Henkel AG & Co. KGaA

Kasper Rorsted – CEO Carsten Knobel – CFO

Rosie Edwards – Goldman Sachs Gale Columbi – MainFirst James Targett – Berenberg Christian Faitz – Kepler Cheuvreux Hermine de Bentzmann – Raymond James Warren Ackerman – Societe Generale Guillaume Delmas – Nomura

Hello ladies and gentlemen, good morning from London and welcome to our conference call. First I would like to focus on the key developments of the third quarter 2014, then Carsten will provide you with the third quarter financials in greater details and after that I will close my presentation with a summary for the third quarter an our current outlook for 2014, and finally we’ll take your questions.

I’d like to begin by reminding everyone that the presentation, which contains the usual formal disclaimer to forward-looking statements within the meaning of relevant U.S. legislation, can be accessed via our website at Henkel.com\ir.

The presentation discussions are conducted subject to the disclaimer. We will not read the disclaimer but propose we take it as read into the records for the purpose of this call.

Now I like to speak about the key developments in the third quarter. We came out with an organic sales growth of 2.3%, increase the EBIT margin to 16.4% and hit an adjusted EPS growth of 6.4%.

Sales share of our emerging markets was 45%. Net working capital 5.6% and net financial position was €714 million.

The emerging market sales growth was driven by the BRIC countries that recorded double digit growth, so very strong contribution from the core countries in the emerging markets that Carsten will speak about that in greater detail. We did see solid organic sales growth across all business groups.

The emerging market remained strong and Western Europe was positive. Western Europe was predominantly driven by very strong Germany, the strongest growth in Germany since 2012.

We saw solid improvement in our adjusted EBIT margins supported by all business groups and we saw strong growth in our adjusted earnings per share. We also finalized acquisition of our Bergquist Company in the U.S.

which will strengthen our position in the electronics markets and address a new market segment that we’ve not been in so far with thermo management partner which is the heat that you feel when you do surfing on your smartphones. Bergquist Company is the leader in this on a global basis.

However, we also have onset of challenges. We continue to see headwinds from FX although at a lower rate, the currency impact was minus 2.2 in the third quarter versus 6.7 in the second.

So a slowdown, but we did continue to see a FX headwind. The European economy is impacted by the Russian-Ukraine crisis.

And I do want to just spend one minute on this because it was part of our core message in the second quarter call. We are seeing the Russian crisis take place outside Russia, particularly in the surrounding countries dealing with Russia.

And we’re also seeing the overall German economy slowing down because of this. We have not seen that for Henkel.

As I said, Henkel has had the strongest quarter in Germany since 2012 but the Russian crisis and the Ukrainian crisis is having impact of the overall European economy. We continue the ongoing tension in the Middle East despite very strong performance in our businesses.

We see intensified promotional and pricing pressure on the HPC side with sluggish consumer environments particularly in major countries. We are seeing negative organic sales growth in our HPC North American business and adhesives are slightly positive.

On the North American part, we’ll go into this in greater detail also. It is one part that we are completely determined to turnaround.

It’s a huge opportunity for us and we are very determined and we have an action plan and we know what we’re going to do. On the adhesive side, we are seeing very strong underlying performance.

I would spend time with you, many of you following the second quarter earnings. The only part we need to get a bit of a balance in is our lower end part of our business in our packaging and consumer goods in the adhesive where we need to find a better balance between price and volume.

Overall, the four other SPUs in the U.S. are having very strong growth rates.

On our laundry and homecare side, saw solid looking sales growth, laundry and homecare both solid. In the mature markets we’re seeing a different development.

We see Western European being solid and we see North America being negative, negative driven by two factors one is a very, very promotional intensive market across all sub elements of the North American side and also sub optimal execution from our side. I’ve discussed this on previous calls and so has Carsten, and I have said we have a strong action plan in place to address this.

The emerging markets ROCE remain very strong. The adjusted EBIT margin showing very strong increase and ROCE is below previous levels, levels of previous year.

This is mainly due to a lower reported EBIT to two extraordinary items which Carsten will speak about and also restructuring and acquisitions. This is the same impact for all three business groups, I will not repeat that common customer go into further details on the extraordinary items.

On laundry and homecare, we continue to strengthen our position when it comes to innovation, whether it’s in homecare with our Pril. We have a very strong position in insecticides in Korea, where we’re the market leader.

We have a solid position in the U.S. and with the acquisition of the Spotless Group we’ve now also created European footprint.

So we’re now taking the technology on both, sides of the business, the Henkel side and the acquired side to ensure that we’ll bring out strong renovation also in the insecticides business which is a very attractive business. And on Brazil, our flagship brand within laundry and homecare a €1.1 billion brand, we continue to bring out new innovation.

And in this context I just want to mention that the part where we’re now bringing out superior performance at 20 degrees, so very strong new innovation also when it comes to the parts and the Brazil brand. On the beauty care side, we are seeing positive OSG and solid margin improvements in the third quarter of 2014.

Retail is positive hair saloon continues to be negative. And again, we’re seeing mixed performance between – in the mature markets.

Western Europe, despite very difficult markets are positive, North America negative and I don’t want to repeat the comments I made for laundry but they’re very similar. In emerging markets we see strong performance driven by our Asian business, driven by China.

Returns adjusted EBIT margin showing solid increase and ROCE below levels at previous year as I said on previous goods acquisition restructuring an extraordinary items which Carsten will take you through. Also here, we continue to push innovation and to ensure that we could do the appropriate pricing.

Smooth & Shine is our African brand that we acquired more than a year ago and we’ve expanded the functionality and the performance of the product through our newly opened R&D center in South Africa, (inaudible) and we continue to push SIAS which has rolled out in almost 50 countries across the board. And on the adhesive side we saw solid OSG, margins on very high levels same as previous year in Q3, so solid OSG.

General industry and transportation metal was strong OSG. In the mature markets, we saw Western Europe being negative.

And let me just highlight the details here. Germany continues strong, Western Europe negative is driven by one single country, France.

And we are seeing the French industry significantly slowing down. North America being positive, four out of the five macro SPUs we have in our HPC business are showing strong growth in North America, as I said our packaging and consumer business, we need to find a better balance between price and volume.

It is clear that we’re not going to take business at any cost. And I think that we maybe have taken the price up a notch too high in the U.S.

and you’ve seen that on the volume side. We’ve worked on this.

This is much more a technical issue we’re dealing with has no strategic impact on our position in the U.S. The emerging markets, was OSG was strong growth in India but also continued double-digit growth in China.

As I said, adjusted EBIT margins, I mean high level similar to previous year and ROCE I’ve already spoken about from the previous charts where I went through the other business groups. On the innovation, we see innovation in a number of areas, whether it’s product innovation in the packaging, whether it’s supply innovation with suppliers driving new raw materials into our business or whether it’s internal management solutions, and this is the Bergquist.

We’re quite excited about the Bergquist Acquisition which is a company with more than 1,100 employees. Our leaders in Thermal management solutions based in Minneapolis in the U.S.

and it’s an extension to our electronics business which we’re very committed to continue to build, it’s a very attractive business not only short-term but also long-term with very attractive margins. So, a good extension to our ties business and right on the core what we’re trying to do to accompany deliver superior innovation and technology to our customers, and thereby also allowing superior margins to be created.

With this, I’d like to stop for the key developments, hand over to Carsten and I’ll come back later and give you the summary and the outlook. Carsten, please?

Thank you very much, Kasper. Good morning everyone.

Let’s have a look now at our details of our financials in quarter three and also some highlights on one to nine. Let’s start with our key KPIs and in that respect with our sales development.

Sales came in with €4.236 million and this showing an increase in nominal terms of 1.2% and let me put this into perspective that’s the first positive since Q2 2013 in nominal growth. Negative FX effects amounted for 2.2% significantly lower than in the first half year, nevertheless a headwind.

And organically we delivered a solid performance 2.3% organic net sales growth driven by all our three businesses. Our gross margin, adjusted gross margins came in with 47.4% so on a similar level than in Q2, 2014 being 80 basis points below the previous year quarter.

And I will comment on that a little bit later during the presentation. Adjusted EBIT margin, another increase of 30 basis points now to a level of 16.4% and even being better than the 16.1% of last year which is a quite high comparable.

And finally, as you have already heard it from Kasper, our adjusted EPS for the preferred shares reached €1.17, an increase of 6.4% so overall a solid performance and another quarter of profitable growth. Having a look now on our cash KPIs starting with our net working capital development in percentage of sales, we reached a good level of 5.6%.

This is an increase versus the prior year of 110 points but there are extraordinary impacts within that 110 basis points, roughly 80 basis points are coming from one-time topics, 40 basis points are related to negative currency effects and the other 40% I mentioned are related to acquisition impacts by integrating the professional hair-care businesses in beauty care in the U.S. Looking at the free cash flow, the free cash flow came in with €629 million on the level of the prior year.

And with this, we are very satisfied especially in the light of the fact that the cash flow of the first half year was below the prior year and we are now back delivering a strong cash flow. Finally, coming to our net financial position, we reached €740 million at the end of quarter three.

This is an increase of €255 million compared to the prior year’s quarter and this is on top to be seen of the increased dividend payout we had at the beginning of the year and the recent acquisitions I mentioned before. With that, let us go a little bit more into the details and starting with our sales development.

And as I said before, organically we have been driving quarter three by plus 2.3% contributing by all business units and the growth is combined of an increase of our price component of 70 basis points and volume of 160 basis points. As said before we still face headwinds when it comes to foreign exchange but this is definitely significantly lower than in the first half year.

And the headwind is mainly caused by depreciation of currency in the emerging markets being more precise especially the Russian ruble. M&A now, you also see based on the activities we are doing are going to impact now first time impact which is a little bit more significant 1.1 percentage point increase or impact by M&A.

And this is related to the acquisition we have closed regarding the E brand in Poland, the Pert brand in Latin America and as said before, the three U.S. here professional companies which have an impact of the 110 basis points I mentioned before.

And this has led us to €4.236 million in terms of nominal sales as pointed out before 1.2% increase. Looking now into the regional development starting with our emerging markets.

You heard it already by Kasper, we have seen a strong organic net sales growth in the emerging markets amounting to 6.7%. And you also see it in the chart from the absolute or nominal development, an increase also in nominal terms compared to the prior year.

The mature markets show a mixed picture also you got that already from Kasper’s statement. We have good developments in Western Europe and in Asia Pacific mature, which is over compensated by a negative development in North America especially by our HPC businesses which I will comment in a minute.

We said the emerging market sale share amounts to 45% and a slight increase to the prior quarters. Now having a look into the details of our regions and here starting first with Western Europe.

Western Europe accounted for a positive organic net sales growth of 0.2%, here we have seen a solid performance of Germany in all of our three business divisions and this over compensating the still slightly negative development in Southern Europe. Eastern Europe, a number in terms of organic net sales growth of 3.1% even slightly higher than what we reported in Q2 for Eastern Europe as organic net sales growth, maybe somewhat counter intuitively that this was strongly driven or by large extent driven by Russia, being precise, we have shown a double-digit organic net sales growth development in Russia.

And you heard it before, we have the countries surrounding that especially Ukraine with a negative organic net sales growth. Moving now to Africa Middle East, here we have seen double-digit growth 14.9% being precise.

And North America now with minus 3.7%, the 3.7% is related to our consumer business laundry and homecare and beauty care who, have been both impacted by an intense level of competition and pricing and as already heard also by a not optimal, always optimal way of execution so both businesses being negative in North America in quarter three. Our adhesives business showed positive organic net sales growth, the good underlying momentum which you have heard was partly understated by our portfolio optimization, which is due to deemphasizing of some of our commoditized businesses in the areas of packaging and consumer goods.

Moving now to Latin America, Latin America showing a positive growth of 1.5%, the strong development in Mexico was over compensated by the weak development in Brazil, which related then to the 1.5% organic growth. In closing, looking at Asia Pacific, this is a very good development, 9.7% or more or less double-digit growth.

This is particularly driven by a very good development in China and in India, precise double-digit growth rates in both countries for the company. So, overall we have polarized this situation if you look on our regional performance especially our BRIC development with double digit growth and having double digits in China, in Russia and in India in this respect.

With that, let now move to our three business divisions, starting with our laundry and homecare business. Laundry and homecare business showed an organic net sales growth of 3.5% organically with the price component of 50 basis points and the volume component of 300 basis points.

Both businesses laundry and home care showed a solid development in organic net sales growth. Looking into the regions we have seen in laundry and homecare in the emerging markets, another quarter of very strong growth.

Being more precise, we have seen Eastern Europe and Latin America with solid contributions but Africa, Middle East and Asia both with double-digit developments. The mature markets slightly below the previous year levels here we have seen a good development in Western Europe, particularly driven by our German business which could over-compensate certain developments in Southern Europe.

And in total Western Europe slightly, below because the over-compensating effect by the negative North American development here specially to fierce promotional environment in declining markets. Looking at the adjusted EBIT margin, an excellent, a very good development another quarter of increase, here 90 basis points now to a level of 16.8% in terms of adjusted EBIT margin and also looking at our net working capital, a very strong number, minus 5.1% in quarter three of this year, slightly below the previous year but as I said, excellent development overall.

Moving now to our beauty care division, here the 35th quarter of consecutive profitable growth. Our organic net sales growth came in at 0.8% with the volume part of under 10 basis points, partly impacted by a negative price component with 30 basis points.

Our retail business showed a positive organic net sales growth, as our long business still characterized by a market decline in the mature markets. And as you know the mature markets account in our sales for the majority of the sales.

And therefore, in total sales and professional slightly below the year before. Looking at the regions, also here a very positive, a very strong development in the emerging markets, we have the double-digit contribution from the emerging part of Asia, and strong growth in Africa Middle East and also here to point out China, especially with a clear double-digit growth rate in the quarter.

Mature markets, similar situation than in laundry and homecare, we have a good development in Western Europe being positive but also here mature Asia being positive partly or partly compensated by the development in North America, so overall mature markets slightly below the previous year based on the negative development in North America. Coming to the bottom-line of beauty care, again an increase in the adjusted EBIT margin, 30 basis points now to a level of 15.2%.

Looking at net working capital, the low number with 4.8% also comparing to other companies working in this sector, nevertheless, an increase of 290 basis points compared to prior year. One third of that increase is related to the part of integrating the recent acquisitions in the professional hair companies in the U.S.

Moving now to our third division coming to adhesive technology. A solid development related to organic net sales growth of 2.7% increase, this 2.7% increase was related to a balanced growth in price and volume precise 140 basis points increase in volumes, 130 basis points in price.

And also the positive news here is, we see an accelerating part in the price component. In Q1, we had 80 basis points, in Q2, we had 100 basis points, now in Q3 we’re seeing 130 basis points as pointed out before in the price component.

All business divisions in adhesives contributing to that especially with a strong performance in general industry and transport metal, we are back also with electronics, with solid organic net sales growth, packaging also solid and consumer adhesives in total was positive. Looking into the emerging market and mature market situation, also here in the emerging markets, an organic sales growth development characterized by a strong development here China, India and Russia showing double digit contribution.

Mature markets differently than in the other two divisions we have seen in North America a slight positive situation. I’ve already pointed it out, and also Kasper specially impacted also here or higher growth not seen because of portfolio optimization in the areas of packaging and consumer.

Western Europe, being mixed in a way that we have seen a good development in Germany and a negative in part of Southern Europe being precise in France. Adjusted EBIT margin came in on the prior level but if you see the absolute number, 17.8% high comparables in that area and 17.8% in absolute terms a very good number.

Also, this is related to net working capital with 12.4% we’re seeing a strong level and a strong performance when it comes to net working capital in adhesive. With that, I would like to move to our income statement adjusted – adjusted income statement and here starting from our sales to the gross profit lines.

Pointed out before, €4.236 million of net sales showing in 1.2% nominal increase. If you see the gross profit came in with €2.07 billion which is minus 0.5% compared to the comparable quarter of last year, impacted by two topics, moderate to higher prices for direct materials and higher promotional pressure in our consumer goods business.

This led to the gross margin in percent of sales as pointed out at the beginning of 47.4%, 80 basis points below the prior year quarter. And this 80 basis points are characterized by 60 basis points which I pointed out to the direct material development and 20 basis points to the impact of higher promotional pressure for our consumer goods businesses.

Further in our income statement adjustments now from gross profit to EBIT, our marketing, selling and distribution expenses decreased in percentage of sales compared to the prior year quarter and this is mainly due to significant efficiency gains we realized in selling and distribution. The marketing expenses were on the prior year level, and even after adjustment of the foreign exchange rates, we have even seen a slight increase also in our absolute marketing spend.

R&D expenses were on the level of Q3 2013 with 2.4% and our admin expenses improved by 30 basis points so they decreased to a level of 4.3% reflecting our strong cost discipline during this quarter. Overall with that, our adjusted EBIT came in with €693 million reflecting what I pointed out before an adjusted EBIT margin of 16.4% and this shows an improvement of 30 basis points compared to Q3 2013.

Now, moving to our BRIC from reported EBIT to adjusted EBIT for the quarter. We have more or less no one-time gains to report on this quarter but more or less no because zero is no.

Moving now to our one-time charges. Here we have two topics to be mentioned.

First, some charges related to the setup of our now fully integrated global supply chain company which also went live. And secondly we have been negatively impacted by expenses of €34 for provisions related to a current proceeding by an anti-trust authority in Europe, in which several manufacturers of consumer goods companies are enrolled.

The proceeding is related to violations which are more or less 10 years ago in being precise between 2003 and 2006. Moving to our restructuring charges, here we accounted €47 million and this is considerably higher than in the prior year quarter, reflecting our efforts to continuously adapt our structures to the changes as the market conditions we face and what we see.

So, both the higher one-time charges and the higher restructuring charges had a negative impact on our ROCE, you had Kasper talking about that at the beginning of the presentation, especially the one-time effects when it comes to the anti-trust are only related to our consumer businesses. With that, having a look on our net financial position.

I pointed it out at the beginning €740 million, an increase of €255 million compared to the comparable quarter of last year, and let me emphasize a little bit on how we spend the cash. Since the beginning of the year, we paid for acquisitions roughly €350 million, secondly, we have paid higher dividends in total €543 million, €100 million more than in the year before.

And lastly, we also spend €351 million for investments in PPE and intangible assets this is roughly €60 million more than in the period of the comparable period of the last year. On top, please note that in October we have closed two acquisitions, the Spotless one and also the Bergquist one, which will have a remaining effect on cash of €1.350 billion which we will record in the quarter four of 2014.

And still with that we have continuing very solid balance sheet which showed financial headroom of roughly €3.5 billion while we’re speaking. With that, before I hand over to Kasper, let me roughly summarize having a look on our first nine months of the year.

So, organic net sales growth are at nine months with 3.3% organic net sales growth, all three business divisions supporting that. Laundry at the level of 4.6%, beauty 2.0%, adhesives 3.5%, our adjusted EBIT margin shows a strong development of 60 basis points increased to a level of 16.1% after nine months.

And our adjusted EPS for the preferred shares now shows after nine months development of plus 7.7%. So, overall a solid performance within the challenges we are facing especially in the environment of the markets.

With this, I would like to hand back to Kasper.

Thank you very much, Carsten. I’ll now give you the summary and the outlook and then we’ll go over to the Q&A.

As we’ve said, we saw a solid organic sales growth in all business group contributed. Emerging markets with strong OSG as we said, BRIC we continued double-digit growth.

China we see no slowdown, so our globalization with a company of 45% of our business in the emerging markets does continue to help drive the top-line for Henkel. The mature markets had a mixed picture.

Western Europe, positive driven by a very strong Germany, North America negative with a positive adhesive business and a strong performance in four out of the five SPUs in adhesive business in the U.S. and a negative HPC business in the U.S.

One element that we’ve highlighted on previous calls, and one element that has the number one priority in the company to turn this situation around. Strong increase in the adjusted EBIT margin to 6.4% which makes us be in the guidance for the first nine months of the year, strong growth in adjusted EPS, excuse me, I meant strong growth in adjusted EPS.

And we have invested in compelling acquisitions. We have acquired five companies so far committed spending of €1.7 billion so we not only continue to invest in the organic part of our business but also strengthen the inner organic part of our business.

Let me give you two examples. We have with the acquisitions we’ve done in the professional hair-care business in the U.S.

we have now created a number three position in the U.S., our single largest market in the world for professional hair-care is now U.S. that position was non-existent four years ago.

With the acquisition of Bergquist, we’ve expanded our product portfolio in the electronics part of the adhesive business which is an extremely interesting part of the business. Bergquist is the leader in thermal management.

And with the acquisition of the Spotless Group, we’ve taken other things on synthesized business from a purely Korea, North American business also into Europe which is also a very strong business with the brands they have, all are number one and number two positions and much more made in excise business an international business. So, we have strengthened all our three business groups within the core of our competence.

When we look upon the overall business environment, we expect a continued challenged business environment with tensions impacting the macro-environment. So a sluggish GDP environment that has not changed significantly in the last couple of months.

We see sluggish consumer behavior with persisting promotional pressure and that will continue to lead on – continues to lead to higher promotional activity. We are seeing fading FX headwinds in the fourth quarter at a much lower rate, so we did see the high-point in the middle of the year.

What do we do, with a focused and balanced investment to force the organic and inorganic growth, we’ve seen that in our CapEx spend and as Carsten also highlighted investments, we’re doing inorganically in our business. We continue to except value of things to continuous portfolio optimization meaning trying to find the right balance between margin expansion and volume expansion.

We need both, it’s not one or the other and it’s a continuous challenge to make sure that we get the right balance. We have so far been able to do that across the board, one year we believe we met an optimal which I spoke about to many of you throughout the individual meetings we had following the second quarter given the right balance in our adhesive business around our packaging part.

That has negatively impacted the top-line. This is a purely tactical optimization there is no strategic impact on this.

And we will continue to have a very strong focus on cost and that’s why as Carsten said, we’ve accelerated the restructuring to ensure that we have a continuous competitive cost base. When we look upon the guidance, we will continue to expect growth between 3% and 5%.

For the business groups, we believed all three would be in the 3% to 5% with the current outlook we believe the laundry and homecare and adhesives will be in the 3% to 5% range and with the current outlook, beauty care would be around 2%. The emerging markets sales share will have a slight increase.

We’re taking the adjusted EBIT margin up to just under 16% from the previous guidance of 15.5%. And on the adjusted EPS growth, which we said before, we expect high single-digit.

As I said following the second quarter, we expect high single-digit which is defined within – between 7% and 9%, closer to 7%. And that is what you’re seeing.

We expect a similar EPS growth in the fourth quarter as you’ve seen in the third quarter. So, we will deliver according to the guidance that we have given this year.

At the same time, as I said on previous calls, we will continue to adapt our structures to the market. And you can see this on the following chart.

Our restructuring chart is which we recently guided at prior year level which was 159. We now expect it to be around 500, no, excuse me 200.

Price increase of total direct material remain unchanged and CapEx we guided between €500 million and €550 million, it would be probably more around the €500 million and this is simply just a pure timing impact. We are heavily investing our businesses and we’re building the plans and the infrastructure as swiftly as we can so that €500 million versus €550 million, I would not put a lot of emphasis on, it’s a pure timing impact that you’re seeing here.

Overall, we’re fully committed to execute our strategy and deliver our 2016 targets of 2010 10, where the primary KPI continues to be the 10% EPS CAGR, which we completely committed to deliver upon over the next set of years, to make sure that we hit our 2016 targets. With this, let me just state about the upcoming events, March 4, we have our full-year earnings, April we have AGM, May we have Q1, June, we have the Investor and Analyst Day which will this year focused on – next year focused on laundry and homecare and we’ll take a patient outlook, August 12, Q2 and November 11 a year from now we have the third quarter earnings of 2015.

Now, let me stop at this point stop at this stage. And we’ll do the question-and-answer session.

So, so far thank you very much. And Q&A please.

Yes, good morning. Just two questions from me.

Firstly, just on recent movements in the oil price, you’ve kind of talked about your outlook in ‘14 for direct materials. But next year you should have a bit of a tailwind from more raw materials.

But would you expect that to be a pass-back to kind of customers within adhesives and consumers in HPC? What is the outlook for pricing next year?

And then secondly, you’ve also given some outgoing FX particularly for your top-line. Can you give us any clues in to how FX has impacted your kind of margins this year?

And how that has trended to going through sequential quarters?

Starting with your question regarding the oil price. The oil price had a minor impact in Q3.

The major decrease only happened in October and therefore based on our delay of four to six months with some three things as we pointed out before came – have come – when it comes to the P&L, this will then imply as only six months from now. But for sure, as always and this not depending on the oil price when prices change, this is also something which we then also transfer to our customers and consumers.

That’s good at the impact of the FX on margin. Our guidance flex, the assumptions regarding the economic environment including FX developments.

So based on these, we gave the guidance on a high single-digit EPS for ‘14 which we confirmed as you have heard from Kasper today. In Q3, the net impact as you know is or was at 2.2%.

The gross profit EBIT and EPS were roughly on the same level of impact.

Let me just add one comment when it comes to FX. We now have five or six quarters of negative FX.

We have not at any point of time used this an excuse on delivery of our numbers. So that means that we have not in any call explained and that we’re mixing our numbers, or not mixing our numbers because of FX and we’ve hit our numbers.

So the excuse we didn’t use when it was against us, we will not use when it is in front of us. We’ve not spoken about adjusted or like-for-like.

We’ve spoken about what we report. That was now, if you take the total to €1.5 billion has been against us on top-line, you can do whatever assumptions you will on €1.5 billion to EBIT.

So, that we have had against us, we’ve not used that as an excuse, we will not use it as an excuse moving forward whether it’s headwind or tailwind.

Okay, thank you. And so, just following up on the first question, I mean, if I look over the past sort of five to seven years, pricing have not ever been negative on adhesive.

Is there a reason to think that would be different next year?

Pricing and material next year when we do the year.

Okay. All right, thank you.

Yes, good morning gentlemen. My first question is on the North America negative OSG in Q3.

So, I think your comments were pretty clear that you’re addressing the issue and it’s your first priority. I would just like to get better understanding of when you would expect the timing of the recovery in the U.S.

some of the competitors are already starting to talk about slightly better market development in the U.S. So I was just wondering if that was the case for you, which will justify a better promotional environment on improving less promotional environment in the U.S.

Second question is more about – for the mid-term, just wondering if you could update us on the progress regarding the central hub for purchasing logistics to be set up in the Netherlands. Would you expect significant savings from that centralization and could you really give us a rough idea of what could be the savings impact after 2016?

And last question on M&A, you mentioned in the call a headroom of €3.5 billion left at the acquisitions. Is there anything in particular you’re looking at the moment from pressing to be today, you seem to be very bullish on U.S.

industrials, is that – do you think there could be room for other adhesive acquisitions in the U.S.? Thank you.

I will do number one and number three, and Carsten will do number two. Acquisitions, no comment, we usually don’t comment on acquisitions.

On the U.S., I think you have to separate the market in two. One is, you continue of an extremely sluggish and some promotional revenue U.S.

especially consumer goods market. We have not seen any change in there.

In three out of four weeks in U.S. in October, and did more stores than care to do, I’ve not seen any change in that.

So, we have a different out-view – view on the overall market. So, we do not expect that the market will significantly change.

I think you can see though also on the reported numbers from the retailers. But it’s our opinion and there is no throughput, I’m just saying that it’s the way we see the market.

What we do, can control is our own performance and as I said, we are completely committed, I can tell you, immense amount of focus and it’s the single highest priority within the means to change that around. In market, I don’t think we’ve changed in the short term.

I’m sure that we will change. And it will take us time but we’ll change it around.

Related to, regarding your question to our global supply chain. Through that we are having a wonderful major project which is related to that cross-divisional fully integrated global supply chain approach of the division including our purchasing activities which you said rightly that we have just started that with creating a hub in the Netherlands.

And this is something which is a significant project for the future, so, guiding on savings because also our company will exist beyond 2015 and majority of the savings to be expected after 2016.

Thanks.

Good morning, gentlemen. Couple of questions from me.

Firstly, just on FX and margins again. I’m just looking at what’s going on with the Russian Ruble.

Could you just talk about how we should look at the impact on margins in Eastern Europe from the ruble in terms of how your currencies are matched there? And then secondly, just in China, I mean, you hopefully posted very good numbers in China in the third quarter, some competitors are talking about de-stocking in the market.

I just wondered if you are seeing any signs of that. Thank you.

Let me start with the China part and Carsten will do the FX part. We have not seen the de-stocking only occurs if you re-stock so to speak.

And we have not seen our growth in China significantly slow down. And if you look upon the overall outlook that is coming for China, just speaking about the 7% to 7.4% overall GDP growth, that is frankly unchanged in the last three years.

We are forcing different markets moving differently but for our business, we’ve seen a very consistent double-digit growth in China to continue to be bullish around China in the long-term. This is one part which is consistent for all the emerging markets in high growth, also deliver us higher volatility.

But for China, our experience has been in the past number of years that we’ve seen a lower level of volatility in China than we’ve seen in any of the other BRIC countries in the last five to seven years. So, as I said, we continue to be bullish when it comes to China, whether it’s in fast moving consumer good or on the industrial side.

Coming again back to FX, and partly I have to repeat what I already said before. We had an impact in Q3 of 2.2% FX when it comes to translational impact and this is as I pointed it out, mainly due to the Russian ruble that has the biggest impact.

But for sure in Eastern Europe in general, but for sure also related especially to Russia and to the Ukraine, we have an over proportionately effect of negative transactional currency effect which is impacting for sure the whole production gross margin set up but which I will not quantify.

Okay. Thank you very much.

Welcome.

Yes, thanks for taking my question. I have one question if I may, all others have been answered.

What is your current view on key end markets in adhesives you achieved building and construction end market and automotive end market also going into 2015? Do you see any weaknesses there potentially coming up?

Thanks.

Of course what you’re asking is a very broad question. Overall, automotive has been fairly resilient but we are seeing a slight slowdown in automotive.

On the construction market, you got to go region by region. Europe will remain very similar to what you’re seeing in the GDP growth, it’s pretty much flat but we are seeing an uptick in the U.S.

So, on the overall outlook, we are seeing an industrial production and that’s taking that approximately 3% for the coming year. So, overall industrial, we actually quite, it should be solid but durable remains I would say challenged.

And I think that until you have a solution on the Russian situation you have an impact on European economy, so you’re not going to expect a lot of GDP growth or industrial growth coming out of Europe. And a predominant driver of that is the Russian situation because most countries in Europe have a substantial bigger business with Russia than the Americas would have.

So Americas should be industrial wise okay next year?

Very helpful thanks.

Hi, good morning I have two questions please. The first one on the beauty care business, can you maybe talk about your market share development in major market and in Asia?

And the second question is again on North America, can you maybe explain what’s happening in your way of execution and what is your action plan and when do you expect this action plan to positively impact the performance of the region? Thank you.

On the U.S. of course I would not elaborate on action plan, because I think that would mean that we would say our competitors what we’re trying to do.

But I think in short, what you’ve seen in the U.S. you’ve seen a dramatic increase in promotional activity to a level which is simply not sustainable.

And I think that we have taken that also to a level which has not been good for us as a company. But one as I said is the overall market that’s been growing in that direction, the overall and we have over-done it.

On the market share side, we’ve actually seen a fairly positive development when it comes to market share development, when it comes to adhesive business. We have seen strong increase in APAC, we’ve seen North America, on the beauty care side, which I’m speaking, we’re seeing strong increase in APAC driven by China, China is really a very strong sales force.

North America, which is predominantly on the body care side, has remained on previous level and the same in Europe so we’ve not seen any decrease in our market share. What you are seeing is – you’re seeing a volume that actually quite sharp but you’re seeing future promotional activity, you’re seeing the less on revenue line.

So we have no, I would say a chance on the market share side, this is simply getting more value out of the products that we’re selling at this stage. And trying to move, certainly we get a better price development.

But that has the negative impact by the promotional activity. So market share is not the issue at this stage.

Okay, thank you. Just a follow-up on your tax rate expectation for the full-year please?

Tax rate.

We do not guide for our tax-rate but we have clearly pointed out during our strategy calls, during the years that we assume or that you can calculate what the tax rate roughly of 25%, the tax rate for the first nine months and also in the quarter three of this year was 24%.

Thank you.

Good morning gentlemen. Its Warren Ackerman here at Soc Gen.

Two questions from me also. The first one is on Germany, and pretty amazing performance from Germany despite the macro-slowing as you commented.

I was just wondering whether you could give us an idea of what the growth rate in Germany is, if you don’t want to do it by quarter, maybe year-to-date or however you want to quantify that. And it sounds like it’s just – it’s not the market, it’s more share improvements.

So if you could maybe go through what your market share is doing in your key categories in Germany. And looking forward to Q4, would you expect Germany to slowdown as per the commentary you made about exports into Russia into Q4.

So, first question around Germany. And then second, for Carsten, I appreciate you don’t want to talk too much about 2015 guidance at this stage.

But obviously from a modeling point of view, looking our numbers, it looks like there is maybe quite a big EPS boost next year from currency on the weak euro. But once we all start to consolidate, all of these kind of smaller acquisitions together it started to become pretty material.

I’m just wondering whether you’re able to at this stage give us some help on what the kind of aggregate of those two points might be on currency and the consolidation of how creative these deals in aggregate will be. Thank you.

I do want to mention the currency part one more time. Because we’ve been very consistent in the way we communicated.

We’ve been one of the companies that have chosen not to adjust for currency, and not to adjust for like-for-like. So, the €1.5 billion that we lost some currency, we didn’t spend, we didn’t go back and they are EPS is as we said, this quarter €6.4 billion adjusted for currency is whatever it is.

We will not do that also for currency moving forward. We will give it more enter looking forward, but when you look upon it right now, like-for-like, we’re still in negative currency charge.

So I just want to mention, we said of speaking about potential headwinds that might come and we see it in our tailwinds and we’re still including headwinds. You didn’t hear Carsten speak about what is the adjusted EPS for third quarter even though we had 2.2% negative currency.

So that will not come, we will go back and speak about and add up the impact of acquisitions, but what we did say in our original guidance was that we don’t adjust on targets for small to medium sized acquisitions. We will give you the impact but we will not adjust for it.

We are from a model standpoint and I want to be very clear on this, completely committed to 10% EPS growth for 2016, that is our primary KPI and that is what we’re striving to do. And we’ll continue to do so.

So, that is one, guidance that we can give you even though we’re not in 2015.

Okay.

And when it comes to Germany, we are seeing a slowdown of the German economy, there is no doubt about that when you’re looking for any overall numbers. What we are seeing is we’re seeing predominant market share growth in our different categories most of our business are non-export oriented.

So our consumer goods business, have up recent, non-export oriented. Of course, some of the sales into the car industry is export but we are really a revenue in the country where the country is.

So, the slowdown of the German export will have to us a lesser impact on lesser in terms of the common affecters. So, in the primary business growth we’re seeing which we continue to see strong in Germany.

For us, it’s market share driven.

Could you be able to be more specific Kasper in terms of exactly where that market share is, is it more in the laundry side or the beauty side?

All three.

All three.

We’re building market share in all three areas. So we’re very happy with our German business at this stage.

Okay, okay thank you.

Thank you.

Good morning. A couple of questions from me, firstly on your beauty care business, I mean, clearly the professional hair salon channel has been attracted to your organic sales growth for quite some time.

Now despite that you acquired three brands in the U.S. in June, so can you confirm that these three brands are actually growing?

And I guess more importantly do you expect a return to positive growth in the professional channel soon as you expand the distribution of this three brands and also wrote them out internationally? And then my second question on Adhesives, I mean, margins were high in the quarter, but flat year-over-year which to me is slightly surprising given that pricing was sequentially stronger, mix must have been positive with a strong performance in general industries slightly weaker on a relative basis in packaging.

So, what did offset that, is it more raw material headwinds or a bit less savings in the quarter? Thank you.

I would do the first one Carsten will do the second one. Yes, we are growing the professional hair care business in the U.S.

And I want to stress, we really do look upon things in the long-term. We think despite the negative development in the professional hair care market that we’ve seen over the last couple of years, it is and remains a very attractive business for us.

It’s a high margin business, it’s a business where a lot of innovation takes place, where you take innovation from the professional hair care market and move it into retail. So it’s an important part to be for trends getting to – to get new products in and then get them into the market.

And with the acquisitions that we’ve done in the U.S. it’s from a nowhere position we’re now number three in the U.S.

so we expanded our footprint in our professional hair care business. It also shows the commitment that we have in one of our core categories which is hair-care and particularly on the coloration where we have great market share development.

When the professional hair-care markets will turnaround we simply don’t know. It is correlated to consumer spend and overall to GDP.

I expect the professional hair care market will turnaround quicker in the U.S. and in Asia than in Europe because that’s where the GDP is going.

In Europe we do foresee a struggling economy also moving forward, or a flat economy moving forward and that has impact on consumer spend. But frankly we can’t go in and out of categories depending on how it goes.

We think it continues to be a very attractive area for us. And it’s a great extension to our retail business where we move products back with imports from a technology standpoint.

Carsten, do you want to speak a bit about the adhesive business? We’re by the way 17.8% margin is still a very solid margin.

Thank you, Kasper. I wanted to start with that.

So, as Kasper pointed it out, the 17.8% is a margin which we have never seen in adhesives before. And which is also quite random to see – we have to see in the industry at all, so therefore we are very satisfied with the 17.8% is by the fact that it is only in apostrophes on the prior year level.

The impact especially in adhesives in the quarter is two-fold. On the one side, it has an impact on or direct materials as I pointed out before.

You may remember I said, 60 basis points out of the 80 basis points for the total company is related to direct materials. This is also especially related to adhesives.

Here we have even a three-digit number, 100 basis points impact, negative impact based on direct materials. And for sure also pointed out, we said that in North America, in our packaging business, we have the topic that we are changing the portfolio mix more to commoditize or lower the commoditized part.

But in general the packaging business has quite high margin and based on these mix effect, this has also a slight negative impact on the gross margin. So, in total that’s more or less the situation.

Nevertheless we delivered as I said before the 17.8% which is on the prior year level.

Thank you very much.

We’re getting to the close, and I just want to remark one thing. Our primary KPI’s EPS, and we want to make sure we get the optimal balance between marketing expansion and top-line expansion.

In the previous year’s talking of primary guidance with margin, I’m not, and you saw we’re also taking the margin guidance for this year up. But our primary KPI is EPS because we believe it delivers the best proximity to what shareholders are looking for.

So that is what we’re looking at, 10% EPS growth over the period 2012-’16. So, ladies and gentlemen thank you very much for participating in our conference call today.

With a tough market environment characterized by persistent promotional pressure, sluggish consumer behavior and even though fading but still negative FX headwinds. We have delivered a quarter of solid performance.

Looking ahead, the challenges in the market environment, seems to remain. However we are confident that through our innovative strength and strong brands coupled with our continuous adoptions of our structures to the market and by further driving operational excellence, we’ll continue to outperform in 2015, ‘14, and on and beyond.

I wish you all the best and I look forward to talking to many of you this afternoon at the UBS European conference at 3:00 a.m. on March 4, 2015 we’ll release our full Q4 and full-year earnings release in the usual setting in our conference call.

Before closing I’d like to announce the date for our Investor and Analyst Day, 2015 hosted by laundry and homecare which will take place on June 1, 2015 in (inaudible). More details will follow at a later stage.

But I can always say that we’re hoping to see many of there as possible. Thank you very much.

And thank you for dialing in today. Bye.