under standardized reporting procedures are likewise
integrated into the treasury system by data transfer. As a result,
it is possible to retrieve and measure at any time all currency
and interest rate risks across the Group and all derivatives en-
tered into to hedge the exposure to these risks. The treasury
system supports the use of various risk concepts.
H e n k e l A n n u a l R e p o r t 2 0 2 0
2 4 9
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Market risk is monitored on the basis of sensitivity analyses
and value-at-risk computations. Sensitivity analyses enable
estimation of potential losses, future gains, fair values or cash
flows of instruments susceptible to market risks arising
from one or several selected hypothetical changes in foreign
exchange rates, interest rates, commodity prices or other rel-
evant market rates or prices over a specific period. We use
sensitivity analyses in the Henkel Group because they enable
reasonable risk assessments to be made on the basis of direct
assumptions (e.g. an increase in interest rates). Value-at-risk
analyses reveal the maximum potential future loss of a certain
portfolio over a given period based on a specified probability
level.
Currency risk
The global nature of our business activities results in a large
number of cash flows in different currencies.
This transaction risk arises from possible exchange rate fluc-
tuations causing changes in the value of future foreign cur-
rency cash flows. The hedging of the resultant exchange rate
risks forms a major part of our central risk management activ-
ity. Transaction risks arising from our operating business are
partially avoided by the fact that we manufacture our products
in those countries in which they are sold. Residual transaction
risks on the operating side are proactively managed by Corpo-
rate Treasury. This includes the ongoing assessment of the
specific currency risk and the development of appropriate
hedging strategies. The objective of currency hedging is to fix
prices based on hedging rates so that we are protected from fu-
ture adverse fluctuations in exchange rates. Because we limit
our potential losses, any negative impact on profits is re-
stricted. The transaction risk arising from major financial pay-
ables and receivables is extensively hedged. In order to man-
age these risks, we primarily utilize currency forwards and
cross-currency interest rate swaps. The derivatives are desig-
nated as cash flow hedges and recognized accordingly in the fi-
nancial statements or measured at fair value through profit or
loss. The currency risk that exists within the Group in the form
of transaction risk initially affects equity in the case of cash
flow hedges, while all changes in the value of the other deriva-
tives are recognized directly in the statement of income.
The following table shows the risk exposure for Henkel’s ma-
jor currencies. The risk arises mainly from imports and ex-
ports by Henkel AG & Co. KGaA and its foreign subsidiaries.
Due to the international nature of its activities, the Henkel
Group has a portfolio of more than 50 different currencies.
H e n k e l A n n u a l R e p o r t 2 0 2 0
2 5 0
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Currency risk exposure1
in million euros
US dollar
Chinese yuan
Russian ruble
Canadian dollar
British pound
Others
Total
1 Transaction risk.
December 31, 2019
December 31, 2020
Total
currency risk
exposure
before
currency
hedging
481
156
151
140
126
1,081
2,135
Of which:
from planned
transactions
Net
currency risk
exposure after
currency
hedging
769
115
115
131
116
923
2,169
84
58
115
65
58
796
1,176
Total
currency risk
exposure
before
currency
hedging
362
141
135
91
78
939
1,745
Of which:
from planned
transactions
Net
currency risk
exposure after
currency
hedging
649
103
87
88
80
733
1,740
26
53
52
44
40
638
853
The value-at-risk pertaining to the transaction risk of the
Henkel Group as of December 31, 2020 amounted to 42 mil-
lion euros after hedging (previous year: 52 million euros).
The value-at-risk shows the maximum expected risk of loss in
a year as a result of currency fluctuations. Our value-at-risk
analysis within the internal risk reporting system assumes a
time horizon of one year and a one-sided confidence interval
of 95 percent, as it comprehensively reflects the risk associated
with one fiscal year. We adopt the variance-covariance approach
as our basis for calculation. Volatilities and correlations are
determined using historical data. The value-at-risk analysis is
based on the operating book positions, the derivative financial
instruments and the planned transactions in foreign currency,
with a forecasting horizon of up to twelve months.
Interest rate risk
Interest rate risk encompasses those potentially negative in-
fluences on profits, equity or cash flow in current or future re-
porting periods arising from changes in interest rates. In the
case of fixed-interest financial instruments, changing capital
market interest rates result in a fair value risk, as the attributa-
ble fair values fluctuate depending on those capital market
interest rates. In the case of floating-interest financial instru-
ments, a cash flow risk exists because the interest payments
may be subject to future fluctuations.
The financing and cash investment activities of the Henkel
Group mainly take place on international money and capital
markets. The resultant financial liabilities and cash deposits
are exposed to the risk of changing interest rates. The aim of
our centralized interest rate management is to reduce this risk
by choosing fixed or floating interest rate contracts and by
using interest rate derivatives. Only those derivative financial
instruments that can be modeled, monitored and assessed in
the risk management system may be used to hedge the interest
rate risk.
Henkel’s interest management strategy is essentially aligned
to optimizing the net interest result for the Group. The deci-
sions made in interest management relate to the bonds, liabil-
ities to banks and commercial paper put in place to secure
Group liquidity, the securities and time deposits used for cash
investments, and other interest-bearing financial instruments.
The financial instruments exposed to interest rate risk are pri-
marily denominated in euros and US dollars.
H e n k e l A n n u a l R e p o r t 2 0 2 0
251
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Depending on forecasts with respect to interest rate develop-
ments, Henkel enters into derivative financial instruments,
primarily interest rate swaps, in order to optimize the interest
rate lock-down structure. In the event of an expected rise in
interest rate levels, Henkel protects its positions by transact-
ing additional interest rate derivatives as effective hedging in-
struments. In addition to the fixed-rate euro-denominated
bond and US dollar bond, Henkel enters into cross-currency
interest rate swaps to convert the bonds denominated in
British pounds and Swiss francs into fixed-rate euro obligations.
Financial instruments with interest rates pegged for less than
12 months are included in the calculation on a time-weighted
basis. All other financial instruments bear floating interest
rates. Our exposure to interest rate risk at the reporting dates
was as follows:
Further information
Credits
Contacts
Financial calendar
Interest rate risk exposure
in million euros
Fixed-interest financial instruments
Euro
US dollar
Total
Floating-interest financial instruments
Euro
US dollar
Chinese yuan
Polish zloty
Others
Total
Carrying amounts
December 31, 2019
December 31, 2020
Interest rate risk
exposure before
interest hedge
-1,935
-270
-2,205
Interest rate risk
exposure after
interest hedge
-1,935
-1,182
-3,117
Interest rate risk
exposure before
interest hedge
-2,169
-75
-2,244
Interest rate risk
exposure after
interest hedge
-2,169
-75
-2,244
897
-1,952
212
201
799
157
897
-1,040
212
201
799
1,069
2,064
-1,809
264
210
827
1,556
2,064
-1,809
264
210
827
1,556
H e n k e l A n n u a l R e p o r t 2 0 2 0
2 5 2
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
The calculation of the interest rate risk is based on sensitivity
analyses that assume a parallel shift of 100 basis points in the
interest curves of all currencies. When analyzing fair value
risk, we calculate the hypothetical fair value loss or gain of
the relevant fixed-interest financial instruments as of the re-
porting date.
The risk of interest rate fluctuations with respect to the earn-
ings of the Henkel Group per the basis point value (BPV)
analysis as described above is shown in the following table.
Interest rate risk
in million euros
Based on an interest rate change of
100 basis points
Of which:
Cash flow through profit and loss
Fair value recognized in equity through
other comprehensive income
2019
2020
19
11
8
17
16
1
Commodity price risk
Uncertainty with respect to commodity price development
impacts the Group. Purchase prices for raw materials can af-
fect the net assets, financial position and results of operations
of Henkel. The risk management strategy put in place by the
Group management for safeguarding against procurement
market risk is described in more detail in the risks and oppor-
tunities report on page 155. As a small part of the risk manage-
ment strategy, cash-settled commodity forwards are entered
into on the basis of forecasted purchasing requirements in
order to hedge future uncertainties with respect to commodity
prices. Cash-settled commodity forwards are only used by
Henkel where there is a direct relationship between the hedg-
ing derivative and the physical underlying. Henkel uses hedge
accounting for these hedging transactions, thus limiting
the temporary exposure to price risks related to holding
commodity forwards. Developments in fair values and the
resultant risks are continuously monitored.
H e n k e l A n n u a l R e p o r t 2 0 2 0
253
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Notes to the consolidated statement of
income
24 Sales and principles of income
recognition
Comprised exclusively of revenues from contracts with custom-
ers, sales came in at 19,250 million euros and were thus lower
than in the previous year (previous year: 20,114 million euros).
Sales encompass the transfer of goods and services less direct
sales deductions such as customer-related rebates, credits and
other benefits paid or granted. Sales are recognized once control
of the goods has been transferred, or the service provided.
The timing of transfer of control of the goods to a customer is
determined by the underlying contract and the terms and
conditions of supply stipulated therein, or by international
trade rules.
Sales represent the consideration that Henkel will likely receive
in exchange for transferring the goods or providing the service.
Sales may only be recognized when no substantial adjustments
to the cumulative recognized revenue is expected.
Pursuant to IFRS 15, Henkel does not recognize sales for products
that it expects to be returned. In addition, empirical experience
has shown that customers are justified in expecting invoice
amounts to be reduced in certain instances. The amounts of
these expected refunds are also not recognized as sales. Henkel
draws on past return and refund statistics to quantify the ex-
pected returns and refunds; these are separated by business
unit and legal entity, and are subject to ongoing calculation
and adjustment. Mathematical estimates and assumptions
were made with regard to the underlying analysis period for
determining, among other factors, the return and refund rates
and the amount of sales to be adjusted by such rates, and also
with regard to observable volatilities.
Henkel agrees payment terms that are standard in our industry;
contracts with customers do not contain any material financing
components.
Warranty obligations do not constitute a separate performance
obligation and are recognized as provisions in accordance
with IAS 37.
H e n k e l A n n u a l R e p o r t 2 0 2 0
254
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Services are generally provided in conjunction with the sale of
goods, and recorded once the service has been performed. The
amount of sales revenue relating to the provision of services is
less relevant than that attributable to the transfer of goods.
For information on opening and closing balances of, and valu-
ation allowances on receivables from contracts with custom-
ers in fiscal 2020, please refer to our discussion of trade ac-
counts receivable in Note 7 on pages 206 and 207.
A disaggregation of sales by business unit and region can be
found in the Group segment report by business unit on pages
178 and 179 and in the discussion of regional development on
page 180.
Henkel exercises its right to choose to refrain from disclosing
transaction prices relating to any remaining performance obli-
gations, since the underlying contracts have an expected original
term of no more than one year.
26 Marketing, selling and distribu-
tion expenses
Marketing, selling and distribution expenses increased from
4,942 million euros to 5,377 million euros.
In addition to marketing organization and distribution ex-
penses, this item comprises, in particular, advertising, sales
promotion and market research expenses. Also included here
are the expenses of technical advisory services for customers,
valuation allowances on trade accounts receivable and amorti-
zation charges and impairment losses on trademarks and
other rights.
27 Research and development
expenses
Interest income is recognized on a time-proportion basis that
takes into account the effective yield on the asset and the interest
rate in force. Dividend income from investments is recognized
when the shareholders’ right to receive payment is legally es-
tablished.
At 501 million euros, research and development expenses were
more or less on a par with the previous year (previous year:
499 million euros). Expenditures directly attributable to re-
search and development activities amounted to 495 million
euros (previous year: 488 million euros).
25 Cost of sales
Cost of sales amounted to 10,378 million euros (previous year:
10,883 million euros).
Cost of sales comprises the cost of products and services sold
and the purchase cost of merchandise sold. It consists of the
directly attributable cost of materials and primary production
cost, as well as indirect production overheads including the
production-related amortization/depreciation and impairment
of intangible assets and property, plant and equipment.
The capitalization of research expenses is not permitted. Devel-
opment expenditures are recognized as an asset if all the criteria
for recognition are met, the research phase can be clearly dis-
tinguished from the development phase, and the expenditures
can be attributed to distinct project phases. Currently, the criteria
set out in IAS 38 Intangible Assets for recognizing development
expenditures are not all met with respect to product and tech-
nology developments. This is due to a high level of interde-
pendence within these developments and the difficulty of
assessing which products will eventually be marketable.
H e n k e l A n n u a l R e p o r t 2 0 2 0
255
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
28 Administrative expenses
Administrative expenses totaled 950 million euros (previous
year: 969 million euros).
Administrative expenses include personnel and material
costs relating to the Group management, Human Resources,
Purchasing, Accounting and IT functions, as well as the costs
of managing and administering the business units.
30 Other operating expenses
Other operating expenses
in million euros
Losses on disposal of non-current assets
Other taxes
Amortization, depreciation of other assets
Goodwill impairment
Sundry operating expenses
Total
2019
-7
-0
-0
-9
-68
-84
2020
-7
-0
-0
-31
-102
-139
29 Other operating income
Other operating income
in million euros
Gains on disposal of non-current assets
Release of provisions
Insurance claim payouts
Payments on derecognized receivables
Write-ups of non-current assets
Sundry operating income
Total
2019
17
32
13
2
3
95
162
2020
22
20
13
1
0
60
115
Sundry operating income relates to a number of individual
items arising from ordinary operating activities, such as grants
and subsidies, tax refunds for indirect taxes, and similar income.
Sundry operating expenses include a number of individual
items arising from ordinary operating activities, such as fees,
provisions for litigation and third-party claims, other taxes,
and similar expenses.
31 Financial result
Financial result
in million euros
Interest result
Other financial result
Investment result
Total
Interest result
in million euros
Interest and similar income
from third parties
Interest to third parties
Total
2019
-75
-13
0
-88
2019
13
-88
-75
2020
-44
-51
0
-94
2020
12
-55
-44
H e n k e l A n n u a l R e p o r t 2 0 2 0
256
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Other financial result
Main components of tax expense and income
in million euros
Interest result from net obligation (pensions)
Interest income from reimbursement rights
(IAS 19)
Expenses from currency losses
Income from currency gains
Other financial expenses
Other financial income
Total
2019
-9
5
-131
135
-38
25
-13
2020
-11
4
-103
70
-29
19
-51
Please see pages 234 and 235 in Note 23 for information on the
net results of the financial instruments by measurement cate-
gory per IFRS 7, and the reconciliation of same to the financial
result.
32 Taxes on income
Income tax expense/income breaks down as follows:
Income before tax and analysis of taxes
in million euros
Income before tax
Current taxes
Deferred taxes
Taxes on income
Tax rate
2019
2,811
644
64
708
25.2%
2020
1,925
686
-185
501
26.0%
2019
2020
in million euros
Current tax expense/income
in the reporting year
Current tax adjustments for prior years
Current taxes
Deferred tax expense/income from
temporary differences
Deferred tax expense/income from
unused tax losses
Deferred tax expense from tax credits
Deferred tax income from changes in tax rates
Increase/decrease in valuation allowances on
deferred tax assets
Deferred taxes
633
11
644
92
-35
3
1
3
64
Deferred tax expense by items on the statement
of financial position
in million euros
Intangible assets
Property, plant and equipment
Financial assets
Inventories
Other receivables and other assets
Special tax items
Provisions
Liabilities
Tax credits
Unused tax losses
Total
2019
84
52
4
-1
-1
–
-32
-12
4
-34
64
659
27
686
-171
-20
4
-3
5
-185
2020
-19
-41
-18
1
-8
1
-90
-1
–
-10
-185
We have summarized the individual company reports prepared
on the basis of the tax rates applicable in each country and taking
into account consolidation procedures in the reconciliation
statement below, showing how the expected tax charge, based
on the tax rate applicable to Henkel AG & Co. KGaA of 31 per-
cent, is reconciled to the effective tax charge disclosed.
H e n k e l A n n u a l R e p o r t 2 0 2 0
2 5 7
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Tax reconciliation statement
Allocation of deferred taxes
in million euros
Income before tax
Tax rate (including trade tax) of Henkel AG & Co. KGaA
Expected tax charge
Tax reductions due to differing tax rates abroad
Tax increases/reductions for prior years
Tax increases/reductions due to changes
in tax rates
Tax increases/reductions due to the recognition
of deferred tax assets relating to unused tax losses
and temporary differences
Tax reductions due to tax-free income and
other items
Tax increases/reductions arising from additions
and deductions for local taxes
Tax increases due to withholding taxes
Tax increases due to non-deductible expenses
Tax charge disclosed
Tax rate
2019
2,811
31%
871
-169
3
1
3
2020
1,925
31%
601
-134
-8
-3
5
-137
-95
-7
54
89
708
25.2%
-6
61
80
501
26.0%
Deferred taxes are calculated on the basis of tax rates that apply
in the individual countries at the year-end date or which have
already been legally decided. In Germany, there is a uniform
corporate income tax rate of 15 percent plus a solidarity sur-
charge of 5.5 percent. After taking into account trade tax, this
yields an overall tax rate of 31 percent. Deferred tax assets and
liabilities are netted where they involve the same tax authority
and the same tax creditor.
The deferred tax assets and liabilities stated on the reporting
date relate to the following items of the consolidated state-
ment of financial position, unused tax losses and tax credits:
in million euros
Intangible assets
Property, plant and equipment
Financial assets
Inventories
Other receivables
and other assets
Special tax items
Provisions
Liabilities
Tax credits
Unused tax losses
Amounts netted
Financial statement
figures
Deferred tax assets
Dec. 31,
2019
313
12
3
29
Dec. 31,
2020
289
35
–
24
Deferred tax liabilities
Dec. 31,
2020
813
123
48
1
Dec. 31,
2019
893
142
76
1
58
–
732
175
2
84
-532
875
83
–
781
171
2
88
-586
887
71
26
89
37
–
–
-532
802
90
25
89
33
–
–
-586
636
The deferred tax assets of 781 million euros (previous year:
732 million euros) relating to provisions in the financial
statement result primarily from recognition and measurement
differences with respect to pension obligations. The deferred
tax liabilities of 813 million euros (previous year: 893 million
euros) relating to intangible assets are mainly attributable to
business combinations. Deferred tax liabilities of 36 million
euros (previous year: 50 million euros) were recognized with
respect to retained earnings of foreign subsidiaries, as these
earnings will be distributed in 2021.
An excess of deferred tax assets is only recognized insofar as it
is likely that the company concerned will achieve sufficiently
positive taxable profits in the future against which the deductible
temporary differences can be offset and tax loss carry-forwards
can be used. Deferred taxes have not been recognized with
respect to unused tax losses of 558 million euros (previous year:
525 million euros), as it is not probable that sufficient taxable
profit will be available against which they may be utilized.
Of these unused tax losses, 470 million euros (previous year:
465 million euros) is attributable to unused state tax losses of
H e n k e l A n n u a l R e p o r t 2 0 2 0
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The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
subsidiaries. No deferred tax assets were recognized in respect
of interest carry-forwards of 37 million euros (previous year:
0 million euros). The interest carry-forwards lapse after more
than three years (previous year: no expiration). In addition,
other expenses amounting to 106 million euros (previous
year: 106 million euros) can be carried forward in full with
no expiration.
In China, deferred tax assets on unused tax losses, other expense
carry-forwards and temporary differences were recognized in
a total amount of 54 million euros (previous year: 62 million
euros) for a company that generated a loss in both the year just
ended and the previous year. There are no countervailing
deferred tax liabilities. In addition, a total of 284 million euros
(previous year: 291 million euros) was recognized as an excess
of deferred tax assets on unused tax losses and temporary
differences for a company in Germany that generated a loss in
both the year just ended and the previous year. Measures were
taken to ensure the availability of sufficient taxable income in
future. As such, our current position is that the deferred tax
assets can be realized.
A deferred tax expense of 8 million euros (previous year: ex-
pense of 7 million euros) was recognized in other comprehensive
income. Within this figure, income of 1 million euros (previous
year: expense of 7 million euros) resulted from actuarial gains
and losses on pension obligations. Deferred taxes from hedging
currency and interest rate risks were recognized as an expense
of 9 million euros (previous year: 0 million euros) in other
comprehensive income.
our US-American subsidiaries (tax rate around 6.1 percent
[previous year: 2.5 percent]). Of the unused tax losses for which
no deferred tax assets have been recognized, 515 million euros
(previous year: 467 million euros) expire after more than
three years, while 41 million euros are non-expiring (previous
year: 57 million euros).
We have summarized the expiry dates of unused tax losses and
tax credits in the following table.
Expiry dates of unused tax losses and tax credits
in million euros
Expire within
1 year
2 years
3 years
more than 3 years
May be carried forward
without restriction
Total
Unused tax losses
Dec. 31,
2019
Dec. 31,
2020
Tax credits
Dec. 31,
2019
Dec. 31,
2020
1
3
3
716
135
858
6
–
–
698
213
917
–
–
–
33
–
33
–
–
–
17
–
17
The list includes unused tax losses arising from losses on the
disposal of assets of 9 million euros (previous year: 9 million
euros) which may be carried forward without restriction. In
many countries, different tax rates apply to losses on the disposal
of assets than to operating profits, and in some cases losses on
the disposal of assets may only be offset against gains on the
disposal of assets. Of the unused tax losses, 545 million euros
(previous year: 555 million euros) are attributable to our US
subsidiaries. Of this figure, 527 million euros (previous year:
550 million euros) relate exclusively to state taxes. The tax cred-
its of 17 million euros (previous year: 33 million euros) that
can be carried forward are attributable to US subsidiaries. In
addition to the unused tax losses listed in the table above, in-
terest of 37 million euros (previous year: 2 million euros) has
been carried forward, of which 37 million euros (previous year:
0 million euros) is attributable to state taxes of our US
H e n k e l A n n u a l R e p o r t 2 0 2 0
2 5 9
The Company
Shares and bonds
Corporate governance
33 Non-controlling interests
The amount shown here represents the proportion of net income
and losses attributable to other shareholders of consolidated
subsidiaries.
Combined management report
Consolidated financial statements
Their share of net income was 16 million euros (previous year:
18 million euros).
Further information
Credits
Contacts
Financial calendar
The non-controlling interests included in the Henkel Group
at the end of fiscal 2020 had no material impact on our net assets,
financial position and results of operations. The Group has no
joint operations or unconsolidated structured entities.
H e n k e l A n n u a l R e p o r t 2 0 2 0
2 6 0
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Other disclosures
34 Reconciliation of adjusted net income
in million euros
Operating profit (EBIT) (as reported)
One-time income
One-time expenses
Restructuring expenses
Adjusted operating profit (adjusted EBIT)
Adjusted return on sales
Financial result
Taxes on income (adjusted)
Adjusted tax rate
Adjusted net income
Attributable to non-controlling interests
Attributable to shareholders of Henkel AG & Co. KGaA
Adjusted earnings per ordinary share
Adjusted earnings per preferred share
At constant exchange rates
2019
2,899
-7
34
294
3,220
16.0
-88
-760
24.3
2,372
19
2,353
5.41
5.43
2020
2,019
-5
328
237
2,579
13.4
-94
-625
25.2
1,860
17
1,843
4.24
4.26
+/-
-30.4%
–
–
–
-19.9%
-2.6pp
6.8%
-17.7%
0.9pp
-21.6%
-11.4%
-21.7%
-21.6%
-21.5%
-17.9%
in %
in %
in euros
in euros
One-time income of 5 million euros is attributable to the
reversal of a previously adjusted provision for legal disputes
(previous year: 0 million euros).
The one-time expenses in fiscal 2020 include expenses of
12 million euros related to the termination of a long-term ser-
vices contract (previous year: 0 million euros), as well as im-
pairment of 303 million euros attributable to assets designated
as held for sale and trademark rights discontinued as part of
our active portfolio management. The one-time expenses also
include 11 million euros related to the optimization of our IT
system architecture for managing business processes (previous
year: 11 million euros) and 2 million euros for acquisition-
related incidental costs (previous year: 2 million euros).
Of the restructuring expenses in fiscal 2020, 119 million euros
is attributable to cost of sales (previous year: 72 million euros)
and 74 million euros to marketing, selling and distribution
expenses (previous year: 144 million euros). A further 7 million
euros is attributable to research and development expenses
(previous year: 12 million euros), while 37 million euros is
attributable to administrative expenses (previous year:
66 million euros).
Taxes on income amounting to 625 million euros (previous
year: 760 million euros) reflect the tax effects of the adjust-
ments to operating profit (EBIT).
H e n k e l A n n u a l R e p o r t 2 0 2 0
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Shares and bonds
35 Payroll cost and employee
structure
Corporate governance
Payroll cost1
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
in million euros
Wages and salaries
Social security contributions
and staff welfare costs
Pension costs
Total
2019
2,550
476
169
3,195
2020
2,687
454
166
3,307
1 Excluding personnel-related restructuring expenses of 102 million euros
(previous year: 137 million euros).
Number of employees per function1
Production and engineering
Marketing, selling and distribution
Research and development
Administration
Total
2019
28,700
13,450
2,650
7,850
52,650
2020
28,700
13,200
2,600
8,100
52,600
1 Basis: annual average number of full-time employees, excluding apprentices and
trainees, work experience students and interns. Figures rounded.
36 Share-based remuneration plans
Global Long Term Incentive Plan (LTI Plan) 2020+
The Global Long Term Incentive (LTI) Plan 2020+ was intro-
duced effective January 1, 2017 to replace the previous Global
LTI Plan 2013. The two plans existed alongside each other until
the final tranche of the Global LTI Plan 2013 was paid out in
2020. However, as from January 1, 2017, first-time-eligible em-
ployees were only being admitted to the Global LTI Plan 2020+.
The Global LTI Plan 2020+ provides for share-based remunera-
tion settled with preferred shares of Henkel AG & Co. KGaA.
These treasury shares are granted on condition that members
of the plan are employed for four years by Henkel AG & Co.
KGaA or one of its subsidiaries in a position senior enough to
qualify for participation, and that they are not under notice
during that period. This minimum period of employment
pertains to the calendar year in which the treasury shares are
granted and the three subsequent calendar years. A perfor-
mance-related investment amount is pledged to eligible em-
ployees at the start of each four-year cycle. Target achievement
is determined, and the investment amount for the cycle speci-
fied, at the end of the first calendar year. At the start of the second
calendar year, this investment amount – after deduction of
taxes and social security contributions, where applicable – is
used to purchase treasury shares on the stock exchange, which
are then transferred to the employees. The number of shares
transferred to each employee on the basis of the investment
amount is determined by the actual market price (stock ex-
change price) of the shares at the time of purchase. The shares
are subject to a lock-up period that ends upon completion of
the relevant four-year cycle. During this time, the employees
participate in all share price developments. Once the lock-up
period has expired, the employees may dispose of the shares
as they wish.
The investment amount specified in the first year of the cycle
based on target achievement is recognized as a proportionate
payroll cost spread over the four-year performance measure-
ment period. As the Global LTI Plan 2020+ provides for settle-
ment using treasury shares, the allocations are recognized in
equity. If treasury shares are granted at the end of the perfor-
mance measurement period, equity is reduced accordingly
with no effect on profit or loss. Additional employer contribu-
tions and other payments that do not constitute part of the
investment amount and are not settled with treasury shares
are recognized under other provisions.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
For the current 2020–2023 cycle, the gross investment would
be 48 million euros, based on 100-percent target achievement
as of December 31, 2020. The final investment amount will be
determined in 2021 on the basis of the conclusive target achieve-
ment, and will be invested net of taxes and other social insur-
ance contributions in shares for the employees.
For the 2018–2021 cycle, a gross investment amount of 0 million
euros was determined, based on target achievement. Accord-
ingly, no treasury shares were acquired for this cycle.
The following table shows the numbers of shares acquired for
the 2017–2022 cycle in fiscal 2020 and the previous year:
For the 2019–2022 cycle, a gross investment amount of 16 mil-
lion euros was determined, based on target achievement. In
fiscal 2020, after deduction of taxes and social insurance con-
tributions, 134,684 treasury shares with a total value of 11 mil-
lion euros were purchased and will be made freely available to
qualifying employees on January 1, 2023. The shares were pur-
chased at an average price of 85.09 euros. Recognition of the
payment of the gross investment amount resulted in a reduc-
tion in equity.
Global LTI Plan 2020+ – 2019–2022 cycle –
Development in reporting year
Global LTI Plan 2020+ – 2017–2020 cycle –
Development prior year
Outstanding entitlements on January 1, 2019
Forfeited entitlements in fiscal 2019
Dividend payments converted into shares in fiscal 2019
Entitlements that became vested in fiscal 2019
Outstanding entitlements on December 31, 2019
Global LTI Plan 2020+ – 2017–2020 cycle –
Development current year
Granted entitlements on June 10, 2020
Forfeited entitlements in fiscal 2020
Dividend payments converted into shares in fiscal 2020
Entitlements that became vested in fiscal 2020
Outstanding entitlements on December 31, 2020
Number of
shares
134,684
-3,786
2,114
-2,283
130,729
Outstanding entitlements on January 1, 2020
Forfeited entitlements in fiscal 2020
Dividend payments converted into shares in fiscal 2020
Entitlements that became vested in fiscal 2020
Outstanding entitlements on December 31, 2020
Number of
shares
301,782
-27,837
4,534
-7,053
271,426
Number of
shares
271,426
-18,788
4,218
-6,631
250,225
Of the shares already acquired for the 2019–2022 cycle, 2,283
became vested in fiscal 2020. They are freely available to quali-
fying employees. 3,786 shares to which entitlement forfeited
were sold. 2,114 shares were purchased to convert dividend
payments into shares. At the end of fiscal 2020, therefore,
130,729 treasury shares were transferred to employees, who
will be able to dispose of them freely at the end of 2022.
At the end of 2020, 250,225 shares were freely available to
qualifying employees.
In fiscal 2020, an equity-increasing payroll cost of 28 million
euros (previous year: equity-increasing payroll cost of 11 mil-
lion euros) was recognized in connection with the Global LTI
Plan 2020+.
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Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Employee share plan
Since 2001, Henkel has been offering its employees a share
plan whereby employees can voluntarily invest up to 4 percent
of their salary up to a maximum amount of 4,992 euros each
year in Henkel preferred shares. As was also the case last year,
in 2020 Henkel rewarded each euro invested by employees
with a bonus of 33 eurocents, which was also invested in Henkel
preferred shares. Employees can dispose freely of these bonus
shares after a lock-up period of three years on condition that
they remain employed by Henkel AG & Co. KGaA or one of its
subsidiaries without being under notice during that period.
The employee share plan constitutes a share-based remunera-
tion program as defined in IFRS 2 Share-Based Payment that is
serviced through equity instruments.
Under the plan, the Henkel Group paid its employees a bonus
of 8 million euros in Henkel preferred shares in fiscal 2020
(previous year: 8 million euros). Because of the revolving na-
ture of the plan, this bonus was recognized directly as a payroll
cost for reasons of simplification. The sale of bonus shares for-
feited by employees lowered the payroll cost by 0 million euros
in 2020 (previous year: 0 million euros). The following table
summarizes the outstanding entitlements of employees from
bonus shares in fiscal 2020 and the previous year.
Global Long Term Incentive (LTI) Plan 2013
The Global Long Term Incentive Plan (LTI Plan) 2013 – which
was replaced by the Global Long Term Incentive Plan (LTI Plan)
2020+ effective January 1, 2017 – provided for share-based
remuneration with cash settlement. Under the plan, Cash Per-
formance Units (CPUs) were granted to qualifying employees
on condition that members of the plan were employed for four
years by Henkel AG & Co. KGaA or one of its subsidiaries in a
position senior enough to qualify for participation and that
they were not under notice during that period. This minimum
period of employment pertained to the calendar year in which
the CPUs were granted and the three subsequent calendar years.
The value of a CPU in each case was the average price of the
Henkel preferred share as quoted 20 stock exchange trading
days after the Annual General Meeting following the perfor-
mance measurement period. The total value of the cash remu-
neration payable to senior management personnel, which was
capped, was recalculated on each reporting date and on the
settlement date, based on the fair value of the CPUs, and
recognized through an appropriate increase in provisions as
a payroll cost spread over the period of service of the benefi-
ciary. All changes to the measurement of this provision were
reported under payroll cost.
In fiscal 2020, the cash remuneration from the last cycle of the
plan – the 2016 to 2019 cycle – was paid to qualifying employees
based on a share price of 83.21 euros, which was the average
price of Henkel preferred shares as quoted 20 stock exchange
trading days after our Annual General Meeting 2020. The ad-
justment of the provision in the reporting year due to fluctua-
tions in the price of Henkel preferred shares produced income
of 3 million euros (previous year: no adjustment). Of the previ-
ously accrued provision, 19 million euros was used to pay the
amounts due.
H e n k e l A n n u a l R e p o r t 2 0 2 0
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Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Employee share plan –
Development prior year
Outstanding entitlements on January 1, 2019
Entitlements granted in fiscal 2019
Forfeited entitlements in fiscal 2019
Dividend payments converted into shares in fiscal 2019
Entitlements that became vested in fiscal 2019
Outstanding entitlements on December 31, 2019
Employee share plan –
Development current year
Outstanding entitlements on January 1, 2020
Entitlements granted in fiscal 2020
Forfeited entitlements in fiscal 2020
Dividend payments converted into shares in fiscal 2020
Entitlements that became vested in fiscal 2020
Outstanding entitlements on December 31, 2020
Number of
shares
186,120
86,742
-5,088
1,628
-60,214
209,188
Number of
shares
209,188
87,964
-3,420
662
-65,378
229,015
37 Group segment report
The Group segment report examines the activities of the Henkel
Group by operating segments; selected regional information is
also provided. The segment report corresponds to the way in
which the Group managed its operating business in fiscal 2020,
and the Group’s internal reporting structure.
In keeping with the requirements of IFRS 8 Operating Seg-
ments, the three business units – Adhesive Technologies,
Beauty Care and Laundry & Home Care – were identified as
operating segments in fiscal 2020. The operating segments
also constitute the reportable segments.
The formerly independent reportable segments Adhesives for
Consumers, Craftsmen and Building, and Industrial Business,
which in turn comprised four operating segments were reor-
ganized with the aim of enhancing management efficiency.
Accordingly, since January 1, 2020, the new reportable segment
Adhesive Technologies, which corresponds to the business
unit, is made up of four business areas: Automotive & Metals,
Packaging & Consumer Goods, Electronics & Industrials, and
Craftsmen, Construction & Professional. Prior-year figures
have been amended accordingly. The level on which goodwill
and trademarks and other rights with indefinite useful lives
are tested for impairment remained unchanged from the pre-
vious year.
The Beauty Care and Laundry & Home Care operating seg-
ments include the same businesses as last year. There is there-
fore no change in the reporting procedure.
Reportable segments
AAddhheessiivvee TTeecchhnnoollooggiieess
The operating segment Adhesive Technologies offers a broad
and globally leading portfolio of high-performance solutions
in adhesives, sealants and functional coatings. The business
unit is composed of four business areas: Automotive & Metals,
Packaging & Consumer Goods, Electronics & Industrials, and
Craftsmen, Construction & Professional.
Our Automotive & Metals business provides our customers in
the automotive and metal processing industries with tailor-
made, high-impact and advanced system solutions along the
value chain, together with an extensive technology portfolio
and specialized technical services.
Our Packaging & Consumer Goods business supplies to small
and medium-sized branded goods manufacturers and to major
international companies operating in the consumer goods,
packaging and furniture industries. We lead the way in devel-
oping innovative solutions to address global consumer trends,
H e n k e l A n n u a l R e p o r t 2 0 2 0
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The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
such as the growing demand for more sustainable products,
and actively drive circular economy.
Our Electronics & Industrials business ranks among the world’s
leaders, offering major customers a specialized portfolio of
innovative high-technology adhesives, materials for the man-
ufacture of microchips and electronic assemblies, and for
industrial fabrication. With our technical knowledge and
extensive research expertise, we help our customers develop
innovative designs for products that are known the world
over. Our solutions are also deployed in the expansion of
digital infrastructures.
In our Craftsmen, Construction & Professional business, we
distribute a comprehensive range of brand-name products for
private consumers, DIYers, craftsmen and retailers, as well as
serving maintenance and installation experts in more than
800 different branches of industry. We supply adhesives
and sealants for home use, adhesive, sealant and insulating
systems and building materials for use in construction, and a
comprehensive portfolio of high-impact solutions for assem-
bling and servicing machinery.
BBeeaauuttyy CCaarree
The operating segment Beauty Care is globally active in the
Branded Consumer Goods business area with Hair Cosmetics,
Body Care, Skin Care and Oral Care, as well as in the profes-
sional Hair Salon business. Both business areas offer focused
brand portfolios featuring consumer-relevant innovations that
create added value for our customers and consumers.
LLaauunnddrryy && HHoommee CCaarree
The operating segment Laundry & Home Care covers the
global activities of Henkel in laundry and home care branded
consumer goods. The Laundry Care segment includes not only
heavy-duty and specialty detergents but also fabric softeners,
laundry performance enhancers and other fabric care prod-
ucts. Our operating segment Home Care encompasses hand
and automatic dishwashing products, cleaners for bathroom
and WC applications, and household, glass and specialty
cleaners. We also offer air fresheners and insect control prod-
ucts for household applications in selected regions.
Principles of Group segment reporting
In determining the segment results, assets and liabilities,
we apply essentially the same principles of recognition and
measurement as in the consolidated financial statements.
We have valued net operating assets in foreign currencies at
average exchange rates.
The Group measures the performance of its segments on the
basis of a segment income variable referred to internally and
in our reporting procedures as “adjusted EBIT,” which is
calculated by adjusting operating profit (EBIT) for one-time
expenses and income, and also for restructuring expenses.
Of the restructuring expenses, 69 million euros (previous year:
65 million euros) is attributable to Adhesive Technologies,
43 million euros (previous year: 97 million euros) to Beauty
Care and 100 million euros (previous year: 121 million euros)
to Laundry & Home Care.
For reconciliation with the figures for the Henkel Group, Group
management overheads are reported under Corporate together
with income and expenses that cannot be allocated to the
individual business units.
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The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
For reconciliation with the pre-tax earnings of the Henkel
Group, please refer to the consolidated statement of income
and the financial result reported therein.
Proceeds transferred between the segments only exist to a
negligible extent and are therefore not separately disclosed.
Net operating assets, provisions and liabilities are assigned to
the segments in accordance with their usage or origin. Where
usage or origin is attributable to several segments, allocation
is effected on the basis of appropriate ratios and keys.
For regional and geographic analysis purposes, we allocate
sales to countries on the basis of the country-of-origin princi-
ple. Non-current assets are allocated in accordance with the
domicile of the international company to which they pertain.
Further information
Credits
Contacts
Financial calendar
Reconciliation between net operating assets/capital employed and financial statement figures
Net operating assets
Net operating assets
Financial
statement
figures
December
31, 2019⁴
December
31, 2019
Financial
statement
figures
December
31, 2020
December
31, 2020
in million euros
Goodwill at carrying amounts
Other intangible assets and property, plant and
equipment (including assets held for sale)
Deferred taxes
Inventories
Trade accounts receivable from third parties
Intra-group trade accounts receivable
Other assets and tax refund claims2
Cash and cash equivalents
Operating assets/Total assets
Operating liabilities
Of which:
Trade accounts payable to third parties
Intra-group trade accounts payable
Other provisions and other liabilities2
(financial and non-financial)
Net operating assets
– Goodwill at carrying amounts
+ Goodwill at cost3
Capital employed
Annual
average¹
2019
12,592
7,997
–
2,296
3,765
1,837
584
–
29,070
8,179
3,886
1,837
2,456
20,891
12,592
13,161
21,460
12,922
12,972
8,138
–
2,193
3,413
1,745
640
–
29,051
7,978
3,819
1,745
2,414
21,073
–
–
–
8,092
875
2,187
3,415
–
2,408
1,460
31,409
–
3,819
–
3,167
–
–
–
–
Annual
average¹
2020
12,535
7,931
–
2,255
3,423
1,868
686
–
28,699
8,439
3,864
1,861
2,715
20,260
12,535
13,600
21,325
1 The annual average is calculated on the basis of the 12 monthly figures.
2 We take only amounts relating to operating activities into account in calculating net operating assets.
3 Before deduction of accumulated impairment pursuant to IFRS 3.79(b).
4 Prior-year figures amended (please refer to the notes on pages 188).
12,374
12,359
7,555
–
2,189
3,106
1,792
664
–
27,680
8,688
3,953
1,792
2,943
18,992
–
–
–
7,568
887
2,189
3,106
–
2,414
1,727
30,250
–
3,953
–
3,693
–
–
–
–
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The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
38 Earnings per share
Earnings per share
in million euros
Net income attributable to shareholders
of Henkel AG & Co. KGaA
Dividends, ordinary shares
Dividends, preferred shares
Total dividends
Retained earnings, ordinary shares
Retained earnings, preferred shares
Retained earnings
Number of ordinary shares
Dividend per ordinary share
Financial calendar
Of which: preliminary dividend per ordinary share1
Retained earnings per ordinary share
Earnings per ordinary share
Number of outstanding preferred shares2
Dividend per preferred share
Of which: preferred dividend per preferred share1
Retained earnings per preferred share
Earnings per preferred share
Number of ordinary shares
Dividend per ordinary share
Of which: preliminary dividend per ordinary share1
Retained earnings per ordinary share (after dilution)
Diluted earnings per ordinary share
Number of potentially outstanding preferred shares2
Dividend per preferred share
Of which: preferred dividend per preferred share1
Retained earnings per preferred share (after dilution)
Diluted earnings per preferred share
2019
2020
Reported
Adjusted
Reported
Adjusted
2,085
475
323
798
770
517
1,287
259,795,875
1.83
0.02
2.96
4.79
174,482,323
1.85
0.04
2.96
4.81
259,795,875
1.83
0.02
2.96
4.79
174,482,323
1.85
0.04
2.96
4.81
2,353
475
323
798
930
625
1,555
259,795,875
1.83
0.02
3.58
5.41
174,482,323
1.85
0.04
3.58
5.43
259,795,875
1.83
0.02
3.58
5.41
174,482,323
1.85
0.04
3.58
5.43
1,408
475
323
798
365
245
609
259,795,875
1.833
0.02
1.40
3.23
174,482,323
1.853
0.04
1.40
3.25
259,795,875
1.833
0.02
1.40
3.23
174,482,323
1.853
0.04
1.40
3.25
1,843
475
323
798
625
420
1,045
259,795,875
1.83
0.02
2.41
4.24
174,482,323
1.85
0.04
2.41
4.26
259,795,875
1.83
0.02
2.41
4.24
174,482,323
1.85
0.04
2.41
4.26
in euros
in euros
in euros
in euros
in euros
in euros
in euros
in euros
in euros
in euros
in euros
in euros
in euros
in euros
in euros
in euros
1 See combined management report, Corporate governance, Composition of issued capital/Shareholders’ rights on pages 31 and 32.
2 Weighted annual average of preferred shares.
3 Proposal to shareholders for the Annual General Meeting on April 16, 2021.
H e n k e l A n n u a l R e p o r t 2 0 2 0
268
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
39 Consolidated statement
of cash flows
We prepare the consolidated statement of cash flows in accord-
ance with IAS 7. It describes the flow of cash and cash equiva-
lents by origin and usage of liquid funds, distinguishing between
changes in funds arising from operating activities, investing
activities, and financing activities. Financial funds include
cash on hand, checks and credit at banks, and other financial
assets with a remaining term of not more than three months.
Securities are therefore included in financial funds, provided
that they are available at short term and are only exposed to an
insignificant price change risk. The computation is adjusted
for effects arising from currency translation. In some countries,
there are administrative hurdles to the transfer of money to
the parent company.
Cash flows from operating activities are determined by ini-
tially adjusting operating profit for non-cash variables such as
amortization/depreciation/impairment/write-ups of intangi-
ble assets, property, plant and equipment, and assets held for
sale, supplemented by changes in provisions, changes in other
assets and liabilities, and also changes in net working capital.
In fiscal 2020, the result of operations was adjusted to reflect
non-cash impairment of intangible assets, property, plant and
equipment and assets held for sale in the amount of 378 million
euros (previous year: 43 million euros). We likewise disclose
payments made for income taxes under cash flow from
operating activities.
Cash flows from investing activities occur as a result of
outflows of funds for investments in intangible assets and
property, plant and equipment, subsidiaries and other
business units, as well as associates and other investments.
Here, we also recognize inflows of funds from the sale
of intangible assets and property, plant and equipment,
subsidiaries, other business units and investments. In the
reporting period, cash flows from investing activities mainly
involved outflows for the acquisition of subsidiaries and other
business units in the amount of -452 million euros (previous
year: -564 million euros). The divestment of businesses resulted
in proceeds on disposal of subsidiaries, other business units
and investments totaling 53 million euros. Investments in in-
tangible assets and property, plant and equipment, including
payments on account, resulted in outflows of -715 million
euros (previous year: -677 million euros). Of the outflows for
the acquisition of subsidiaries and other business units,
virtually the entire amount is attributable to the acquisitions
described in the section “Acquisitions and divestments” on
pages 182 and 183.
In cash flow from financing activities, we disclose interest and
dividends paid and received, the change in borrowings relat-
ing to bonds together with other changes in borrowings, the
redemption of lease liabilities, the change in pension provi-
sions, and also payments made for the acquisition of non-con-
trolling interests and other financing transactions. The other
changes in borrowings are essentially due to payments made
and received in connection with our revolving short-term
commercial paper financing program, which accounted for
-705 million euros in the year under review (previous year:
-506 million euros) of cash flow from financing activities.
Other changes in pension obligations include payment receipts
of 217 million euros in fiscal 2020 constituting the refund of
pension payments to retirees for which a right of reimbursement
exists with respect to Henkel Trust e.V. The prior-year reim-
bursement amounted to 104 million euros, recognized in cash
flow from financing activities.
Free cash flow indicates how much cash is actually available
for acquisitions and dividends, reducing debt and/or alloca-
tions to pension funds.
H e n k e l A n n u a l R e p o r t 2 0 2 0
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Reconciliation of assets and liabilities reflected in cash flow from financing activities 2019
in million euros
At January 1, 2019
Change in cash flow from financing activities2
Of which:
Interest paid3
Redemption of bonds
Issuance of bonds
Other changes in borrowings4
Redemption of lease liabilities
Allocations to pension funds
Other changes in pension obligations
Payments for the acquisition of non-controlling
interests with no change in control
Other financing transactions
Interest expense/income
Additions of lease liabilities
Purchase or sale of subsidiaries
Foreign exchange effects
Changes in fair value
Sundry
At December 31, 2019
Derivative assets
and liabilities
-24
12
3
–
–
11
–
–
–
–
-2
1
–
–
–
25
–
14
Receivable from
Henkel Trust e.V.
and reimburse-
ment rights
719
3
Provisions for
pensions and
similar
obligations
-794
23
–
–
–
–
–
–
3
–
–
5
–
–
2
13
–
742
–
–
–
–
–
50
-27
–
–
-10
–
–
-6
202
-50
-635
Borrowings
Lease liabilities
Other assets
and liabilities1
-4,175
401
72
666
-847
510
–
–
–
–
–
-74
–
–
-21
-89
–
-3,958
-507
141
16
–
–
–
125
–
–
–
–
-16
-141
-15
-13
–
–
-551
-47
21
–
–
–
–
–
–
–
21
–
2
–
–
–
8
–
-16
2 6 9
Total
-4,828
601
91
666
-847
521
125
50
-24
21
-2
-92
-141
-15
-38
159
-50
-4,404
1 Commitments and entitlements relating to incidental tax expenses and liabilities for put options granted on non-controlling interests.
2 The received interest disclosed in the cash flow from financing activities is mainly attributable to cash and cash equivalents, the reconciliation of which is provided in the statement of cash flows.
3 Does not include cash outflow of 5 million euros for fees and other financial charges relating to the procurement of money and loans.
4 Differs from the cash flow statement due to currency differences and the currency results of intra-group financing and capital transactions, and changes in financial liabilities to third parties.
H e n k e l A n n u a l R e p o r t 2 0 2 0
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Reconciliation of assets and liabilities reflected in cash flow from financing activities 2020
in million euros
At January 1, 2020
Change in cash flow from financing activities2
Of which:
Interest paid3
Redemption of bonds
Issuance of bonds
Other changes in borrowings4
Redemption of lease liabilities
Allocations to pension funds
Other changes in pension obligations
Payments for the acquisition of non-controlling
interests with no change in control
Other financing transactions
Interest expense/income
Additions of lease liabilities
Purchase or sale of subsidiaries
Foreign exchange effects
Changes in fair value
Sundry
At December 31, 2020
Derivative assets
and liabilities
14
-77
16
–
–
-93
–
–
–
–
–
-11
–
–
–
40
–
-34
Receivable from
Henkel Trust e.V.
and reimburse-
ment rights
742
-131
Provisions for
pensions and
similar
obligations
-635
43
–
–
–
–
–
–
-131
–
–
4
–
–
-11
11
–
615
–
–
–
–
–
67
-24
–
–
-11
–
–
26
55
-29
-551
Borrowings
Lease liabilities
Other assets
and liabilities1
-3,958
778
37
534
-518
725
–
–
–
–
–
-28
–
–
51
73
–
-3,084
-551
155
16
–
–
–
139
–
–
–
–
-16
-181
-3
39
-3
–
-560
-16
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
-16
2 7 0
Total
-4,404
768
69
534
-518
632
139
67
-155
–
–
-62
-181
-3
104
177
-29
-3,630
1 Commitments and entitlements relating to incidental tax expenses and liabilities for put options granted on non-controlling interests.
2 The received interest disclosed in the cash flow from financing activities is mainly attributable to cash and cash equivalents, the reconciliation of which is provided in the statement of cash flows.
3 Does not include cash outflow of 10 million euros for fees and other financial charges relating to the procurement of money and loans.
4 Differs from the cash flow statement due to currency differences and the currency results of intra-group financing and capital transactions, and changes in financial liabilities to third parties.
H e n k e l A n n u a l R e p o r t 2 0 2 0
271
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
40 Contingent liabilities
Compared to provisions, contingent liabilities are prone to
much greater uncertainty as they represent either only a po-
tential obligation or a current obligation where payment is
unlikely or the amount of the obligation cannot be estimated
with sufficient reliability.
Estimating the financial impact from the contingent liabilities
for those risks arising from legal disputes and proceedings
that do not meet the criteria for recognition as provisions is
not expedient due to the uncertainty surrounding the likeli-
hood of resolution and amount of resource outflow involved.
Within the Henkel Group, contingent liabilities also exist with
respect to guarantee and warranty agreements and to guarantees
assumed with respect to public authorities. At December 31,
2020, these contingent liabilities amounted to 13 million euros
(previous year: 16 million euros).
41 Other unrecognized financial
commitments
As of the end of 2020, commitments arising from orders for
property, plant and equipment amounted to 110 million euros
(previous year: 130 million euros).
As of the reporting date, payment commitments under the
terms of agreements for capital increases and share purchases
contracted prior to December 31, 2020 amounted to 19 million
euros (previous year: 29 million euros).
42 Related party disclosures
Related parties as defined by IAS 24 Related Party Disclosures
are legal entities or natural persons who may be able to exert
influence on Henkel AG & Co. KGaA and its subsidiaries, or be
subject to control or material influence by Henkel AG & Co.
KGaA or its subsidiaries. These mainly include all members of
the Henkel family share-pooling agreement together, the non-
consolidated subsidiaries, the associates, and the members of
the corporate bodies of Henkel AG & Co. KGaA. Related parties
as defined in IAS 24 also include Henkel Trust e.V. and Metzler
Trust e.V.
Henkel AG & Co. KGaA, Düsseldorf, has been notified that the
members of the Henkel family share-pooling agreement together
held the majority of voting rights in Henkel AG & Co. KGaA
(ISIN DE0006048408) as of the reporting date. The voting
rights are held by
135 members of the families of the descendants of Fritz
Henkel, the company’s founder,
18 foundations set up by members of those families,
three trusts set up by members of those families,
two private limited companies (GmbH) set up by members
of those families, and 13 limited partnerships with a limited
company as general partner (GmbH & Co. KG),
under a share-pooling agreement as defined in Section 34 (2)
German Securities Trading Act [WpHG].
No party to the share-pooling agreement is obliged to notify
that it has reached or exceeded 3 percent or more of the total
voting rights in Henkel AG & Co. KGaA, whether with or with-
out the addition of voting rights expressly granted under the
terms of usufruct agreements.
H e n k e l A n n u a l R e p o r t 2 0 2 0
2 7 2
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
The Dutch company Henkel Nederland B.V., Nieuwegein, exer-
cised the exemption option afforded in Article 2:403 of the
Civil Code of the Netherlands.
44 Remuneration of the corporate
bodies
The total remuneration of the members of the Supervisory
Board and of the Shareholders’ Committee of Henkel AG & Co.
KGaA amounted to 1,562,000 euros plus value-added tax
(previous year: 1,565,000 euros) and 2,350,000 euros (previous
year: 2,350,000 euros) respectively. The total remuneration
(Section 285 No. 9a and Section 314 (1) No. 6a HGB) of the
Management Board, i.e. members of the Management Board
of Henkel Management AG, amounted to 15,880,397 euros
(previous year: 17,247,891 euros).
Provisions for pension obligations to former members of the
Management Board and the management of Henkel KGaA, as
well as the former management of its legal predecessor and
surviving dependents, amounted to 119,491,147 euros (previous
year: 105,312,747 euros). The total remuneration for this group
of persons (Section 285 No. 9b and Section 314 (1) No. 6b HGB)
in the reporting year amounted to 7,300,068 euros (previous
year: 13,291,431 euros).
Dr. Simone Bagel-Trah, Germany, is the authorized representa-
tive of the parties to the Henkel family share-pooling agreement.
Together, the members of the Henkel family share-pooling
agreement represent the ultimate controlling party of the
Henkel Group as defined in IAS 24. No business transactions
took place between Henkel and this party in fiscal 2020 and in
the previous year.
Financial receivables from and payables to non-consolidated
subsidiaries and associates are disclosed in Notes 3 and 19.
Further detailed information on the remuneration paid to the
members of the corporate bodies can be found in the explana-
tions relating to the remuneration system and in the remuner-
ation report on pages 53 to 92. As was also the case last year, no
further material business transactions took place between the
corporation and members of the Management Board, Supervi-
sory Board and Shareholders’ Committee.
Henkel Trust e.V. and Metzler Trust e.V., as parties to relevant
contractual trust arrangements (CTA), hold the assets required
to cover the corporation’s pension obligations in Germany.
The claim on Henkel Trust e.V. for reimbursement of pension
payments made is shown under other financial assets (Note 3
on page 204). The receivable does not bear interest.
43 Exercise of exemption options
The following German companies included in the consolidated
financial statements of Henkel AG & Co. KGaA exercised
exemption options in fiscal 2020:
Schwarzkopf Henkel Production Europe GmbH & Co. KG,
Düsseldorf (Section 264b German Commercial Code [HGB])
Henkel Loctite-KID GmbH, Hagen (Section 264 (3) HGB)
Henkel IP Management and IC Services GmbH, Monheim
(Section 264 (3) HGB)
Sonderhoff Holding GmbH, Cologne (Section 264 (3) HGB)
H e n k e l A n n u a l R e p o r t 2 0 2 0
273
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
The following expenditure was recognized in fiscal 2020
under IFRS for remuneration paid to members of the Manage-
ment Board, Supervisory Board and Shareholders’ Committee
in office in the year under review:
Remuneration of the corporate bodies
in euros
Management Board remuneration
Short-term remuneration1
Expense for Long Term Incentive
Service cost of pension obligations
Remuneration paid in connection with
termination of employment
Total
Supervisory Board remuneration
Fixed fee and meeting attendance2
Shareholders’ Committee remuneration
Fixed fee2
Total expenses relating to the corporate
bodies
2019
2020
14,418,084
4,519,679
3,125,737
14,498,717
1,435,387
3,031,332
8,208,000
30,271,500
–
18,965,436
1,565,000
1,562,000
2,350,000
2,350,000
34,186,500
22,877,436
1 Fixed remuneration, other emoluments, Short Term Incentive.
2 Including committee activity.
Further discussion of the remuneration paid to the individual
members who served on the Management Board, Supervisory
Board and Shareholders’ Committee in the year under review
can be found in the audited remuneration report on pages 77
to 92.
45 Declaration of compliance with
the Corporate Governance Code
In March 2020, the Management Board of Henkel Management
AG, and the Supervisory Board and Shareholders’ Committee
of Henkel AG & Co. KGaA approved a joint declaration of com-
pliance with the recommendations of the German Corporate
Governance Code (GCGC) in accordance with Section 161 Ger-
man Stock Corporation Act [AktG]. The declaration has been
made permanently available to shareholders on the company
website: www.henkel.com/ir
46 Subsidiaries and other
investments
Details relating to the investments held by Henkel AG & Co.
KGaA and the Henkel Group, which are part of these financial
statements, are provided in a separate schedule appended to
these notes to the consolidated financial statements but not
included in this version of the Annual Report. Said schedule
is included in the accounting record submitted for publica-
tion in the electronic Federal Gazette and can be viewed
there. The schedule is also published on our website:
www.henkel.com/reports
47 Auditor’s fees and services
The following table lists the total fees charged to the Group
for services provided by the auditor PricewaterhouseCoopers
GmbH Wirtschaftsprüfungsgesellschaft and other companies
of the worldwide PwC network for fiscal 2020, and by the auditor
KPMG AG Wirtschaftsprüfungsgesellschaft and other companies
of the worldwide KPMG network in fiscal 2019:
Type of fee
in million euros
Audit services
Other attestation services
Tax advisory services
Other services
Total
2019
9.9
0.5
1.0
0.6
12.0
Of which:
Germany
2.0
0.4
0.1
0.5
3.0
2020
9.1
0.1
0.9
0.6
10.7
Of which:
Germany
3.0
0.1
0.2
0.5
3.8
H e n k e l A n n u a l R e p o r t 2 0 2 0
274
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
The financial statement auditing services relate primarily to
the statutory audits of the annual and consolidated financial
statements of Henkel AG & Co. KGaA, together with various
audits of annual financial statements of its subsidiaries.
Reviews of interim financial statements were also included in
the audit mandate.
Other attestation services included the provision of a comfort
letter, and the performance of legally and contractually stipu-
lated audits such as those specified in Section 20 Securities
Trading Act [WpHG] in relation to the European Market Infra-
structure Regulation (EMIR). These fees also covered the audit
of the non-financial report and sustainability disclosures.
Fees for tax advisory services mainly relate to those performed
in connection with intra-group restructuring procedures under
company law, and provision of support on ongoing tax issues.
Other services mainly comprised services focusing on the
implementation of regulatory requirements, and other project-
related advisory services.
Subsequent events
After December 31, 2020, there were no reportable events of
particular significance for the net assets, financial position
and results of operations of the Henkel Group.
Düsseldorf, January 30, 2021
Henkel Management AG,
Personally Liable Partner
of Henkel AG & Co. KGaA
Management Board
Carsten Knobel,
Jan-Dirk Auris, Sylvie Nicol, Bruno Piacenza,
Jens-Martin Schwärzler, Marco Swoboda
H e n k e l A n n u a l R e p o r t 2 0 2 0
275
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Recommendation for the approval of the
annual financial statements and the
appropriation of the profit of Henkel AG &
Co. KGaA
It is proposed that the annual financial statements of Henkel AG & Co. KGaA be approved as presented and that the unappropriated
profit of 2,006,781,698.41 euros for fiscal 2020 be applied as follows:
a) Payment of a dividend of 1.83 euros per ordinary share
(259,795,875 shares)
= 475,426,451.25 euros
b) Payment of a dividend of 1.85 euros per preferred share
(178,162,875 shares)
c) Carried forward as retained earnings
= 329,601,318.75 euros
= 1,201,753,928.41 euros
2,006,781,698.41 euros
At the time of convocation, the corporation holds 3,680,552 of its preferred treasury shares. According to Section 71b German Stock
Corporation Act [AktG], treasury shares do not qualify for a dividend. The amount in unappropriated profit which relates to the
shares held by the corporation at the date of the Annual General Meeting will be carried forward as retained earnings. As the number
of such treasury shares can change up to the time of the Annual General Meeting, a correspondingly adapted proposal for the
appropriation of profit will be submitted to it, providing for an unchanged payout of 1.83 euros per ordinary share qualifying for a
dividend, and 1.85 euros per preferred share qualifying for a dividend, with corresponding adjustment of the payout totals and of
retained earnings carried forward to the following year.
Düsseldorf, January 30, 2021
Henkel Management AG,
Personally Liable Partner
of Henkel AG & Co. KGaA
Management Board
H e n k e l A n n u a l R e p o r t 2 0 2 0
276
The Company
Shares and bonds
Corporate governance
Corporate bodies of Henkel AG & Co. KGaA
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Combined management report
Honorary Chairman of the Henkel Group: Dipl.-Ing. Albrecht Woeste
Consolidated financial statements
Supervisory Board of Henkel AG & Co. KGaA
Further information
Credits
Contacts
Financial calendar
Dr. rer. nat. Simone Bagel-Trah
Chair,
Private Investor, Düsseldorf
Born in 1969
Member since: April 14, 2008
Memberships:
Henkel Management AG (Chair)1
Henkel AG & Co. KGaA
(Shareholders’ Committee, Chair)2
Bayer AG1
Heraeus Holding GmbH1
Birgit Helten-Kindlein*
Vice Chair,
Chairwoman of the General Works Council of
Henkel AG & Co. KGaA and Chairwoman of the
Works Council of Henkel AG & Co. KGaA,
Düsseldorf site
Jutta Bernicke*
Member of the Works Council of
Henkel AG & Co. KGaA, Düsseldorf site
Born in 1962
Member since: April 14, 2008
Dr. rer. nat. Kaspar von Braun
(until June 17, 2020)
Astrophysicist, Pasadena
Born in 1971
Member from: April 19, 2010
Lutz Bunnenberg
(since June 17, 2020)
Private Investor, Munich
Born in 1973
Member since: June 17, 2020
Born in 1964
Member since: April 14, 2008
Membership:
Analyticon Biotechnologies AG (Vice Chair)1
Michael Baumscheiper*
(since December 11, 2020)
Member of the General Works Council of
Henkel AG & Co. KGaA and Chairman of the
Works Council of Henkel AG & Co. KGaA,
Hamburg site
Born in 1966
Member since: December 11, 2020
Peter Emmerich*
(until December 11, 2020)
Member of the General Works Council of
Henkel AG & Co. KGaA and Chairman of the
Works Council of Henkel AG & Co. KGaA,
Herborn-Schönbach site
Born in 1966
Member from: April 9, 2018
* Employee representatives.
1 Membership of statutory supervisory and administrative boards in Germany.
2 Membership of comparable oversight bodies.
Benedikt-Richard Freiherr von Herman
Private Investor, Wain
Born in 1972
Member since: April 11, 2016
Timotheus Höttges
Chairman of the Executive Board
Deutsche Telekom AG, Bonn
Born in 1962
Member since: April 11, 2016
Memberships:
FC Bayern München AG1
Telekom Group:
Telekom Deutschland GmbH (Chair)1
T-Mobile US, Inc. (Chair), USA2
Prof. Dr. sc. nat. Michael Kaschke
Former Chairman of the Executive Board,
Carl Zeiss AG, Oberkochen
Born in 1957
Member since: April 14, 2008
Memberships:
Carl Zeiss Meditec AG (Chair)1
Deutsche Telekom AG1
Robert Bosch GmbH1
H e n k e l A n n u a l R e p o r t 2 0 2 0
2 7 7
The Company
Shares and bonds
Corporate governance
Barbara Kux
Private Investor, Zurich
Born in 1954
Member since: July 3, 2013
Combined management report
Consolidated financial statements
Memberships:
Firmenich S.A. (Vice Chair), Switzerland2
Grosvenor Group Ltd., Great Britain2
Dr. rer. nat. Martina Seiler*
Chemist, Duisburg
Member of the Senior Staff Representative Committee of
Henkel AG & Co. KGaA
Born in 1971
Member since: January 1, 2012
Further information
Credits
Contacts
Financial calendar
Simone Menne
(since June 17, 2020)
Private Investor, Kiel
Born in 1960
Member since: June 17, 2020
Memberships:
Bayerische Motoren Werke AG1
Deutsche Post AG1
Johnson Control International plc., Ireland2
Russel Reynolds Associates Inc., USA2
Andrea Pichottka*
Managing Director, IG BCE Bonusagentur GmbH,
Hannover
Managing Director, IG BCE
Bonusassekuranz GmbH, Hannover
Born in 1959
Member since: October 26, 2004
Philipp Scholz
Adjunct Professor at Humboldt University Berlin,
Berlin
Born in 1967
Member since: April 9, 2018
Prof. Dr. oec. publ. Theo Siegert
(until June 17, 2020)
Managing Partner of
de Haen-Carstanjen & Söhne, Düsseldorf
Born in 1947
Member from: April 20, 2009
Dirk Thiede*
Member of the Works Council of
Henkel AG & Co. KGaA, Düsseldorf site
Born in 1969
Member since: April 9, 2018
Edgar Topsch*
Member of the General Works Council of
Henkel AG & Co. KGaA and
Vice Chairman of the Works Council of
Henkel AG & Co. KGaA, Düsseldorf site
Born in 1960
Member since: August 1, 2010
Michael Vassiliadis*
Chairman of IG BCE, Hannover
Born in 1964
Member since: April 9, 2018
Memberships:
BASF SE
RAG AG (Vice Chair)
STEAG GmbH
Vivawest GmbH
* Employee representatives
1 Membership of statutory supervisory and administrative boards in Germany.
2 Membership of comparable oversight bodies.
Committees of the Supervisory Board
NNoommiinnaattiioonnss CCoommmmiitttteeee
Functions
The Nominations Committee prepares the resolutions of
the Supervisory Board on election proposals to be
presented to the Annual General Meeting for the election
of members of the Supervisory Board (representatives of
the shareholders).
Members
Dr. Simone Bagel-Trah, Chair
Benedikt-Richard Freiherr von Herman,
Vice Chair (since June 17, 2020)
Dr. Kaspar von Braun (until June 17, 2020)
Barbara Kux (since June 17, 2020)
Prof. Dr. Theo Siegert (until June 17, 2020)
AAuuddiitt CCoommmmiitttteeee
Functions
The Audit Committee prepares the proceedings and
resolutions of the Supervisory Board relating to the
approval of the annual financial statements and the
consolidated financial statements, and relating to
ratification of the proposal to be put before the Annual
General Meeting regarding appointment of the auditor.
It also deals with accounting, risk management and
compliance issues.
Members
Prof. Dr. Theo Siegert, Chair (until June 17, 2020)
Prof. Dr. Michael Kaschke, Chair (since June 17, 2020)
Simone Menne, Vice Chair (since June 17, 2020)
Dr. Simone Bagel-Trah
Birgit Helten-Kindlein
Edgar Topsch
Michael Vassiliadis
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Shareholders’ Committee of Henkel AG & Co. KGaA
Dr. rer. nat. Simone Bagel-Trah
Chair,
Private Investor, Düsseldorf
Born in 1969
Member since: April 18, 2005
Memberships:
Henkel AG & Co. KGaA (Chair)1
Henkel Management AG (Chair)1
Bayer AG1
Heraeus Holding GmbH1
Dr. rer. pol. h.c. Christoph Henkel
Vice Chair,
Private Investor, London
Born in 1958
Member since: May 27, 1991
Prof. Dr. rer. pol. HSG Paul Achleitner
Chairman of the Supervisory Board,
Deutsche Bank AG, Munich
Born in 1956
Member since: April 30, 2001
Memberships:
Bayer AG1
Deutsche Bank AG (Chair)1
Alexander Birken
(since June 17, 2020)
Chairman of the Management Board,
Otto Group (GmbH & Co. KG), Hamburg
Born in 1964
Member since: June 17, 2020
Memberships:
C&A AG, Switzerland2
Otto Group:
Hermes Europe GmbH1
Johann-Christoph Frey
Private Investor, Klosters
Born in 1955
Member since: April 9, 2018
Memberships:
Antai Venture Builder S.L., Spain
Henkel Management AG1
Stefan Hamelmann
(until June 17, 2020)
Private Investor, Düsseldorf
Born in 1963
Member from: May 3, 1999
Dr. rer. oec. Christoph Kneip
(since June 17, 2020)
Tax Consultant, Düsseldorf
Born in 1962
Member since: June 17, 2020
Memberships:
Arenberg Schleiden GmbH2
Arenberg Recklinghausen GmbH2
Rheinische Bodenverwaltung AG1
Prof. Dr. rer. pol. Ulrich Lehner
Former Chairman of the Management Board
of Henkel KGaA, Düsseldorf
Born in 1946
Member since: April 14, 2008
Memberships:
Deutsche Telekom AG (Chair)1
Porsche Automobil Holding SE1
Dr.-Ing. Dr.-Ing. E.h. Norbert Reithofer
Chairman of the Supervisory Board
of Bayerische Motoren Werke
Aktiengesellschaft, Munich
Born in 1956
Member since: April 11, 2011
Memberships:
Bayerische Motoren Werke Aktiengesellschaft
(Chair)1
Henkel Management AG1
Siemens AG1
Konstantin von Unger
Managing Partner, CKA Capital Ltd., London
Born in 1966
Member since: April 14, 2003
Jean-François van Boxmeer
Chairman of the Board of Directors of
Vodafone Group plc., London
Born in 1961
Member since: April 15, 2013
Memberships:
Heineken Holding N.V., Netherlands2
Mondelez International Inc., USA2
Vodafone Group plc. (Chair), Great Britain2
Werner Wenning
(until June 17, 2020)
Former Chairman of the Supervisory Board
of Bayer AG, Leverkusen
Born in 1946
Member from: April 14, 2008
Memberships:
Henkel Management AG1
Siemens AG1
Subcommittees of the
Shareholders’ Committee
FFiinnaannccee SSuubbccoommmmiitttteeee
Functions
The Finance Subcommittee deals principally with
financial matters, accounting issues including the
statutory year-end audit, taxation and accounting
policy, internal auditing, and risk management in
the corporation.
Members
Dr. Christoph Henkel, Chair
Stefan Hamelmann,
Vice Chair (until June 17, 2020)
Konstantin von Unger,
Vice Chair (since June 17, 2020)
Prof. Dr. Paul Achleitner
Dr. Christoph Kneip (since June 17, 2020)
Prof. Dr. Ulrich Lehner
Dr. Dr. Norbert Reithofer (until June 17, 2020)
HHuummaann RReessoouurrcceess SSuubbccoommmmiitttteeee
Functions
The Human Resources Subcommittee deals
principally with personnel matters relating to
members of the Management Board, issues
pertaining to human resources strategy, and with
remuneration.
Members
Dr. Simone Bagel-Trah, Chair
Konstantin von Unger,
Vice Chair (until June 17, 2020)
Johann-Christoph Frey,
Vice Chair (since June 17, 2020)
Alexander Birken (since June 17, 2020)
Dr. Dr. Norbert Reithofer (since June 17, 2020)
Jean-François van Boxmeer
Werner Wenning (until June 17, 2020)
1 Membership of statutory supervisory and administrative boards in Germany.
2 Membership of comparable oversight bodies.
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Further information
Credits
Contacts
Financial calendar
Management Board of Henkel Management AG*
Supervisory Board of Henkel Management AG*
Carsten Knobel
Chairman of the Management Board
(since January 1, 2020)
Born in 1969
Member since: July 1, 2012
Membership:
Deutsche Lufthansa AG1
Jan-Dirk Auris
Adhesive Technologies
Born in 1968
Member since: January 1, 2011
Bruno Piacenza
Laundry & Home Care
Born in 1965
Member since: January 1, 2011
Jens-Martin Schwärzler
Beauty Care
Born in 1963
Member since: November 1, 2017
Marco Swoboda
(since January 1, 2020)
Finance
Sylvie Nicol
Human Resources/Infrastructure Services
Born in 1971
Member since: January 1, 2020
Dr. rer. nat. Simone Bagel-Trah
Chair,
Private Investor, Düsseldorf
Born in 1969
Member since: February 15, 2008
Memberships:
Henkel AG & Co. KGaA (Chair)1
Henkel AG & Co. KGaA
(Shareholders’ Committee, Chair)2
Bayer AG1
Heraeus Holding GmbH1
Konstantin von Unger
(until June 22, 2020)
Vice Chair,
Managing Partner, CKA Capital Ltd., London
Born in 1973
Member since: April 9, 2019
Membership:
Henkel Central Eastern Europe GmbH, Austria2
Memberships:
Henkel Central Eastern Europe GmbH (Chair),
Austria2
Henkel Nederland BV (Chair), Netherlands2
Henkel South Africa (Pty.) Ltd. (Chair),
South Africa2
Born in 1966
Member from: April 17, 2012
Membership:
Henkel AG & Co. KGaA
(Shareholders’ Committee)2
Johann-Christoph Frey
(since June 22, 2020)
Vice Chair
Private Investor, Klosters
Born in 1955
Member since: June 22, 2020
Memberships:
Antai Venture Builder S.L., Spain
Henkel AG & Co. KGaA
(Shareholders’ Committee)2
Dr.-Ing. Dr.-Ing. E.h. Norbert Reithofer
(since June 22, 2020)
Chairman of the Supervisory Board of Bayerische
Motoren Werke Aktiengesellschaft, Munich
Born in 1956
Member since: June 22, 2020
Memberships:
Bayerische Motoren Werke Aktiengesellschaft
(Chair)1
Henkel AG & Co. KGaA
(Shareholders’ Committee)2
Siemens AG1
Werner Wenning
(until June 22, 2020)
Former Chairman of the Supervisory Board of
Bayer AG, Leverkusen
Born in 1946
Member from: September 16, 2013
Memberships:
Henkel AG & Co. KGaA
(Shareholders’ Committee)2
Siemens AG1
* Personally Liable Partner of Henkel AG & Co. KGaA.
1 Membership of statutory supervisory and administrative boards in Germany.
2 Membership of comparable oversight bodies.
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Independent Auditor’s Report
290
Responsibility statement
291
Quarterly breakdown of sales
292 Multi-year summary
294 Glossary
297
Credits
298
Contacts
298
Financial calendar
Henkel Annual Report 2020 1Contents The Company 2 Fiscal 2020 at a glance 6 Foreword 13 Report of the Supervisory Board 20 Our Management Board 22 Shaping our future 23 Shares and bonds Corporate governance 31 Takeover-relevant information 35 Corporate governance statement 53 Remuneration system 77 Remuneration report 2020 Combined management report 94 Fundamental principles of the Group 103 Economic report 146 Henkel AG & Co. KGaA (condensed version according to the German Commercial Code [HGB]) 151 Risks and opportunities report 166 Forecast Consolidated financial statements 171 Consolidated statement of financial position 173 Consolidated statement of income 174 Consolidated statement of comprehensive income 175 Consolidated statement of changes in equity 176 Consolidated statement of cash flows 178 Notes to the consolidated financial statements 274 Subsequent events 275 Recommendation for the approval of the annual financial statements and the appropriation of the profit of Henkel AG & Co. KGaA 276 Corporate bodies of Henkel AG & Co. KGaA Further information 281 Independent Auditor’s Report 290 Responsibility statement 291 Quarterly breakdown of sales 292 Multi-year summary 294 Glossary 297 Credits 298 Contacts 298 Financial calendar Henkel Annual Report 2020 1Contents The Company 2 Fiscal 2020 at a glance 6 Foreword 13 Report of the Supervisory Board 20 Our Management Board 22 Shaping our future 23 Shares and bonds Corporate governance 31 Takeover-relevant information 35 Corporate governance statement 53 Remuneration system 77 Remuneration report 2020 Combined management report 94 Fundamental principles of the Group 103 Economic report 146 Henkel AG & Co. KGaA (condensed version according to the German Commercial Code [HGB]) 151 Risks and opportunities report 166 Forecast Consolidated financial statements 171 Consolidated statement of financial position 173 Consolidated statement of income 174 Consolidated statement of comprehensive income 175 Consolidated statement of changes in equity 176 Consolidated statement of cash flows 178 Notes to the consolidated financial statements 274 Subsequent events 275 Recommendation for the approval of the annual financial statements and the appropriation of the profit of Henkel AG & Co. KGaA 276 Corporate bodies of Henkel AG & Co. KGaA Further information 281 Independent Auditor’s Report 290 Responsibility statement 291 Quarterly breakdown of sales 292 Multi-year summary 294 Glossary 297 Credits 298 Contacts 298 Financial calendar Henkel Annual Report 2020 1Contents The Company 2 Fiscal 2020 at a glance 6 Foreword 13 Report of the Supervisory Board 20 Our Management Board 22 Shaping our future 23 Shares and bonds Corporate governance 31 Takeover-relevant information 35 Corporate governance statement 53 Remuneration system 77 Remuneration report 2020 Combined management report 94 Fundamental principles of the Group 103 Economic report 146 Henkel AG & Co. KGaA (condensed version according to the German Commercial Code [HGB]) 151 Risks and opportunities report 166 Forecast Consolidated financial statements 171 Consolidated statement of financial position 173 Consolidated statement of income 174 Consolidated statement of comprehensive income 175 Consolidated statement of changes in equity 176 Consolidated statement of cash flows 178 Notes to the consolidated financial statements 274 Subsequent events 275 Recommendation for the approval of the annual financial statements and the appropriation of the profit of Henkel AG & Co. KGaA 276 Corporate bodies of Henkel AG & Co. KGaA Further information 281 Independent Auditor’s Report 290 Responsibility statement 291 Quarterly breakdown of sales 292 Multi-year summary 294 Glossary 297 Credits 298 Contacts 298 Financial calendar
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Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Independent Auditor’s Report
In our opinion, on the basis of the knowledge obtained in the
audit,
the accompanying consolidated financial statements
comply, in all material respects, with the IFRSs as adopted
by the EU and the additional requirements of German
commercial law pursuant to § [Article] 315e Abs. [paragraph]
1 HGB [Handelsgesetzbuch: German Commercial Code]
and, in compliance with these requirements, give a true
and fair view of the assets, liabilities, and financial posi-
tion of the Group as at 31 December 2020, and of its finan-
cial performance for the financial year from 1 January to
31 December 2020, and
the accompanying group management report as a whole
provides an appropriate view of the Group’s position. In
all material respects, this group management report is
consistent with the consolidated financial statements,
complies with German legal requirements and appropriately
presents the opportunities and risks of future development.
Our audit opinion on the group management report does
not cover the content of those parts of the group manage-
ment report listed in the “Other Information” section of our
auditor’s report.
The auditor’s report reproduced below also includes a report
on the audit of the European Single Electronic Format of the
financial statements and management report prepared for
disclosure purposes in accordance with § [Article] 317 Abs.
[paragraph] 3b HGB [Handelsgesetzbuch: German Commercial
Code] (“ESEF Report”). The subject matter of the audit on
which the ESEF report is based (ESEF documents to be audited)
is not attached. The audited ESEF documents can be viewed
in or retrieved from the Federal Gazette.
To Henkel AG & Co. KGaA, Düsseldorf
Report on the Audit of the Consolidated Financial
Statements and of the Group Management Report
AUDIT OPINIONS
We have audited the consolidated financial statements of
Henkel AG & Co. KGaA, Düsseldorf, and its subsidiaries (the
Group), which comprise the consolidated statement of finan-
cial position as at 31 December 2020, and the consolidated
statement of comprehensive income, consolidated statement
of income, consolidated statement of changes in equity and
consolidated statement of cash flows for the financial year
from 1 January to 31 December 2020, and notes to the consoli-
dated financial statements, including a summary of significant
accounting policies. In addition, we have audited the group
management report of Henkel AG & Co. KGaA, which is com-
bined with the Company’s management report, for the finan-
cial year from 1 January to 31 December 2020. In accordance
with the German legal requirements, we have not audited the
content of those parts of the group management report listed
in the “Other Information” section of our auditor’s report.
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Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Pursuant to § 322 Abs. 3 Satz [sentence] 1 HGB, we declare that
our audit has not led to any reservations relating to the legal
compliance of the consolidated financial statements and of
the group management report.
BASIS FOR THE AUDIT OPINIONS
We conducted our audit of the consolidated financial state-
ments and of the group management report in accordance with
§ 317 HGB and the EU Audit Regulation (No. 537/2014, referred
to subsequently as “EU Audit Regulation”) in compliance with
German Generally Accepted Standards for Financial Statement
Audits promulgated by the Institut der Wirtschaftsprüfer
[Institute of Public Auditors in Germany] (IDW). Our responsi-
bilities under those requirements and principles are further
described in the “Auditor’s Responsibilities for the Audit of
the Consolidated Financial Statements and of the Group
Management Report” section of our auditor’s report. We are
independent of the group entities in accordance with the re-
quirements of European law and German commercial and
professional law, and we have fulfilled our other German
professional responsibilities in accordance with these require-
ments. In addition, in accordance with Article 10 (2) point (f)
of the EU Audit Regulation, we declare that we have not pro-
vided non-audit services prohibited under Article 5 (1) of the
EU Audit Regulation. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis
for our audit opinions on the consolidated financial statements
and on the group management report.
KEY AUDIT MATTERS IN THE AUDIT OF THE CONSOLIDATED
FINANCIAL STATEMENTS
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the con-
solidated financial statements for the financial year from
1 January to 31 December 2020. These matters were addressed
in the context of our audit of the consolidated financial state-
ments as a whole, and in forming our audit opinion thereon;
we do not provide a separate audit opinion on these matters.
In our view, the matters of most significance in our audit were
as follows:
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wwiitthh iinnddeeffiinniittee uusseeffuull lliivveess
22.. RReeccooggnniittiioonn aanndd mmeeaassuurreemmeenntt ooff ppeennssiioonn pprroovviissiioonnss
Our presentation of these key audit matters has been struc-
tured in each case as follows:
1. Matter and issue
2. Audit approach and findings
3. Reference to further information
Hereinafter we present the key audit matters:
11.. RReeccoovveerraabbiilliittyy ooff ggooooddwwiillll aanndd bbrraannddss aanndd ootthheerr rriigghhttss
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1. In the consolidated financial statements of Henkel AG &
Co. KGaA, goodwill amounting to € 12.4 billion in total
(40.9% of consolidated total assets) and brands and other
rights with indefinite useful lives amounting to € 2.8 billion
in total (9.2% of consolidated total assets) are reported under
the line item “Intangible assets” of the balance sheet.
Goodwill and brands and other rights with indefinite useful
lives are tested for impairment by the Company once a year
or when there are indications of impairment to determine
any possible need for write-downs. The impairment tests
are performed at the level of the cash-generating units or
groups of cash-generating units to which the respective
goodwill and brands and other rights with indefinite useful
lives are allocated. The carrying amount of the relevant
(group of) cash-generating units, including the respective
allocated goodwill and brands and other rights with indefi-
nite useful lives, are compared with the corresponding recov-
erable amount in the context of the impairment test. The
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Contacts
Financial calendar
expectations, and on the basis of the executive directors’
explanations regarding key planning value drivers. In this
context, we also assessed the appropriate consideration of
the costs of Group functions in the respective cash-gener-
ating unit. In addition, we evaluated the assessment of the
executive directors regarding the effects of the corona crisis
on the business activities of the Group and examined how
they were taken into account in the planning. With the
knowledge that even relatively small changes in the discount
rate applied can have material effects on the fair values less
costs of disposal calculated in this way, we also focused our
assessment on the parameters used to determine the dis-
count rate applied, and evaluated the measurement model.
Furthermore, we evaluated the sensitivity analyses per-
formed by the Company in order to assess any impairment
risk (lower recoverable amount versus carrying amount)
relating to any potential change in a material assumption
underlying the valuation. Overall, the valuation parameters
and assumptions used by the executive directors are in line
with our expectations and are also within the ranges con-
sidered by us to be reasonable.
3. The Company’s disclosures on goodwill and brands and
other rights with indefinite useful lives are contained in
the notes to the consolidated financial statements in the
section entitled “Notes to the consolidated balance sheet”,
note “(1) Goodwill and other intangible assets”.
recoverable amount is generally determined on the basis of
fair value less costs of disposal. The valuation to determine
the fair value less costs of disposal carried out for the pur-
poses of the impairment tests is based on the present values
of the future cash flows derived from the financial planning
for the financial year 2021 prepared by the executive direc-
tors and acknowledged by the supervisory board which is
extrapolated for subsequent years based on assumptions.
Expectations relating to future market developments and
country-specific assumptions about the development of
macroeconomic factors, as well as the expected effects of
the ongoing corona crisis on the business activities of the
Group are also taken into account. Present values are calcu-
lated using discounted cash flow models. The discount rate
used is the weighted average cost of capital for the respective
cash-generating unit. The impairment test determined that
no write-downs were necessary. The outcome of this valua-
tion is dependent to a large extent on the estimates made
by the executive directors of the future cash flows of the
cash-generating units, and on the respective discount rates,
rates of growth and other assumptions employed. The valu-
ation is therefore, also against the background of the effects
of the corona crisis, subject to considerable uncertainty.
Against this background and due to the underlying com-
plexity of the valuation, this matter was of particular sig-
nificance in the context of our audit.
2. As part of our audit we assessed, among other things, the
methodology used for the purpose of the impairment tests
and evaluated the calculation of the weighted average cost
of capital. In addition, we assessed whether the future
cash inflows underlying the valuation together with the
weighted average cost of capital used represent an appro-
priate basis for the impairment tests overall. We evaluated
the appropriateness of the future cash inflows used in the
calculations, among other things by comparing this data
with the Group’s extrapolated financial planning, by recon-
ciling it against general and sector-specific market
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Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
22.. RReeccooggnniittiioonn aanndd mmeeaassuurreemmeenntt ooff ppeennssiioonn pprroovviissiioonnss
1. Pension provisions amounting to € 0.5 billion are reported
in the consolidated financial statements of Henkel AG &
Co. KGaA under the balance sheet item “Provisions for
pensions and similar obligations.” The pension provisions
comprise pension obligations amounting to € 5.7 billion,
plan assets of € 5.3 billion and a reported surplus of plan
assets over benefit obligations of € 0.1 billion. The obliga-
tions from defined benefit pension plans are measured
using the projected unit credit method. This requires as-
sumptions to be made in particular about long-term rates of
growth in salaries and pensions, average life expectancy
and staff turnover. The average life expectancy is calculated
for Germany as at 31 December 2020 based on the mortality
tables published by Heubeck-Richttafeln GmbH (Heubeck-
Richttafeln RT 2018 G). Country-specific mortality tables
are used to calculate obligations outside of Germany. The
discount rates must be determined by reference to market
yields on high-quality corporate bonds with matching
currencies and consistent maturities. This usually requires
the data to be extrapolated, since sufficient long-term corpo-
rate bonds do not exist. The plan assets are measured at fair
value, which in turn involves estimation uncertainties.
From our point of view, these matters were of particular
significance in the context of our audit because the recog-
nition and measurement of this significant item in terms
of its amount are based to a large extent on estimates and
assumptions made by the Company’s executive directors.
2. As part of our audit, we firstly assessed whether the criteria
for recognition as defined benefit or defined contribution
pension commitments were met and evaluated the actuar-
ial expert reports obtained and the professional qualifica-
tions of the external experts. We also examined the specific
features of the actuarial calculations and assessed the
numerical data, the actuarial parameters and the valuation
methods on which the valuations were based for compli-
ance with the standard and appropriateness, in addition to
other procedures. In addition, we analyzed the development
of the obligation and the cost components in accordance
with actuarial expert reports in the light of changes occur-
ring in the valuation parameters and the numerical data,
and assessed their plausibility. For the audit of the fair
value of the plan assets, we obtained bank and fund confir-
mations and assessed the methods on which the respective
valuation was based and the valuation parameters applied.
Based on our audit procedures, we were able to satisfy
ourselves that the estimates and assumptions made by the
executive directors are substantiated and sufficiently docu-
mented.
3. The Company’s disclosures relating to the pension provi-
sions are contained in the notes to the consolidated financial
statements in the section entitled “Notes to the consolidated
balance sheet” in note “(16) Provisions for pensions and
similar obligations”.
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Corporate governance
OTHER INFORMATION
The executive directors are responsible for the other infor-
mation. The other information comprises the following non-
audited parts of the group management report:
Combined management report
Consolidated financial statements
the statement on corporate governance pursuant to § 289f
HGB and § 315d HGB included in section “Corporate govern-
ance statement” of the group management report
Further information
the separate non-financial report pursuant to § 289b Abs. 3
Credits
Contacts
Financial calendar
HGB and § 315b Abs. 3 HGB
The other information comprises further the remaining parts
of the annual report – excluding cross-references to external
information – with the exception of the audited consolidated
financial statements, the audited group management report
and our auditor’s report.
Our audit opinions on the consolidated financial statements
and on the group management report do not cover the other
information, and consequently we do not express an audit
opinion or any other form of assurance conclusion thereon.
In connection with our audit, our responsibility is to read the
other information and, in so doing, to consider whether the
other information
is materially inconsistent with the consolidated financial
statements, with the group management report or our
knowledge obtained in the audit, or
otherwise appears to be materially misstated.
RESPONSIBILITIES OF THE EXECUTIVE DIRECTORS AND THE
SUPERVISORY BOARD FOR THE CONSOLIDATED FINANCIAL
STATEMENTS AND THE GROUP MANAGEMENT REPORT
The executive directors are responsible for the preparation of
the consolidated financial statements that comply, in all mate-
rial respects, with IFRSs as adopted by the EU and the addi-
tional requirements of German commercial law pursuant to
§ 315e Abs. 1 HGB and that the consolidated financial state-
ments, in compliance with these requirements, give a true and
fair view of the assets, liabilities, financial position, and finan-
cial performance of the Group. In addition, the executive di-
rectors are responsible for such internal control as they have
determined necessary to enable the preparation of consoli-
dated financial statements that are free from material mis-
statement, whether due to fraud or error.
In preparing the consolidated financial statements, the execu-
tive directors are responsible for assessing the Group’s ability
to continue as a going concern. They also have the responsibil-
ity for disclosing, as applicable, matters related to going con-
cern. In addition, they are responsible for financial reporting
based on the going concern basis of accounting unless there is
an intention to liquidate the Group or to cease operations, or
there is no realistic alternative but to do so.
Furthermore, the executive directors are responsible for the
preparation of the group management report that, as a whole,
provides an appropriate view of the Group’s position and is,
in all material respects, consistent with the consolidated
financial statements, complies with German legal require-
ments, and appropriately presents the opportunities and risks
of future development. In addition, the executive directors are
responsible for such arrangements and measures (systems) as
they have considered necessary to enable the preparation of a
group management report that is in accordance with the appli-
cable German legal requirements, and to be able to provide
sufficient appropriate evidence for the assertions in the group
management report.
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Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
The Supervisory Board is responsible for overseeing the Group’s
financial reporting process for the preparation of the consol-
idated financial statements and of the group management
report.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE
CONSOLIDATED FINANCIAL STATEMENTS AND OF THE GROUP
MANAGEMENT REPORT
Our objectives are to obtain reasonable assurance about
whether the consolidated financial statements as a whole are
free from material misstatement, whether due to fraud or error,
and whether the group management report as a whole provides
an appropriate view of the Group’s position and, in all material
respects, is consistent with the consolidated financial state-
ments and the knowledge obtained in the audit, complies with
the German legal requirements and appropriately presents the
opportunities and risks of future development, as well as to
issue an auditor’s report that includes our audit opinions on
the consolidated financial statements and on the group man-
agement report.
Reasonable assurance is a high level of assurance, but is not
a guarantee that an audit conducted in accordance with § 317
HGB and the EU Audit Regulation and in compliance with
German Generally Accepted Standards for Financial Statement
Audits promulgated by the Institut der Wirtschaftsprüfer
(IDW) will always detect a material misstatement. Misstate-
ments can arise from fraud or error and are considered mate-
rial if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users
taken on the basis of these consolidated financial statements
and this group management report.
We exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of
the consolidated financial statements and of the group
management report, whether due to fraud or error, design
and perform audit procedures responsive to those risks,
and obtain audit evidence that is sufficient and appropriate
to provide a basis for our audit opinions. The risk of not
detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may in-
volve collusion, forgery, intentional omissions, misrepre-
sentations, or the override of internal control.
Obtain an understanding of internal control relevant to the
audit of the consolidated financial statements and of ar-
rangements and measures (systems) relevant to the audit of
the group management report in order to design audit pro-
cedures that are appropriate in the circumstances, but not
for the purpose of expressing an audit opinion on the effec-
tiveness of these systems.
Evaluate the appropriateness of accounting policies used by
the executive directors and the reasonableness of estimates
made by the executive directors and related disclosures.
Conclude on the appropriateness of the executive directors’
use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncer-
tainty exists related to events or conditions that may cast
significant doubt on the Group’s ability to continue as a
going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in the auditor’s
report to the related disclosures in the consolidated finan-
cial statements and in the group management report or, if
such disclosures are inadequate, to modify our respective
audit opinions. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Group
to cease to be able to continue as a going concern.
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Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Evaluate the overall presentation, structure and content of
the consolidated financial statements, including the disclo-
sures, and whether the consolidated financial statements
present the underlying transactions and events in a manner
that the consolidated financial statements give a true and
fair view of the assets, liabilities, financial position and
financial performance of the Group in compliance with
IFRSs as adopted by the EU and the additional requirements
of German commercial law pursuant to § 315e Abs. 1 HGB.
Obtain sufficient appropriate audit evidence regarding the
financial information of the entities or business activities
within the Group to express audit opinions on the consoli-
dated financial statements and on the group management
report. We are responsible for the direction, supervision
and performance of the group audit. We remain solely
responsible for our audit opinions.
Evaluate the consistency of the group management report
with the consolidated financial statements, its conformity
with German law, and the view of the Group’s position it
provides.
Perform audit procedures on the prospective information
presented by the executive directors in the group manage-
ment report. On the basis of sufficient appropriate audit
evidence we evaluate, in particular, the significant assump-
tions used by the executive directors as a basis for the pro-
spective information, and evaluate the proper derivation of
the prospective information from these assumptions. We
do not express a separate audit opinion on the prospective
information and on the assumptions used as a basis. There
is a substantial unavoidable risk that future events will dif-
fer materially from the prospective information.
We communicate with those charged with governance regard-
ing, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our
audit.
We also provide those charged with governance with a state-
ment that we have complied with the relevant independence
requirements, and communicate with them all relationships
and other matters that may reasonably be thought to bear on
our independence, and where applicable, the related safe-
guards.
From the matters communicated with those charged with gov-
ernance, we determine those matters that were of most signifi-
cance in the audit of the consolidated financial statements of
the current period and are therefore the key audit matters. We
describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter.
Other Legal and Regulatory Requirements
Assurance Report in Accordance with § 317 Abs. 3b HGB on the
Electronic Reproduction of the Consolidated Financial Statements
and the Group Management Report Prepared for Publication
Purposes
REASONABLE ASSURANCE CONCLUSION
We have performed an assurance engagement in accordance
with § 317 Abs. 3b HGB to obtain reasonable assurance about
whether the reproduction of the consolidated financial state-
ments and the group management report (hereinafter the
“ESEF documents”) contained in the attached electronic file
Henkel_KA+KLB_ESEF-2021-01-30.zip and prepared for publi-
cation purposes complies in all material respects with the
requirements of § 328 Abs. 1 HGB for the electronic reporting
format (“ESEF format”). In accordance with German legal
requirements, this assurance engagement only extends to the
conversion of the information contained in the consolidated
H e n k e l A n n u a l R e p o r t 2 0 2 0
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Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
financial statements and the group management report into
the ESEF format and therefore relates neither to the infor-
mation contained within this reproduction nor to any other
information contained in the above-mentioned electronic file.
In our opinion, the reproduction of the consolidated financial
statements and the group management report contained in the
above-mentioned attached electronic file and prepared for
publication purposes complies in all material respects with
the requirements of § 328 Abs. 1 HGB for the electronic report-
ing format. We do not express any opinion on the information
contained in this reproduction nor on any other information
contained in the above-mentioned electronic file beyond this
reasonable assurance conclusion and our audit opinion on the
accompanying consolidated financial statements and the ac-
companying group management report for the financial year
from 1 January to 31 December 2020 contained in the “Report
on the Audit of the Consolidated Financial Statements and on
the Group Management Report” above.
BASIS FOR THE REASONABLE ASSURANCE CONCLUSION
We conducted our assurance engagement on the reproduction
of the consolidated financial statements and the group man-
agement report contained in the above-mentioned attached
electronic file in accordance with § 317 Abs. 3b HGB and the Ex-
posure Draft of IDW Assurance Standard: Assurance in Accord-
ance with § 317 Abs. 3b HGB on the Electronic Reproduction of
Financial Statements and Management Reports Prepared for
Publication Purposes (ED IDW AsS 410) and the International
Standard on Assurance Engagements 3000 (Revised). Accord-
ingly, our responsibilities are further described below in the
“Group Auditor’s Responsibilities for the Assurance Engage-
ment on the ESEF Documents” section. Our audit firm has
applied the IDW Standard on Quality Management: Require-
ments for Quality Management in the Audit Firm (IDW QS 1).
RESPONSIBILITIES OF THE EXECUTIVE DIRECTORS AND THE
SUPERVISORY BOARD FOR THE ESEF DOCUMENTS
The executive directors of the Company are responsible for the
preparation of the ESEF documents including the electronic
reproduction of the consolidated financial statements and the
group management report in accordance with § 328 Abs. 1 Satz
4 Nr. 1 HGB and for the tagging of the consolidated financial
statements in accordance with § 328 Abs. 1 Satz 4 Nr. 2 HGB.
In addition, the executive directors of the Company are re-
sponsible for such internal control as they have considered
necessary to enable the preparation of ESEF documents that
are free from material non-compliance with the requirements
of § 328 Abs. 1 HGB for the electronic reporting format,
whether due to fraud or error.
The executive directors of the Company are also responsible
for the submission of the ESEF documents together with the
auditor’s report and the attached audited consolidated finan-
cial statements and audited group management report as well
as other documents to be published to the operator of the
German Federal Gazette [Bundesanzeiger].
The supervisory board is responsible for overseeing the prepa-
ration of the ESEF documents as part of the financial reporting
process.
GROUP AUDITOR’S RESPONSIBILITIES FOR THE ASSURANCE
ENGAGEMENT ON THE ESEF DOCUMENTS
Our objective is to obtain reasonable assurance about whether
the ESEF documents are free from material non-compliance
with the requirements of § 328 Abs. 1 HGB, whether due to
fraud or error. We exercise professional judgment and main-
tain professional skepticism throughout the assurance en-
gagement. We also:
Identify and assess the risks of material non-compliance
with the requirements of § 328 Abs. 1 HGB, whether due to
fraud or error, design and perform assurance procedures
H e n k e l A n n u a l R e p o r t 2 0 2 0
2 8 9
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
responsive to those risks, and obtain assurance evidence
that is sufficient and appropriate to provide a basis for our
assurance conclusion.
Further Information pursuant to Article 10 of the EU
Audit Regulation
Obtain an understanding of internal control relevant to the
assurance engagement on the ESEF documents in order to
design assurance procedures that are appropriate in the cir-
cumstances, but not for the purpose of expressing an as-
surance conclusion on the effectiveness of these controls.
Evaluate the technical validity of the ESEF documents, i.e.,
whether the electronic file containing the ESEF documents
meets the requirements of the Delegated Regulation (EU)
2019/815 in the version applicable as at the balance sheet
date on the technical specification for this electronic file.
Evaluate whether the ESEF documents enables a XHTML
reproduction with content equivalent to the audited con-
solidated financial statements and to the audited group
management report.
Evaluate whether the tagging of the ESEF documents with
Inline XBRL technology (iXBRL) enables an appropriate and
complete machine-readable XBRL copy of the XHTML repro-
duction.
We were elected as group auditor by the annual general meet-
ing on 17 June 2020. We were engaged by the supervisory
board on 19 June 2020. We have been the group auditor of the
Henkel AG & Co. KGaA, Düsseldorf, without interruption since
the financial year 2020.
We declare that the audit opinions expressed in this auditor’s
report are consistent with the additional report to the audit
committee pursuant to Article 11 of the EU Audit Regulation
(long-form audit report).
German Public Auditor Responsible for the Engagement
The German Public Auditor responsible for the engagement is
Michael Reuther.
Düsseldorf, January 31, 2021
PricewaterhouseCoopers GmbH
Wirtschaftsprüfungsgesellschaft
Dr. Peter Bartels
German Public Auditor
Michael Reuther
German Public Auditor
H e n k e l A n n u a l R e p o r t 2 0 2 0
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Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Responsibility statement
To the best of our knowledge, and in accordance with the applicable accounting principles, the consolidated financial statements
give a true and fair view of the net assets, financial position and results of operations of the Group, and the management report
of the Group, which is combined with the management report of Henkel AG & Co. KGaA, includes a fair review of the development,
performance and results of the business and the position of the Group, together with a cogent description of the principal
opportunities and risks associated with the expected development of the Group.
Düsseldorf, January 30, 2021
Henkel Management AG
Management Board
Carsten Knobel,
Jan-Dirk Auris, Sylvie Nicol, Bruno Piacenza,
Jens-Martin Schwärzler, Marco Swoboda
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Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Quarterly breakdown of sales
in million euros
Adhesive Technologies
Change versus previous year
Adjusted for foreign exchange
Organic
Beauty Care
Change versus previous year
Adjusted for foreign exchange
Organic
Laundry & Home Care
Change versus previous year
Adjusted for foreign exchange
Organic
Corporate
Henkel Group
Change versus previous year
Adjusted for foreign exchange
Organic
1st quarter
2019
2,309
1.7%
-0.2%
-0.8%
960
-0.4%
-2.4%
-2.2%
1,667
6.3%
5.8%
4.7%
32
4,969
2.8%
1.3%
0.7%
2020
2,209
-4.3%
-4.1%
-4.1%
935
-2.6%
-1.7%
-3.9%
1,755
5.3%
5.5%
5.5%
29
4,927
-0.8%
-0.5%
-0.9%
2nd quarter
2019
2,422
-0.4%
-0.4%
-1.2%
1,002
-3.2%
-2.5%
-2.4%
1,666
1.3%
2.6%
2.0%
30
5,121
-0.4%
0.1%
-0.4%
2020
1,944
-19.7%
-17.8%
-17.4%
883
-11.9%
-10.4%
-12.8%
1,705
2.3%
4.3%
4.4%
26
4,558
-11.0%
-9.1%
-9.4%
Half year
2019
4,731
0.6%
-0.3%
-1.0%
1,962
-1.9%
-2.4%
-2.3%
3,334
3.8%
4.1%
3.3%
62
10,090
1.1%
0.7%
0.1%
2020
4,153
-12.2%
-11.1%
-10.9%
1,818
-7.4%
-6.2%
-8.5%
3,460
3.8%
4.9%
4.9%
55
9,485
-6.0%
-4.9%
-5.2%
3rd quarter
2019
2,395
0.9%
-1.6%
-2.4%
970
-2.3%
-1.8%
-2.2%
1,682
2.5%
3.8%
4.0%
30
5,077
0.8%
0.1%
-0.3%
2020
2,280
-4.8%
0.7%
1.3%
999
3.0%
6.3%
4.3%
1,693
0.7%
7.7%
7.7%
26
4,999
-1.5%
4.0%
3.9%
4th quarter
2019
2,335
0.3%
-1.4%
-1.8%
944
-1.3%
-0.5%
-1.6%
1,640
4.8%
3.9%
4.0%
28
4,947
1.3%
0.4%
0.0%
2020
2,251
-3.6%
3.7%
3.7%
934
-1.1%
4.7%
1.4%
1,551
-5.4%
4.9%
4.9%
29
4,765
-3.7%
4.3%
3.7%
Full year
2019
9,461
0.6%
-0.9%
-1.5%
3,877
-1.8%
-1.8%
-2.1%
6,656
3.7%
4.0%
3.7%
121
20,114
1.1%
0.5%
0.0%
2020
8,684
-8.2%
-4.5%
-4.2%
3,752
-3.2%
-0.4%
-2.8%
6,704
0.7%
5.6%
5.6%
110
19,250
-4.3%
-0.4%
-0.7%
H e n k e l A n n u a l R e p o r t 2 0 2 0
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The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Multi-year summary
in million euros
Results of operations
Sales
Adhesive Technologies
Beauty Care
Laundry & Home Care
Corporate
Gross margin
Research and development expenses
Operating profit (EBIT)
Adhesive Technologies
Beauty Care
Laundry & Home Care
Corporate
Income before tax
Tax rate
Net income
Attributable to shareholders of Henkel AG & Co. KGaA
Earnings per preferred share (EPS)
Net return on sales2
Interest coverage ratio
Net assets
Total assets
Non-current assets
Current assets
Equity
Liabilities
Equity ratio
Return on equity3
Operating debt coverage ratio
TABLE CONTINUED ON NEXT PAGE
2014
2015
16,428
8,127
3,547
4,626
128
47.0
413
2,244
1,345
421
615
-137
2,195
24.3%
1,662
1,628
3.76
10.1%
48.4
20,961
14,150
6,811
11,644
9,317
55.6%
16.4%
274.8%
18,089
8,992
3,833
5,137
128
48.2
478
2,645
1,462
561
786
-164
2,645
24.4%
1,968
1,921
4.44
10.9%
75.7
22,323
15,406
6,917
13,811
8,512
61.9%
16.9%
375.2%
2016
18,714
8,961
3,838
5,795
121
47.9
463
2,775
1,561
526
803
-115
2,742
23.7%
2,093
2,053
4.74
11.2%
107.9
27,951
19,738
8,213
15,185
12,766
54.3%
15.2%
80.8%
2017
2018
2019¹
2020
20,029
9,387
3,868
6,651
123
46.7
476
3,055
1,657
535
989
-126
2,988
15.0%
2,541
2,519
5.81
12.7%
59.2
28,339
19,864
8,475
15,647
12,692
55.2%
16.7%
80.9%
19,899
9,403
3,950
6,419
128
46.0
484
3,116
1,669
589
970
-112
3,051
23.6%
2,330
2,314
5.34
11.7%
56.0
29,562
20,879
8,683
16,999
12,563
57.5%
14.9%
79.0%
20,114
9,461
3,877
6,656
121
45.9
499
2,899
1,631
418
973
-123
2,811
25.2%
2,103
2,085
4.81
10.5%
41.5
31,409
22,279
9,130
18,611
12,798
59.3%
12.4%
88.6%
19,250
8,684
3,752
6,704
110
46.1
501
2,019
1,248
246
688
-162
1,925
26.0%
1,424
1,408
3.25
7.4%
33.1
30,250
20,930
9,321
17,879
12,372
59.1%
7.6%
126.4%
in euros
H e n k e l A n n u a l R e p o r t 2 0 2 0
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
in million euros
Financial position
Cash flow from operating activities
Capital expenditures
Investment ratio
Shares
Dividend per ordinary share
Dividend per preferred share
Total dividends
Payout ratio
Share price, ordinary shares, at year-end
Share price, preferred shares, at year-end
Market capitalization at year-end
Employees
Total5
Germany
Abroad
as % of sales
in euros
in euros
in euros
in euros
in bn euros
(at December 31)
2014
1,914
2,214
13.5
1.29
1.31
569
30.0%
80.44
89.42
36.8
49,750
8,200
41,550
2015
2,384
979
5.4
1.45
1.47
639
30.2%
88.62
103.20
41.4
49,450
8,350
41,100
2016
2,850
4,430
23.7
1.60
1.62
704
30.3%
98.98
113.25
45.9
51,350
8,250
43,100
2017
2,468
2,511
12.5
1.77
1.79
779
30.7%
100.00
110.35
45.6
53,700
8,300
45,400
2018
2,698
1,104
5.5
1.83
1.85
805
30.9%
85.75
95.40
39.3
53,000
8,500
44,500
2019¹
3,241
1,262
6.3
1.83
1.85
805
34.2%
84.00
92.20
38.2
52,450
8,550
43,900
1 Prior-year figures amended (please refer to the notes on page 188).
2 Net income divided by sales.
3 Net income divided by equity at the start of the year.
4 Proposal to shareholders for the Annual General Meeting on April 16, 2021.
5 Basis: permanent employees excluding trainees.
293
2020
3,080
1,220
6.3
1.834
1.854
8054
43.7%4
78.85
92.30
36.9
52,950
8,700
44,250
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Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Glossary
AAddjjuusstteedd EEBBIITT
Earnings Before Interest and Taxes (EBIT) adjusted for excep-
tional items in the form of one-time expenses and income,
and for restructuring expenses.
CCaappiittaall eemmppllooyyeedd
Capital invested in company assets and operations.
CCoommpplliiaannccee
Acting in conformity with applicable regulations; adherence to
laws, rules, regulations and in-house or corporate codes of
conduct.
CCoommppoouunndd aannnnuuaall ggrroowwtthh rraattee
Year-over-year rate of growth, e.g. of an investment.
CCoorrppoorraattee ggoovveerrnnaannccee
System of management and control, primarily within listed
companies. Describes the powers and authority of corporate
management, the extent to which these need to be monitored
and the extent to which structures should be put in place
through which certain interest/stakeholder groups may exert
influence on the corporate management.
CCoorrppoorraattee GGoovveerrnnaannccee CCooddee
The German Corporate Governance Code (abbreviation: GCGC)
is intended to render the rules governing corporate manage-
ment and control for a stock corporation in Germany transparent
for national and international investors, engendering trust
and confidence in the governance of German companies.
CCrreeddiitt ddeeffaauulltt sswwaapp
Instrument used by Henkel to evaluate the credit risks of banks.
CCrreeddiitt ffaacciilliittyy
Aggregate of all loan services available on call from one or
several banks as cover for an immediate credit requirement.
DDeeccllaarraattiioonn ooff ccoonnffoorrmmiittyy
Declaration made by the management/executive board and
supervisory board of a company according to Section 161 of the
German Stock Corporation Act [AktG], confirming implemen-
tation of the recommendations of the Governmental Commis-
sion for the German Corporate Governance Code.
DDeeffiinneedd ccoonnttrriibbuuttiioonn ppllaannss//DDeeffiinneedd ccoonnttrriibbuuttiioonn ppeennssiioonn
ssyysstteemm
Post-employment benefit plans under which an entity pays
fixed contributions into a separate fund and will have no legal
or constructive obligation to pay further contributions if the
fund does not hold sufficient assets to pay all employee
benefits relating to employee service in current and prior
periods.
DDeerriivvaattiivvee
Financial instrument, the value of which changes in response
to changes in an underlying asset or an index, which will be
settled at a future date and which initially requires only a
small or no investment.
EEaarrnniinnggss ppeerr sshhaarree ((EEPPSS))
Metric indicating the income of a joint stock corporation
divided between the weighted average number of its shares
outstanding. The calculation is performed in accordance
with International Accounting Standard (IAS) 33.
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Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
EEBBIITT
Abbreviation for Earnings Before Interest and Taxes. Standard
profit metric that enables the earning power of the operating
business activities of a company to be assessed independently
of its financial structure, facilitating comparability between
entities where these are financed by varying levels of debt
capital.
EEBBIITTDDAA
Abbreviation for Earnings Before Interest, Taxes, Depreciation
and Amortization; impairment losses and reversals/value
write-ups are also eliminated from the earnings calculation.
EEccoonnoommiicc VVaalluuee AAddddeedd ((EEVVAA®®))
The EVA concept reflects the net wealth generated by a company
over a certain period. A company achieves positive EVA when
the operating result exceeds the weighted average cost of
capital. The WACC corresponds to the yield on capital employed
expected by the capital market. EVA is a registered trademark
of Stern Stewart & Co.
EEqquuiittyy rraattiioo
Financial metric indicating the ratio of equity to total capital.
It expresses the share of total assets financed out of equity
(owners’ capital) rather than debt capital (provided by lenders).
Serves to assess the financial stability and independence of a
company.
FFrreeee ccaasshh ffllooww
Cash flow actually available for acquisitions, dividend pay-
ments, the reduction of borrowings, and contributions to
pension funds.
GGrroossss mmaarrggiinn
Indicates the percentage by which a company’s sales exceed
cost of sales, i.e. the ratio of gross profit to sales.
GGrroossss pprrooffiitt
Difference between sales and cost of sales.
HHeeddggee aaccccoouunnttiinngg
Method for accounting for hedging transactions whereby the
compensatory effect of changes in the fair value of the hedging
instrument (derivative) and of the underlying asset or liability
is recognized in either the statement of income or the statement
of comprehensive income.
KKGGaaAA
Abbreviation for “Kommanditgesellschaft auf Aktien.” A KGaA
is a company with a legal identity (legal entity) in which at
least one partner (the personally liable partner, aka general
partner) has unlimited liability with respect to the company’s
creditors, while the liability for such debts of the other part-
ners participating in the share-based capital stock is limited to
their share capital (limited shareholders).
LLoonngg TTeerrmm IInncceennttiivvee ((LLTTII))
Bonus aligned to long-term financial performance.
NNeett ffiinnaanncciiaall ppoossiittiioonn
The net financial position is defined as cash and cash equiva-
lents plus readily monetizable securities & time deposits and
financial collateral provided, less borrowings, plus positive
and minus negative fair values of derivative financial instru-
ments.
NNeett wwoorrkkiinngg ccaappiittaall
Inventories plus payments on account, receivables from
suppliers and trade accounts receivable, less trade accounts
payable, liabilities to customers, and current sales provisions.
NNoonn--ccoonnttrroolllliinngg iinntteerreessttss
Proportion of equity attributable to third parties (non-control-
ling shareholders, aka minority shareholders) in subsidiaries
included within the scope of consolidation. Valued on a pro-
portional net asset basis. A pro-rata portion of the net income
of a corporation is due to shareholders owning non-control-
ling interests.
H e n k e l A n n u a l R e p o r t 2 0 2 0
296
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
OOrrggaanniicc ssaalleess ggrroowwtthh
Growth in revenues after adjusting for effects arising from
acquisitions, divestments and foreign exchange differences –
i.e. “top line” growth generated from within.
PPaayyoouutt rraattiioo
Indicates what percentage of annual net income (adjusted for
exceptional items) is paid out in dividends to shareholders,
including non-controlling interests.
RReettuurrnn oonn ccaappiittaall eemmppllooyyeedd ((RROOCCEE))
Profitability metric reflecting the ratio of earnings before inter-
est and taxes (EBIT) to capital employed.
RReettuurrnn oonn ssaalleess ((EEBBIITT))
Operating business metric derived from the ratio of EBIT to
revenues.
RReettuurrnn--eennhhaanncciinngg ppoorrttffoolliioo
Contains investments in equities and alternative investments,
and serves to improve the overall return of the pension plan
assets over the long term in order to raise the coverage ratio
of pension funds. In addition, a broader investment horizon
increases the level of investment diversification.
SSwwaapp
Term given to the exchange of capital amounts in differing
currencies (currency swap) or of different interest obligations
(interest swap) between two entities.
VVaalluuee--aatt--rriisskk
Method, based on fair value, used to calculate the maximum
likely or potential future loss arising from a portfolio.
WWeeiigghhtteedd aavveerraaggee ccoosstt ooff ccaappiittaall ((WWAACCCC))
Average return on capital, expressed as a percentage and cal-
culated on the basis of a weighted average of the cost of debt
and equity. WACC represents the minimum return expected of
a company by its lenders for financing its assets.
H e n k e l A n n u a l R e p o r t 2 0 2 0
297
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Credits
PPuubblliisshheedd bbyy
Henkel AG & Co. KGaA
40191 Düsseldorf, Germany
(0)
Phone: +49
211-797-0
© 2021 Henkel AG & Co. KGaA
EEddiitteedd bbyy
Corporate Communications, Investor Relations,
Corporate Accounting and Subsidiary Controlling
CCoooorrddiinnaattiioonn
Martina Flögel, Lars Korinth, Rabea Laakmann
DDeessiiggnn aanndd ttyyppeesseettttiinngg iinn SSmmaarrttNNootteess
MPM Corporate Communication Solutions,
Mainz
PPhhoottooggrraapphhss
Nils Hendrik Müller; Henkel
EEnngglliisshh ttrraannssllaattiioonn
SDL plc
PPrrooooffrreeaaddiinngg sseerrvviicceess
Paul Knighton, Cambridge; Thomas Krause, Krefeld
DDaattee ooff ppuubblliiccaattiioonn ooff tthhiiss RReeppoorrtt
March 4, 2021
PR No.: 03 21 0
Except as otherwise noted, all marks used in this publication are trademarks
and/or registered trademarks of the Henkel Group in Germany and else-
where.
This document contains forward-looking statements which are based on the
current estimates and assumptions made by the corporate management of
Henkel AG & Co. KGaA. Statements with respect to the future are character-
ized by the use of words such as expect, intend, plan, anticipate, believe,
estimate, and similar terms. Such statements are not to be understood as in
any way guaranteeing that those expectations will turn 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
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 ac-
tions of competitors and others involved in the marketplace. Henkel neither
plans nor undertakes to update any forward-looking statements. This docu-
ment has been issued for information purposes only and is not intended to
constitute an investment advice or an offer to sell, or a solicitation of an offer
to buy, any securities.
H e n k e l A n n u a l R e p o r t 2 0 2 0
298
The Company
Shares and bonds
Corporate governance
Combined management report
Consolidated financial statements
Further information
Credits
Contacts
Financial calendar
Contacts
Financial calendar
AAnnnnuuaall GGeenneerraall MMeeeettiinngg HHeennkkeell AAGG && CCoo.. KKGGaaAA 22002211::
Friday, April 16, 2021
PPuubblliiccaattiioonn ooff SSttaatteemmeenntt ffoorr tthhee FFiirrsstt QQuuaarrtteerr 22002211::
Thursday, May 6, 2021
PPuubblliiccaattiioonn ooff RReeppoorrtt ffoorr tthhee FFiirrsstt HHaallff YYeeaarr 22002211::
Thursday, August 12, 2021
PPuubblliiccaattiioonn ooff SSttaatteemmeenntt ffoorr tthhee TThhiirrdd QQuuaarrtteerr 22002211::
Monday, November 8, 2021
PPuubblliiccaattiioonn ooff RReeppoorrtt ffoorr FFiissccaall 22002211::
Wednesday, February 23, 2022
AAnnnnuuaall GGeenneerraall MMeeeettiinngg HHeennkkeell AAGG && CCoo.. KKGGaaAA 22002222::
Monday, April 4, 2022
CCoorrppoorraattee CCoommmmuunniiccaattiioonnss
Phone: +49 (0) 211 797-3533
Email: corporate.communications@henkel.com
IInnvveessttoorr RReellaattiioonnss
Phone: +49 (0) 211 797-3937
Email: info@ir.henkel.com
UUpp--ttoo--ddaattee ffaaccttss aanndd ffiigguurreess oonn HHeennkkeell aallssoo
aavvaaiillaabbllee oonn tthhee iinntteerrnneett::
www.henkel.com
OOuurr ffiinnaanncciiaall ppuubblliiccaattiioonnss::
www.henkel.com/financial-reports
OOuurr ssuussttaaiinnaabbiilliittyy ppuubblliiccaattiioonnss::
www.henkel.com/sustainability/reports
HHeennkkeell aapppp aavvaaiillaabbllee ffoorr iiOOSS aanndd AAnnddrrooiidd::
HHeennkkeell iinn ssoocciiaall mmeeddiiaa::
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