Dynamic Growth for Henkel CEE * Henkel Expands Market

Leadership Position in Central and Eastern Europe VIENNA, Aug 31 (PROTEXT) - Henkel Central Eastern Europe withheadquarters in Vienna has further expanded its market leadershipposition in Central and Eastern Europe in allbusiness segments. The company posted revenues of EUR 367.5million in the first half of 2001. Henkel CEE based in Vienna, one of the largest manufacturersof brand-name products in Central and Eastern Europe, furtherstrengthened its market leadership position in the region. Thecompany achieved revenues of EUR 367.5 in the first six months of2001, an increase of 8.8 per cent compared to EUR 337.5 lastyear. According to Friedrich Stara, President of Henkel CEE,total revenues in the year 2001 are expected to surpass EUR 700million for the first time.

The success story of Henkel in Central and Eastern Europedates back to 1984, which marks the initial launch of exports tothe region. Since the first foreign CEE subsidiary wasestablished in Hungary in 1987, Henkel has set up an additional20 joint ventures in Central and Eastern Europe, and has investedmore than EUR 174 million to date to expand its presence in theemerging CEE markets. Today, Henkel CEE operates 12 subsidiaries with a total of 14production facilities, with responsibility for 15 countries and185 million inhabitants. Henkel does business in Austria, Bosnia-Herzegovina, Bulgaria, Croatia, Czech Republic, Estonia, Hungary,Latvia, Lithuania, Poland, Romania, Slovakia, Slovenia, Ukraineand Yugoslavia. 3,600 of Henkel CEE's 4,400 employees work inCentral and Eastern Europe, which now accounts forthree-quarters of the company's total revenues. Despite intensive international competition, the company hassuccessfully positioned itself in Central and Eastern Europe. Inthe year 2000, total revenues were EUR 690 million, close to asix-fold increase compared to revenues of EUR 122 million in1989. Henkel CEE is number one in adhesives and hair care productsin the CEE region, the top provider of surface technologies and astrong number two in the market segment for detergents andhousehold cleansers. Its most well-known brands include Persil,Silan, Loctite, Pattex, Schwarzkopf, Poly and Fa. Successful StrategyThe company's extensive know-how and experience are optimallyapplied within the framework of a regional operational plan. Thisputs Henkel closer to the business pulse of its CEE targetmarkets and makes the company more flexible in responding tocomplex issues and trends. The formula for success ispositioning Henkel as a partner to Central and Eastern Europe,providing products of the highest quality tailored to individualneeds. Ongoing Positive But Cautious Growth PerspectivesThe year 2000 went well for the markets of Central and EasternEurope. This was due, above all, to positive external factorsinfluencing growth. All CEE countries posted economic growth,several of which did so in an impressive manner. The whole regiontook a big step forward in catching up economically.

However, since the beginning of 2001, world market conditionshave been characterised by a significant cyclical downturn. "Aslowdown in the EU, which absorbs the lion's share of exportsfrom Central and Eastern Europe, would have a major impact onthese markets. Weak economic growth in the EU could alsonegatively influence the CEE candidates for EU membership,"Henkel President Stara says.

Growth in the gross national products of the CEE marketscontinued into the first few months of 2001, whereas a slowdownin some countries, for example Poland, can be attributed tointernal factors such as high interest rates and currencyrevaluation. Inflation in most CEE countries is undercontrol and inflation rates are declining. A rise in unemploymentcontinues to remain a major challenge, particularly in Poland andin Slovakia. This is complemented by a deterioration in thebalance of trade and current account balance due to higherconsumer demand in these countries, which has led toan increase in imports. The financing of the current accountdeficits, which make up 5 per cent of gross national product inthe case of most CEE candidates for EU membership, is ensured forthe time being. However, this could pose a problem in the nexttwo to three years, following the end of large-scaleprivatisations. Henkel CEE: Market OverviewAustriaHenkel Austria is one of the largest companies within Henkel CEEin terms of both size and annual revenues. With one productionfacility and 770 employees, Henkel Austria achieved revenues ofEUR 167 million in the year 2000. The company is Austrian marketleader for detergents and household cleansers, hair careproducts, adhesives and surface technologies. PolandHenkel Polska with six production facilities and 1135 employeesposted revenues of EUR 196 million in 2000, making it the largestcompany within Henkel CEE for the first time instead of HenkelAustria. Henkel Polska is the country's market leader for haircare products, and is strongly positioned in the market segmentsfor detergents, toiletries, adhesives and surface technologies. HungaryHenkel Magyarország based in Budapest operates four productionfacilities. The company employs a work force of 800, postingannual revenues of EUR 102 million last year. HenkelMagyarország is number one in the country for detergents andhousehold cleansers, hair care and body care products, adhesivesand surface technologies. Czech RepublicHenkel CR with 280 employees achieved EUR 73 million in revenuesin 2000, and is positioned as the number one provider in thecountry for adhesives, hair care products and toiletries as wellas for surface technologies. Henkel CR ranks a close second inthe market segment for detergents and household cleansers. SlovakiaHenkel Slovensko was established in 1991. With one manufacturingfacility and 240 employees, the company had revenues of EUR 33million last year. Henkel Slovensko is market leader foradhesives, hair care products and surface technologies, and isranked a close second in detergents and household cleansers. SloveniaHenkel Slovenija with headquarters in Maribor is Henkel's fifthlargest European factory for cosmetics and body care products.With 660 employees, the company had revenues of EUR 36 million inthe year 2000, serving as the nation's top producer of detergentsand household cleansers, hair care and body care products andsurface technologies. RomaniaHenkel Romania, established in 1994, markets detergents andhousehold cleansers, cosmetics, body care products and adhesiveson the Romanian market. 285 employees achieved revenues of EUR 39million in the year 2000. Following the setting up of the jointventure Henkel Bautechnik in 1999, the first Henkel manufacturingplant for structural engineering products in Romania commencedproduction in the year 2000. CroatiaHenkel Croatia in Zagreb is a sales company which marketsdetergents and household cleansers, cosmetics, toiletries andadhesives. With a work force of 53, the company achieved revenuesof EUR 17 million last year. Schwarzkopf & Henkel is theundisputed market leader in the cosmetics sector. The brands Fa,Poly Color, Taft and Schauma dominate the Croatian market. Baltic StatesHenkel is represented in all three Baltic States -- Estonia,Latvia and Lithuania. 125 employees achieved revenues of EUR 15million in these three markets last year. UkraineThe latest addition to Henkel CEE is the Ukraine. Henkel isrepresented in the country with two companies: Henkel Uzhgorod,which was established at the end of 1999, and Henkel Bautechnik,a joint venture founded in 1998 with a production plant in Kievwhich began operating in 1999. Henkel Uzhgorod producesdetergents on a compound basis, along with scouring agents andshoe polish. Henkel expects revenues in the Ukraine to reach alevel of EUR 14 million in 2001.Contact:Henkel Central Eastern EuropeCorporate CommunicationsSabine SchauerPhone: +43.1.71104-2253Fax: +43.1.71104-2650E-mail: sabine.schauer@henkel.athttp://www.hcee.com

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