ANNUAL REPORT 2021 Henkel Annual Report 2021 1 The Company Consolidated financial statements Contents 2 Fiscal 2021 at a glance 176 Consolidated statement of financial position 6 What drives us 178 Consolidated statement of income 7 Foreword 179 Consolidated statement of comprehensive income 15 Report of the Supervisory Board 180 Consolidated statement of changes in equity 26 Our Management Board 181 Consolidated statement of cash flows 28 Shaping our future 183 Notes to the consolidated financial statements 299 Subsequent events 29 Shares and bonds 300 Recommendation for the approval of the annual financial statements and the appropriation of the Corporate governance profit of Henkel AG & Co. KGaA 39 Takeover-relevant information 301 Corporate bodies of Henkel AG & Co. KGaA 44 Corporate governance statement Further information Combined management report 306 Independent Auditor’s Report 72 Fundamental principles of the Group 317 Responsibility statement 86 Economic report 318 Quarterly breakdown of sales 142 Henkel AG & Co. KGaA 319 Multi-year summary (condensed version according to the German 321 Glossary Commercial Code [HGB]) 325 Credits 149 Risks and opportunities report 326 Contacts 170 Forecast 326 Financial calendar Note: All individual figures in this report have been commercially rounded. Addition may result in deviations from the totals indicated. Henkel Annual Report 2021 2 Organic The Company Fiscal 2021 at a glance sales growth Shares and bonds 7.8 Corporate governance % Key financials Combined management report +/- Consolidated financial statements in million euros 2017 2018 2019 2020 2021 2020–2021 Adjusted1 Sales 20,029 19,899 20,114 19,250 20,066 4.2% EBIT margin Further information Operating profit (EBIT) 3,055 3,116 2,899 2,019 2,213 9.6% Adjusted1 operating profit (adjusted EBIT) 3,461 3,496 3,220 2,579 2,686 4.2% 13.4 Credits Return on sales (EBIT margin) 15.3% 15.7% 14.4% 10.5% 11.0% 0.5pp % Adjusted1 return on sales (adjusted EBIT margin) 17.3% 17.6% 16.0% 13.4% 13.4% 0.0pp Contacts Net income 2,541 2,330 2,103 1,424 1,629 14.5% Attributable to non-controlling interests 22 16 18 16 -5 – Financial calendar Attributable to shareholders of Adjusted1 Henkel AG & Co. KGaA 2,519 2,314 2,085 1,408 1,634 16.1% EPS Earnings per preferred share (EPS) in euros 5.81 5.34 4.81 3.25 3.78 16.3% Adjusted1 earnings per preferred share (adjusted EPS) in euros 5.85 6.01 5.43 4.26 4.56 7.0% 4.56 Return on capital employed (ROCE) 16.3% 15.5% 13.5% 9.6% 11.0% 1.4pp € Dividend per ordinary share in euros 1.77 1.83 1.83 1.83 1.832 – Dividend per preferred share in euros 1.79 1.85 1.85 1.85 1.852 – pp = percentage points Development of adjusted1 EPS at constant exchange Sales by business unit 2021 Sales by region 2021 rates 1% Adhesive Technologies 3%1% Emerging markets⁴ 9.2 Beauty Care Western Europe % 33% Laundry & Home Care 25% North America Corporate³ 41% Japan/Australia/ 48% New Zealand Dividend per preferred Corporate share2 18% 30% 1.85 € 3 Umsätze u3n dU Lmesisättuzne guennd, dLeieis ntuicnhgte dne, nd iUen ntiecrhnte dhemne Unnsbteerrneeichhmene nzsubgeeroeridchneent wzuegrdeeonrd knöent nweenr.den können. 4 Osteuropa4, A Ofrsitkeau/rNoaphao, Astf,r Likaat/eNinaahmoestr,i kLaa,t eAisnieamn (eorhiknae, AJaspieann )(.ohne Japan). 1 Adjusted for one-time expenses and income, and for restructuring expenses. 2 Proposal to shareholders for the Annual General Meeting on April 4, 2022. 3 Sales and services not assignable to the individual business units. 4 Eastern Europe, Africa/Middle East, Latin America, Asia (excluding Japan). Henkel Annual Report 2021 3 Our top brands The Company Adhesive Technologies Shares and bonds Corporate governance Key financials Combined management report in million euros 2020 2021 +/- Consolidated financial statements Sales 8,684 9,641 11.0% Proportion of Henkel sales 45% 48% – Further information Operating profit (EBIT) 1,248 1,524 22.2% Adjusted1 operating profit (adjusted EBIT) 1,320 1,561 18.2% Credits Return on sales (EBIT margin) 14.4% 15.8% 1.4pp Adjusted1 return on sales (adjusted EBIT margin) 15.2% 16.2% 1.0pp Contacts Return on capital employed (ROCE) 13.4% 17.2% 3.8pp Economic Value Added (EVA®) 410 747 82.1% Financial calendar 1 Adjusted for one-time expenses and income, and for restructuring expenses. pp = percentage points Sales Adhesive Technologies in million euros 2017 9,387 Organic sales growth 2018 9,403 2019 9,461 13.4 2020 8,684 % 2021 9,641 0 2,000 4,000 6,000 8,000 10,000 Henkel Annual Report 2021 4 Our top brands The Company Beauty Care Shares and bonds Corporate governance Key financials Combined management report in million euros 2020 2021 +/- Consolidated financial statements Sales 3,752 3,678 -2.0% Proportion of Henkel sales 19% 18% – Further information Operating profit (EBIT) 246 77 -68.8% Adjusted1 operating profit (adjusted EBIT) 377 351 -6.9% Credits Return on sales (EBIT margin) 6.6% 2.1% -4.5pp Adjusted1 return on sales (adjusted EBIT margin) 10.0% 9.5% -0.5pp Contacts Return on capital employed (ROCE) 6.2% 1.8% -4.4pp Economic Value Added (EVA®) -47 -208 – Financial calendar 1 Adjusted for one-time expenses and income, and for restructuring expenses. pp = percentage points Sales Beauty Care in million euros 2017 3,868 Organic sales growth 2018 3,950 2019 3,877 1.4 2020 3,752 % 2021 3,678 0 2,000 4,000 Henkel Annual Report 2021 5 Our top brands The Company Laundry & Home Care Shares and bonds Corporate governance Key financials Combined management report in million euros 2020 2021 +/- Consolidated financial statements Sales 6,704 6,605 -1.5% Proportion of Henkel sales 35% 33% – Further information Operating profit (EBIT) 688 797 15.9% Adjusted1 operating profit (adjusted EBIT) 1,004 904 -10.0% Credits Return on sales (EBIT margin) 10.3% 12.1% 1.8pp Adjusted1 return on sales (adjusted EBIT margin) 15.0% 13.7% -1.3pp Contacts Return on capital employed (ROCE) 9.3% 11.4% 2.2pp Economic Value Added (EVA®) 150 326 >100% Financial calendar 1 Adjusted for one-time expenses and income, and for restructuring expenses. pp = percentage points Sales Laundry & Home Care in million euros 2017 6,651 Organic sales growth 2018 6,419 2019 6,656 3.9 2020 6,704 % 2021 6,605 0 2,000 4,000 6,000 8,000 Henkel Annual Report 2021 6 The Company What drives us Shares and bonds Corporate governance Our purpose Our values Combined management report Pioneers at heart for the good We put our customers and consumers at the center Consolidated financial statements of generations. of what we do. Further information We value, challenge and reward our people. Credits Our vision We drive excellent sustainable financial Contacts performance. Win the 20s by outperforming the markets Financial calendar We are committed to leadership in sustainability. through innovative and sustainable solutions. We shape our future with a strong entrepreneurial spirit based on our family business tradition. Henkel Annual Report 2021 7 The Company “We will introduce Shares and bonds important changes in 2022 Corporate governance to strengthen our com- Combined management report petitiveness and deliver Consolidated financial statements sustainable profitable Further information Credits growth going forward.” Contacts Financial calendar CARSTEN KNOBEL CHAIRMAN OF THE MANAGEMENT BOARD The COVID-19 pandemic has profoundly changed our lives over the past two years. We had all hoped that we might see a greater degree of normality by now. However, at the start of 2022, COVID-19 still affects the way we live and work. In many countries, infection rates have again soared. At the same time, vaccination and booster campaigns are under way and there is reason to hope that we might finally return to a more normal life. Our highest priority has been and will always be clear: to lead our teams and our company safely through the crisis. Throughout the pandemic, we have done everything possible to ensure the safety and wellbeing of more than 52,000 Henkel colleagues, as well as to protect their jobs and incomes. Henkel Annual Report 2021 8 In 2021, we once again navigated Henkel through a year with many unpredicted challenges, which has only been The Company possible thanks to the unwavering commitment shown by our people around the world. Together, as a strong Shares and bonds global team, we managed to advance our Purposeful Growth agenda – even in these challenging times. I would like to thank all Henkel employees for their resilience and tireless efforts – particularly those who keep our pro- Corporate governance duction and business-critical processes running on site, as well as those who have had to work off-site or from their homes during the pandemic. They have all gone above and beyond to ensure our business continuity Combined management report while following our precautionary measures. Every day, our strong team spirit and company culture make me Consolidated financial statements proud and confident for our future. Further information Good business performance in 2021 Overall, we delivered a good business performance in 2021. We recorded organic growth across all business Credits units, kept our margin stable and achieved a significant increase in earnings per preferred share – despite a very challenging business environment with unprecedented disruptions in global supply chains, a shortage of raw Contacts materials, and exceptionally strong material price increases. Financial calendar Henkel Group sales in fiscal 2021 rose to 20,066 million euros. This corresponds to an organic sales growth of 7.8 percent versus 2020. A significant recovery in demand in the industrial and hair salon businesses had a particularly positive effect. In the consumer goods business, demand in many categories returned to more normal patterns compared to the previous year, when demand was particularly strong for hygiene and cleaning products as well as hair colorants and less strong for styling products. At the same time, the impact of significantly higher raw material and logistics prices and currency effects weighed on profitability. Thanks to significantly increased sales volumes, successful price increases, active cost management and ongoing structural adjustments, we were able to more than offset the impact of the crisis on our earnings. Adjusted1 earnings before interest and taxes (EBIT) grew by 4.2 percent to 2.7 billion euros. Adjusted1 return on sales (EBIT margin) was unchanged year on year at 13.4 percent. And adjusted1 earnings per preferred share (EPS) rose to 4.56 euros, marking a significant improvement of 9.2 percent at constant exchange rates. 1 Adjusted for one-time expenses and income, and for restructuring expenses. Henkel Annual Report 2021 9 The performance of our business units was affected by a range of factors in 2021. Sales of our Adhesive Technologies The Company business unit increased to 9,641 million euros, reflecting double-digit organic sales growth of 13.4 percent, Shares and bonds driven primarily by the global economic recovery and a significant increase in demand from key customer indus- tries. Adjusted1 return on sales (EBIT margin) for Adhesive Technologies amounted to 16.2 percent. Beauty Care Corporate governance recorded sales of 3,678 million euros and organic growth of 1.4 percent. While the recovery in the Professional business area had a positive effect following the closures imposed in the first waves of the pandemic, Beauty Combined management report Care’s consumer business area was impacted in particular by a normalization of demand – after strong increases in Consolidated financial statements the previous year – in the body care category, causing a decline in performance. Adjusted1 return on sales for Beauty Care was 9.5 percent. In Laundry & Home Care, sales grew to 6,605 million euros, with both business areas Further information delivering a strong performance. The organic growth rate was 3.9 percent. Adjusted1 return on sales (EBIT margin) for Laundry & Home Care amounted to 13.7 percent. Credits Contacts The net financial position of Henkel improved significantly in the course of 2021, mainly due to the good free cash flow. At the end of 2021, net debt amounted to 292 million euros compared to 888 million euros at the end Financial calendar of 2020. Henkel shares declined overall in fiscal 2021. The preferred share closed at 71.14 euros, significantly below the previous year and the DAX performance. The ordinary shares closed the year at 68.70 euros. This is clearly not in line with our own ambitions as a management team and your expectations as our shareholders. We are con- vinced that we can – and must – generate more value for our shareholders going forward. We will therefore ini- tiate a range of far-reaching measures in 2022 to underpin our commitment and deliver on our ambitions. At the Annual General Meeting on April 4, 2022, we will propose to our shareholders a stable dividend of 1.85 euros per preferred share and 1.83 euros per ordinary share. This represents a payout ratio of 40.5 percent and is thus slightly above our target range of 30 to 40 percent of adjusted1 net income after non-controlling interests. 1 Adjusted for one-time expenses and income, and for restructuring expenses.