In fiscal 2023, Henkel Group experienced a nominal sales decrease of -3.9 percent compared to the previous year, amounting to 21,514 million euros. Negative foreign exchange effects contributed to this decline by -4.3 percent. Acquisitions and divestments also hurt sales, primarily due to the sale of business activities in Russia. Despite these challenges, organic sales showed robust growth at 4.2 percent, driven by significant price increases in the high single-digit percentage range, albeit with a decline in volumes. However, there was a noticeable improvement in volume development during the latter half of the year.
In fiscal 2023, sales for the Consumer Brands business unit amounted to 10,565 million euros driven by the Laundry & Home Care and Hair segments. showing a nominal decrease of -3.3 percent compared to the previous year. Foreign exchange effects contributed to a -4.4 percent reduction in sales, while acquisitions/divestments had a negative impact of -5.1 percent, primarily due to the sale of business activities in Russia. However, organically, sales grew by 6.1 percent, driven by double-digit price increases despite a partial decline in volumes resulting from ongoing portfolio optimization efforts. Nonetheless, there was a notable improvement in volume development in the latter half of the year.
Adjusted operating profit significantly increased to 1,115 million euros from 910 million euros in the prior year. This growth was fueled by higher selling prices to counteract elevated prices for direct materials, ongoing cost reduction measures, efficiency enhancements in production and supply chain, savings from the integrated Consumer Brands business unit, and portfolio optimization efforts. Despite the absence of earnings contribution from the divested Russian business activities, adjusted return on sales rose to 10.6 percent, marking a 220 basis points increase from the previous year. Additionally, marketing and advertising investments were stepped up compared to the prior year to reinforce brands and businesses.
Adjusted operating profit soared by 10.2 percent to 2,556 million euros, attributed to positive selling price trends, cost-saving initiatives, production efficiency enhancements, and portfolio optimization despite challenges from high direct material and logistics costs.
Adjusted return on sales surged to 11.9 percent from 10.4 percent in 2022. Adjusted earnings per preferred share rose significantly by 11.5 percent to 4.35 euros, or by 20.0 percent at constant exchange rates.
Net working capital as a percentage of sales dropped to 2.6 percent, significantly lower than the previous year’s 4.5 percent, primarily due to reduced inventories. Free cash flow surged to a record high of 2,603 million euros, marking a substantial rise from the previous year’s 653 million euros. The increase was driven by significantly higher cash flow from operating activities, propelled by increased operating profit and reduced net working capital.
