Henkel AG & Co. KGaA
Q4 2021 Earnings Call Transcript

Published: 24 Feb 2022

[Carsten Knobel:]

Dear investors and analysts, good morning from Düsseldorf and a warm welcome to our Conference Call on the Full Year Results 2021. Thank you really for joining us today. Together with Marco, our CFO, I would like to talk you through the full year 2021 presentation and also for sure answer your questions. Before we start, I would like to remind everyone that this presentation, which contains the usual formal disclaimer to forward-looking statements within the meaning of relevant U.S. legislation, can be accessed via our website at henkel.com/ir. The presentation and discussion are conducted subject to this disclaimer. I will not read the disclaimer, but we take it as read into the record for the purpose of this conference call. What are the key topics we will present to you today? First, we will take a closer look at the final 2021 results as well as the outlook for 2022. Henkel delivered a good performance in 2021 in a highly demanding market environment and the outlook for 2022 is unchanged compared to the announcement end of January. Second, we will report on our progress in the implementation of our strategic framework, which is well on track. We will also outline the priorities we have set to advance to the next level of our purposeful growth agenda. And finally, with Henkel Consumer Brands and our new 2030+ sustainability ambition, we will highlight two of our key initiatives that will shape our way forward. Starting with the key financials in the full year 2021, Henkel Group sales advanced to €20.1 billion and we achieved significant organic sales growth of 7.8%, with growth across all three business units. We kept the adjusted EBIT margin stable at 13.4%, thanks to strong volume expansion and pricing and saving initiatives. With this, we could offset the accelerated headwinds from direct material prices. Adjusted EPS improved by 9.2% at constant currencies. We generated a free cash flow of €1.5 billion, ending the year with a further improved net financial position of minus €300 million. And with a dividend proposal of €1.85 per preferred share, we will also sustain our long-term track record of increasing for stable dividend payouts. Let us have a closer look at the business environment we are operating in. Throughout 2021, we experienced a strong economic recovery with the broad-based improvement of industrial demand across regions and sectors. Overall, the industrial production index increased by about 7% in 2021 compared to a decline of more than 3% in 2020. The second quarter saw the strongest expansion rates versus a particularly low prior year basis. And since the economy recovery has started to accelerate from Q3 of last year, growth dynamics showed in the course of the second half year to 5% versus 11.4% in the first half. While most industrial markets performed well, selected industries such as automotive were held back by supply shortages, especially in the second half of the year. Turning to our consumer markets, where we saw varying dynamics throughout the year of 2021. As a result of increasing vaccination rates in many countries, with many restrictions lifted across our key regions, consumer behavior and demand were normalizing as the year progressed. Nevertheless, our relevant markets in Beauty Care developed slightly negative in 2021. This was in particular due to significant decline of the soap market in key regions like Western Europe and North America, which were affected by the strong unwind of 2020 peak demand levels. Our relevant Laundry & Home Care markets were slightly positive in 2021 with differentiated developments across regions and also categories. Generally, the overall picture did not change throughout the year. Demand was lower in most of the categories which had benefited from the pandemic-related elevated demand levels, such as home colorations, soap or hard surface cleaners. In contrast, hair styling and especially the hair salon market continued the strong recovery, which started in Q2 of last year. Heavy-duty detergents markets were robust with a stable development, auto dishwashing on the other hand, continued to grow in 2021. At the same time, we faced an unprecedented input cost inflation. Prices for raw materials and logistics were significantly increasing throughout the year of 2021 with a broad-based movement across the different raw material classes and regions. On average, prices for direct materials were up by a low double-digit percentage versus prior year, leading to gross price headwinds of around €1 billion in fiscal 2021. We work very hard to limit the impact on Henkel’s profitability with comprehensive savings in the supply chain and especially pricing initiatives. These measures are in full execution, resulting in strong pricing across all business units with an accelerated trend throughout 2021. However, since our pricing initiatives are materializing with a certain time delay, they could not yet fully compensate for the drastic headwinds. Raw material prices continue to climb towards year-end and remained at plateau levels since then with a highly uncertain outlook for the upcoming months. This means further significant cost pressures in 2022, in particular, in the first half year, which we will address with another step-up in pricing and saving initiatives, however, again, with a certain time lag. But how does our sales performance compares to the pre-COVID situation? What you see here is over the 2 years horizon, that Henkel achieved an overall strong compound annual growth rate in organic sales of 3.5%, in line with our new mid to long-term ambition. Adhesive Technologies and Laundry & Home Care clearly exceeded pre-COVID levels across all business areas with a CAGR of more than 4%. Over the same 2-year period, the industrial production index showed a compound annual growth rate of 0.8%, not including price effects and the relevant Laundry & Home Care market grew by close to 4%. In contrast, beauty care is slightly below its 2019 levels, which is not a satisfying performance. But to put this into perspective, the development of our active markets was overall flat over that period. It is worth noting that the business unit in both Consumer and Professional were ahead of their respective pre-COVID levels in the third and the fourth quarter of 2021, as already highlighted in our conference call before in the Q3 call. With that, let me hand over now to Marco. Marco, please.

[Marco Swoboda:]

Yes. Thanks, Carsten, and good morning also from my side to everybody on the call. Let me provide some color on our financial performance in fiscal 2021. And as Carsten said, I will keep it short and focus on the key developments. So overall, in a challenging environment, we achieved significant sales growth of 7.8%, driven by both strong pricing of 3% and volume increases of 4.8%. The net effect of acquisitions, divestments was broadly flat. And currencies, however, were a strong headwind at minus 3.5%, bringing the nominal sales development to grow by 4.2%. So let’s look at the regional picture. In 2021, we recorded organic sales growth across all the regions. And organic growth was even double digit in the emerging markets, and in each of Middle East, Africa, Latin America, Eastern Europe and Asia Pacific regions. North America recorded an organic sales growth of 1.2%, mainly driven by double-digit growth in Adhesive Technologies, while our consumer businesses were below previous year’s levels. Western Europe was up by 3.2%, largely as a result of significant growth in Adhesive Technologies. So looking at the business units, starting with Adhesive Technologies and here, backed by the continued broad-based recovery of industrial demand, Adhesive Technologies achieved organic sales growth of 13.4% with double-digit growth across all business areas and supported by all regions. And growth was predominantly driven by a double-digit increase of volumes but also with a strong contribution from pricing, which accelerated quarter-over-quarter. Thanks in particular to the strong expansion of volumes and resulting positive operating leverage effects as well as price increases, we were able to compensate the drastic input cost headwinds. The business unit closed the year with an adjusted EBIT margin of 16.2%, corresponding to an improvement of 100 basis points year-over-year. Beauty Care recorded positive organic sales growth of 1.4%, driven by pricing and mix while volumes were slightly negative. Following a significant decline in sales last year, our professional business showed a strong comeback in fiscal 2021 with double-digit growth across all regions. Our consumer business ended the year below prior year with mixed developments across categories. Key driver was a significant decline in key markets

[Carsten Knobel:]

Thank you, Marco. ago in early March 2020, we launched our new strategic framework, Henkel’s Purposeful Growth agenda. After 2 years in execution, let me take this occasion to reflect on the progress we made so far and how we want to advance our strategic framework to the next level. And I’m proud to say we made strong progress across all pillars. The past 2 years have proven that we have set the right priorities for Henkel future. And despite the challenges we have been facing in our market environment, we stick to the plan, state through our convictions and consistently implemented our strategic priorities. The Purposeful Growth agenda will continue to be our guiding framework to further enhance our businesses and ultimately, the entire company. What is clear? We need to constantly adapt in order to be successful, and we have been transparent about it. In some areas, we see the need for further action. That is while we are evolving our growth agenda to advance to the next level with a clear ambition and commitment to win the 20s through purposeful growth. Today, I would like to provide an update on our progress and also give you some more color on our way forward. Starting with our winning portfolio, 2 years ago, we set ourselves the target to divest or discontinue brands and businesses with sales of around €0.5 billion, and we delivered on that. We also strengthened our portfolio with 3 acquisitions in 2020 and 2021 in each of our three business units, adding annual sales of more than €200 million. For sure, we made strong progress in shaping our portfolio, but we are not yet where we want to be. As an important element and enabled by the creation of Henkel Consumer Brands, multi-category platform, we will step up our active portfolio management and further sharpen our portfolio with a specific focus on our consumer businesses. And against clear criteria, which means leading positions, attractive growth and healthy margins. And we will continue to grow our businesses through value-enhancing acquisitions. So M&A remains an integral part of our strategy, as just demonstrated. Two weeks ago, we announced the acquisition of Shiseido’s Hair Professional business in the Asia Pacific region, an important step to further strengthen our professional business, which has delivered a very strong performance in the past year, supported by a string of pearls of value-adding acquisitions. We will acquire an attractive portfolio with strong successful premium brands such as Sublimic and Primience endorsed by the licensed Shiseido Professional brand. It is a perfect strategic fit to our existing portfolio, adding highly complementary brands and also hair categories. And we are significantly expanding our position in the attractive Asia Pacific market, particularly in Japan and in China, the world’s top two and three hair professional markets and important centers of trends and innovations. The business to be acquired is representing annual sales of more than €100 million and is backed by strong R&D capabilities, so a great addition to our professional portfolio. Moving to the next pillar of our strategic framework, which is impactful innovation. In Adhesive Technologies, we are advancing with our high-impact solutions leveraging the opportunities offered by the global mega trends, sustainability, connectivity and mobility. In Beauty Care and Laundry & Home Care, we successfully launched products onto the market that address relevant consumer needs with a particular focus on sustainability and growth segments. Under our flagship brands, such as Persil and Schwarzkopf; or under our dedicated nature brands, such as Nature Box. One important KPI we are tracking in this regard is our innovation rate which advanced in the consumer businesses to meanwhile, more than 50%. Key to innovation are strong consumer insights and close collaboration with customers, both of which we successfully drove forward in the past 2 years. For example, we opened our new inspiration center for Adhesive Technologies at our headquarters here in Düsseldorf and work has already begun in building another innovation center in Shanghai. Our teams also intensified the collaboration with external partners, for example, with startups, incubators or think tanks, and we will continue to build on that, with the launch of our new venture capital Fund II of €150 million, with continued investments supporting our strong innovation pipeline to expand our market positions despite strong cost and margin headwinds from input cost inflation and with another step up in customer and consumer collaborations through our unique innovation centers, D2C platforms and the use of tools leveraging the potential of artificial intelligence. The area of sustainability, we made particularly strong progress in the past 2 years and achieved important milestones. Just to name a few key examples of how we contribute to climate protection and the circular economy. We meanwhile reduced carbon dioxide emissions by 50% in our operations compared to the base year 2010 and increased the share of green electricity to more than two-thirds. And today, 86% of our packaging is recyclable, approaching our long-term target of 100% by 2025. Our biggest lever are our products and technologies. And across all three business units, we have been driving the transformation of our portfolios and products to increase their contribution to more sustainability. Our efforts and progress are also externally recognized and it’s demonstrated by our excellent results in relevant ratings and rankings, for example, with EcoVadis. When it comes to the next level, we are accelerating our efforts guided by our new 2030+ Sustainability Ambition Framework. More on this in a few minutes. We will continue to advance our portfolio with a clear aim to fully turn sustainability into a true competitive edge for customers and consumers alike. And we will advance our portfolio in Adhesive Technologies, building on our comprehensive approach to map and track the sustainability contribution of our products and solutions. Also in the field of digitalization, we have been taking significant steps forward. With a strong increase in digital sales throughout the Henkel Group, the digital sales share stand at more than 18% that translate into an organic growth of around 60% compared to the level just 2 years ago, particular driver, our B2B e-shops in Adhesive Technologies and in Beauty Care Professionals. Also, our new digital unit, Henkel dx, which combines the digital and IT teams across Henkel is fully operational, a step change for Henkel, and we keep investing in new initiatives while further optimizing our overall IT spend. Often forgotten in the discussion, we are driving the topic of Industry 4.0, with success and differentiating Henkel from our competition, our pioneering role was once more confirmed by the World Economic Forum. Going forward, we will focus on further expanding digital sales driven by our e-shops and e-commerce platforms. We will leverage our new digital hubs in Berlin and Shanghai with strong collaboration between the teams at Henkel dx and our businesses. And we will implement our new platform strategy, leveraging our partnership with Adobe and scaling up our new integrated RAQN platform, which has a particular focus on driving e-commerce. Moving on now to our future-ready operating model, here, we implemented relevant changes, the new organizational, more customer-centric structure, along four business areas in Adhesive Technologies is firmly embedded. Also in Beauty Care and Laundry & Home Care, we adapted the organizational setups to increase proximity to customers and consumers and to strengthen the regional focus as we did for the purchasing function where the teams became even more aligned to business units innovation in markets. Looking at what’s to come in the next month, the merger of Laundry & Home Care and Beauty Care to create one multi-category platform, Henkel Consumer Brands will be a step change regarding our operating models and more to that in a minute. But what is also important to me, also beyond Henkel Consumer Brands, we will optimize support structures and follow a stringent approach to manage our cost base. Last but for sure not least, our cultural transformation. We have been crystal clear that for us creating a collaborative culture with empowered people is key to Henkel’s long-term success because it will be the people and the culture that make the difference. We launched our new purpose, pioneers at heart for the good of generation. It serves as our north star, both for our teams and for our growth agenda. To make it tangible across all touch points, we are launching Henkel’s new corporate branding today. Since we are convinced that cultural transformation starts from the top, we have completed engaging our top executives in new leadership trainings and introduced the 360-degree feedback process and not least accelerated through the pandemic. We have made a step change when it comes to new ways of working, supported by our holistic Smart Work concept, which we are rolling out globally as we speak. Also here, we have set clear priorities going forward. We will drive our cultural journey with a particular focus on enabling pioneers. We will complete the rollout of our Smart Work concept and we will strengthen diversity, equity and inclusion across all dimensions. To wrap it up, we have made substantial progress across the six pillars of our framework. We achieved key milestones and have further evolved our company. But despite the progress we made, we are also well aware that there are areas where we need to become better. In particular, in our consumer businesses, for example, in the performance of Laundry & Home Care in North America and some parts of our Beauty Care consumer business. That is why we have defined clear priorities for the next level of implementation in order to fully leverage our potential. Today, I would also like to discuss two of our key initiatives of Henkel’s way forward

[Operator:]

Thank you, Mr. Knobel The first question comes from Christian Faitz from Kepler. Please go ahead.

[Christian Faitz:]

Yes. Thank you very much. Good morning, everybody. Two questions, please. First of all, can you remind us of your group sales exposure to Russia and what consequences would you see for your business on the back of the latest developments? Also which of the three segments are in relative terms, most exposed to the Russian market. I would believe this is mostly on the consumer side, correct? And in that context, what explains the sharp decline in EBIT in Eastern Europe in H2 despite the sound nominal sales improvement. So that was question group number one. Second, would you share the view that your adhesives business should see additional momentum with the automotive industry expected to recover per second half of this year. Would this also further improve the price mix, as I would believe that the car customers have higher value-added adhesives in their products versus construction or packaging? Thanks.

[Carsten Knobel:]

So, good morning Christian. Yes, coming to your first question, which is related to Russia and the Ukraine. So as you can imagine, we are monitoring the current developments in both countries in Russia and the Ukraine very closely and also, of course, for sure, with the concern. But we continue to hope really for a peaceful resolution of this conflict and the further escalation of the situation would of course, have international consequences, the extent of which is difficult to assess at this point. Coming to the concrete parts now, we have been active in Russia for over 30 years and employ around 2,500 people. We operate here with all three business units and have, yes, 11 production sites and the group sales overall are slightly below 5% for the company. And if we look at the Ukraine, we are there for over 20 years with all three business units also here. We have around 600 people with four production sites. Two are located in the Southeast Ukraine, but none in the separate controlled area. The turnover in terms of percentage of Henkel Group sales are less than 1%, which are generated in the country. Your question, when you said is it predominantly consumer-driven, which is not really the case. It is more or less – with our still three business units, it’s more or less a third, a third, a third. So, a little bit like that. So, little bit less in Beauty Care, but that’s overall, I would say the situation on that. Hope that answers because you had several parts, but I think I was now comprehensive on that. Yes, the second part was related to adhesives and here specifically to the automotive situation and the question of recovery. Overall now, automotive and metals reached double-digit growth in 2021, strongly supported by really a broad recovery in demand during the first half year. However, organic sales growth was negative in Q3 and Q4 of last year. This was due to the weak global automotive production as a result of the challenged supply chains and the semiconductor shortages. And the outlook for now ‘22 for sure, what you have seen, it was also maybe already in 2021, where a significant come back of the automotive/the semiconductor business would have been hoped at the beginning of ‘21, which not materialized in 2021 at the end. And yes, there is, for sure, an expectation that the development of the semiconductor or the shortage will come to an end. And by that, for sure, we would also in our assumption have included also a comeback of that and also coming back in terms of also top line growth. And yes, that’s what I can say in this part. If you look at the outlook, it’s recorded with a double-digit organic growth rate for the full year and outperformed the development of the light vehicle production in each quarter of last year. And for sure, that’s also our approach to outperform the market going forward, but maybe that’s more or less the answer. I hope that helps you.

[Christian Faitz:]

Very helpful. Thank you. Thanks Carsten.

[Carsten Knobel:]

You’re welcome.

[Operator:]

The next question comes from Iain Simpson from Barclays. Please go ahead.

[Iain Simpson:]

Thank you very much. I wondered if you could give a little bit of detail on the Shiseido acquisition. What you see as the kind of opportunities in terms of what you can do with those brands? And also, glad to see you hit your revenue exit target. I think you talked about 5% of beauty sales. Should we expect to see any more revenue exits elsewhere in the business, or is it just the kind of 5% of beauty flagged and then you are more or less done in terms of portfolio exit? Thank you.

[Carsten Knobel:]

Yes. Iain, good morning, first of all, and yes, thank you for your questions. And maybe we start – first, I understood the first question to the professional acquisition of Shiseido. So, what is the strategic rationale behind – through the acquisition, we will further strengthen our hair professional business and our footprint in Asia. You know the attractive portfolio with strong and successful premium brands, I mentioned them, is really a perfect fit for our Beauty Care business and will significantly expand our hair professional core category. And with that, on top, we are already in Japan and China, and this will be added with the Shiseido professional business. On top, we will enter the hair professional market in South Korea with this setup. And yes, I think that’s for the first question. For the second, maybe I will start, and Marco then continues. We have – what we have said is our decision regarding the first measures is integrated in the outlook or in the planning of the year to implement in 2022 with an organic sales growth of 5% on Beauty Care standalone. And this includes the measures to improve the quality of Beauty Care portfolio in terms of growth dynamics and gross margin contribution. And that’s for sure, coming on top of the measures we alluded today, the €0.5 billion, which we had set ourselves as a target for March – or in March 2020 for the years 2020 and 2021. So, this comes on top. And here I stop and hand over to Marco because the other part of your question was, is this now the end of portfolio measures or are others to come.

[Marco Swoboda:]

Yes, sure. I mean, as Carsten said, we have defined certain measures already to optimize the portfolio, in particular, with the focus of Beauty Care that accounts for the 5%. But of course, we are also looking to further optimize the portfolio that can be, on the one hand, by further divestments in line with our strategic agenda, and that is not factored into the 5%. And for sure, we also will further review the quality of the portfolio entirely. And we do also think that the combination of the two businesses into consumer brands gives us new opportunities in terms of also feasibility of certain portfolio optimization measures compared to the standalone setup before. So, all that means in a nutshell, we will of course, further look into optimizing the portfolio and the 5% is not the end, but we will further work on it. And of course, we have done some analysis on that. We have some plans, but we will further continue to do so. And for us, as we said, also initially in 2020, active portfolio management has to become a continuous process, and that is what we want to install.

[Carsten Knobel:]

And Iain, I think that is what I said in the call, on May 5, you can expect an update on that.

[Iain Simpson:]

Thank you very much.

[Carsten Knobel:]

You’re welcome.

[Operator:]

The next question comes from Olivier Nicolai from Goldman Sachs. Please go ahead.

[Olivier Nicolai:]

Good morning Carsten and Marco. Just a couple of questions, please, on your – going back to the 16% EBIT margin ambition in the mid to long-term. What is the underlying input cost inflation you are assuming? And secondly, should we also expect a step-up in CapEx to make your business more profitable? I don’t think you have commented on CapEx kind of guidance for the future. Thank you.

[Carsten Knobel:]

Yes. Good morning Olivier. Maybe to make it short on the CapEx part, Marco take the – will take the question of the input ambition, at least assumptions, we have been put in. So, from – I think you have seen, if you look back over the last couple of years, I can say, even on a decade, I think we have continuously supported our businesses with an increased level of CapEx or with – at the end, a stable level of CapEx, and there is no assumption in our mid-term ambition that we will have significant step-ups in CapEx. For sure, we will support our businesses. But there is no big step-up or a significant step-up planned. I think the level of CapEx we have been using over the last years was always sufficient to support. I hope that helps. I think the other question now, as you said, if I understood it right, the mid-term ambition of 16%. What is the assumption behind of input? I hand over to Marco.

[Marco Swoboda:]

Yes. So I mean, of course, the 16% is our ambition we have set out as our mid to long-term financial ambition on the margin. And maybe let’s look at the different items. On the one hand, of course, we have the aspiration that we will pass through of that the coming years and also the high input costs that we have seen, and we had of course, talked a lot about it already on the different businesses, how that could evolve. And let’s look at adhesives for sure, also here. The aim is to reach the full pass-through of the high input costs, so that we also get back to the margins we will use in Adhesive Technologies. And of course, the same is true for beauty and laundry, where we also have to work on passing through the different input cost developments. We will also, of course, see benefits from the creation of the consumer brands unit. These defensive synergies will also help us of course, to support the margin, as we have said, also the synergies will be used to support the margin, reinvest into the business as another component to drive also top line. But of course, margin support will be another component. And then I think the third big item, of course, is the optimization of the portfolio that we concentrate on the businesses that also provide us with a better margin profile. That will be another component also that should bring us to the 16% level that we aspire to. So, that is what we can say at that point in time, I think to the principal component.

[Olivier Nicolai:]

Thank you.

[Carsten Knobel:]

Oliver, thank you.

[Operator:]

The next question comes from Emma Letheren from RBC. Please go ahead.

[Emma Letheren:]

Hi, good morning everyone. You mentioned North America grew 1.2% in the presentation with adhesives up double digit. I am not sure how big each division is in each region, but that indicates your consumer business must have done not very well. So, I am wondering if you can give some color around what’s going on in U.S. beauty and home care? Thank you

[Carsten Knobel:]

Yes. Good morning Emma. Yes, I think your observation is right. If you look at the North American performance in Beauty Care, overall, Beauty Care recorded organic sales growth in North America below prior year with a mixed picture looking at the different business units within beauty. We achieved a very strong comeback in the professional area, in our key markets, North America, with a clear double-digit growth. At the same time, the organic sales growth in our consumer business was below or clearly below the prior year level with a double-digit decline in Body Care. It is important here to note that the consumer business in North America has a very large exposure to the Body Care category with around two-thirds of the sales. And the category was heavily impacted by the very significant decline of demand in the soap market, resulting from the fast normalization versus 2020 peak levels. And in addition to that, the markets are affected by an unbalanced supply-demand situation and by that, also with the excess of inventory levels. That’s to the Beauty Care performance. Adhesives, as you pointed out, had a good development in North America. And the last part, our Laundry & Home Care business, was below prior year in laundry and in home care, mainly due to the supply chain and logistic issues as well as prior year high comparables, I think which I pointed also out – Marco and I pointed out also during the course of last year when we were in the Q2 call and also in the Q3 call. On the other side, especially to the Laundry & Home Care business, you know that we are on a turnaround situation or turnaround plan. And our performance here is the top priority for Henkel. And by that, we are taking definitely also decisive actions within our setup, which means we are stepping up our innovation offense with launch across our key brands and support this turnaround. We are reorganizing our structures to be more agile, more collaborative and thereby also faster in decision making and we have also and we are further shaping our portfolio and driving key capabilities as e-commerce, digi and sustainability. And based on the question of Iain at the beginning regarding portfolio measures and the answer of Marco, for sure, also the North American portfolio in consumer brands is included in our thoughts when we want to optimize our portfolio going forward in order to improve the performance. I hope that helps, Emma.

[Emma Letheren:]

Yes, very clear. Thank you very much.

[Carsten Knobel:]

You’re welcome.

[Operator:]

The next question comes from Rogerio Fujimori from Stifel. Please go ahead.

[Rogerio Fujimori:]

Hi everyone. Thanks for taking my questions. I have one on Laundry. Could you talk about the pricing elasticity you have observed in Q4 and year-to-date in developed markets? Have you seen any surprises relative to your planning assumptions so far. And then a follow-up on your beauty business and the Body Care category after the normalization of demand you have seen – we have seen in last year. How should we think about the market development for this category in ‘22? And are you comfortable with trade inventory levels in North America at the end of last year? Thank you.

[Carsten Knobel:]

So, good morning Rogerio, so to your two questions, pricing Q4. So, as our pricing initiatives are progressing to our plans is, for sure, a differentiated picture from region-to-region to be seen. So, negotiations are still ongoing for some of the Western European countries, but we already achieved good results in terms of pricing initiatives particularly in North America and also Eastern Europe. And I think that is the important part to mention here. From the other part in Q4, we faced continued strong market headwinds from the ongoing normalization of demand and the unbalanced supply situation that is now related to the Body Care or to your Body Care question. Sales volume stabilized on lower levels compared to prior quarters, but still compared to very high prior year levels of 2020 in that comparison. And looking forward, at least my assumption, our assumption is that we are getting more and more into normalized levels because the 2 years 2020 and 2021 were too extreme. 2020 extreme in high and by 2021, markets coming back, especially on the soap market, I alluded earlier before. So, assumption is that 2022 will get into a more normalized level. And by that, also more normalized performance numbers we will see.

[Rogerio Fujimori:]

Great. Thank you.

[Carsten Knobel:]

You’re welcome Rogerio.

[Operator:]

The next question comes from Chris Pitcher from Redburn. Please go ahead.

[Chris Pitcher:]

Thank you very much. A question on Beauty Care, could you give us some detail on how profitability has recovered in professional? Has the margin impairment within Beauty Care been mainly on the retail side? And it’s that as much as anything driving the need to bring that business together with Laundry & Home in order to recover fixed cost? Thank you.

[Carsten Knobel:]

Yes. Marco, do you want to take it?

[Marco Swoboda:]

So, in principle – happy to take that. I mean profitability in professional, indeed, as you say, implicitly in your question, in 2020 due to the quite strong decline in turnover of cost that had also a strong downturn in profitability as a result. And with the upturn we have seen in the professional business, we have also seen profitability to recover here not yet fully to the level we had before because also here, the raw material costs have increased, but we have seen a significant recovery. And in so far, indeed, profitability in the consumer business, not where we wanted to have and that’s what we have to work on going forward. And also, for sure, the synergies that we want to create with the consumer brands unit will help.

[Chris Pitcher:]

Thank you.

[Operator:]

The next question comes from Iain Simpson from Barclays. Please go ahead.

[Iain Simpson:]

Thanks very much for allowing a follow-up. Just in terms of ‘22, I wondered if you could give any indication as to how that top line might break down into price and volume. Looking at some of the comments from your competitors around the level of pricing that they are looking to take this year, would it be reasonable to expect perhaps mid-single digit pricing at group level with perhaps a little bit more in Adhesives and a little bit less in consumer products, is that the right sort of range?

[Carsten Knobel:]

So even – Iain, thanks for your – for the follow-up. We are not guiding on a price-volume question, but I think you have heard it from Marco also for me. For sure, the unprecedented situation we are facing which we faced not only in 2021, but also as it seems in 2022 from the increase of the raw materials, which is definitely without saying that we need to further bring price increases in all three divisions into the setup. So, you can expect that without giving you a number, that there will be also a significant price effect in the businesses for 2022. And at that point, I wouldn’t differentiate between what you ask is adhesives higher than beauty or laundry. Most probably, it will be. But yes, I hope that helps and clarifies, more, I don’t want to say at this point.

[Iain Simpson:]

Thank you.

[Carsten Knobel:]

Iain, you’re welcome.

[Operator:]

This was our last question. I will now hand over to Mr. Knobel for his closing remarks. Thank you.

[Carsten Knobel:]

So first of all, thank you for all your questions, and let me briefly summarize the key takeaways for today’s presentation. We achieved, I mentioned before, a good business performance in fiscal 2021, and we are delivered on our guidance. Our outlook for ‘22, which we presented end of January remains unchanged. We achieved a strong progress along all our pillars for our purposeful growth agenda since the launch 2 years ago. And on top, we continue our journey with clear priorities to advance to the next level. We have kicked off the merger of our Laundry & Home Care and Beauty Care business to create Henkel Consumer Brands. And with our new 2030 plus Sustainability Ambition Framework, we are really accelerating our efforts in sustainability. On our next call, which will take place on May 5th, in which we will not only present our Q1 statements, but also share more details on the progress and the specifics of the Henkel Consumer Brands, as indicated at the end of Jan. And with this, I really would like to thank you for joining us today. And I can only close with please take care, stay safe and also stay healthy and see you soon. Thank you. Bye-bye.