Leading in Innovation Thomas Müller-Kirschbaum Corporate Senior Vice President
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1 Leading in Innovation Thomas Müller-Kirschbaum Corporate Senior Vice President Laundry & Home Care Investors and Analysts Day Duesseldorf, September 2, 2009
2 Disclaimer This information contains forward-looking statements which are based on current estimates and assumptions made by the corporate management of Henkel AG & Co. KGaA. Statements with respect to the future are characterized by the use of words such as expect, intend, plan, anticipate, believe, estimate, and similar terms. Such statements are not to be understood as in any way guaranteeing that those expectations will turn out to be accurate. Future performance and results actually achieved by Henkel AG & Co. KGaA and its affiliated companies depend on a number of risks and uncertainties and may therefore differ materially from the forward-looking statements. Many of these factors are outside Henkel's control and cannot be accurately estimated in advance, such as the future economic environment and the actions of competitors and others involved in the marketplace. Henkel neither plans nor undertakes to update any forward-looking statements. 2
3 Laundry & Home Care Five Pillar Strategy for Profitable Growth 2 1 Brand Equity Innovation Leadership 3 Portfolio Steering Category / Region People / Mission based Management 5 Cost Focus 4 Customer Focus 3
4 Pacemaker in Innovations First laundry detergent in cloth-form with softener and anti-static effect (Purex 3in1) First laundry detergent with hot water performance already at 20 C Persil Best Ever : 100 years Persil First autodish with 20% less CO 2 emission First combination of design and function: WC ALESSI Surfer First heavy-duty detergent with soil-repellent for cotton First light-duty detergent with malodor absorbent First 3in1 automatic dishwashing detergent First 2in1 automatic dishwashing tablet with integrated rinse aid Best laundry detergent tablet First gel-type toilet rim block First laundry detergent gel Unique extruded detergents (Megaperls, Super-Compacts) Fabric softener based on esterquat First color detergent First automatic dishwashing tablets First phosphate-free powder detergent (Zeolite A)
5 Recognized Leader in Innovation Strategy Innovation strategy of Henkel Laundry & Home Care wins "Best Innovator Award 2005" Laundry & Home Care (A.T. Kearney, Fraunhofer Gesellschaft and WirtschaftsWoche) 5
6 Recognized Leader in Innovation Execution Henkel (Persil) among 5 finalists for the "Innovationspreis der Deutschen Wirtschaft 2007" 6
7 Agenda Organization Key Data Innovation Process Open Innovation Network Leading Technologies Key Take Aways 7
8 New Laundry & Home Care Network Global and Regional R&D R Global &D Discovery + Basic Development Regional R& D Specific Development + Implementation WE EE Global Research Partnerships NA MENA LA AP Network Organization 8
9 R&D / Technology Sites Worldwide Toluca Scottsdale Düsseldorf Wien Cairo Chennai Ansan Multi-technology site Specialized site Organization 9
10 Agenda Organization Key Data Innovation Process Open Innovation Network Leading Technologies Key Take Aways 10
11 R&D Expenditures R&D expenditures as % of sales incl. expenses for Corporate Research allocated to the business sectors Key Data 11
12 Innovation Rate Sales with Products Younger than 3 Years Innovation rate as % of sales Substantial increase in innovation rate over the last years Key Data 12
13 Innovation KPI in Laundry & Home Care Financial Impact Innovation rate (Sales with products younger than 3 years, 2008) 40% Gross profit improvement (Higher profitability of new products, 2009 vs. 2008) >5pp of new products Execution Average time to market (Months) 10 Open Innovation Open Innovation rate (Share of projects with substantial external contributions) 80% Patents Patent activity ranking (Worldwide ranking in patent publications #1 in our category, 2008) Granted patent rate (Share of granted patents in patent portfolio as 50% measure for patent quality, 2008) MARGINNOVATION Key Data 13
14 Agenda Organization Key Data Innovation Process Open Innovation Network Leading Technologies Key Take Aways 14
15 Predicting, Influencing, and Using Future Technological Developments Technologies Extrapolation status today Scenarios for new technologies Retropolation from future scenarios Consumer needs today short term medium term long term Innovation strategy: Recognized leader in market-relevant innovations Innovation Process 15
16 Innovation Process From Future Scenarios to Market Future foresight with scenarios The use of future scenarios supports the long-term and systematic analysis of future challenges. Strategic search fields Tomorrow's success potentials are divided into strategic search fields for the Henkel business in order to be able to translate these into innovations. Innovation ideas Through the strategic search fields innovation ideas are systematically generated and prioritized in pipelines according to their time sequence. Innovation steering Henkel Inno Gate drives the efficient implementation of prioritized innovation ideas into successful, market-oriented products Innovation Process 16
17 Henkel Inno Gate Efficient steering of new product introduction process Innovation Process 17
18 Agenda Organization Key Data Innovation Process Open Innovation Network Leading Technologies Key Take Aways 18
19 Open Innovation Network Packaging suppliers Licensing Equipment suppliers Raw material suppliers External inventors Institutes, Universities Technology brokerage Scientific advisory board Open Innovation Network 19
20 Suppliers as Major Innovation Contributors Examples from Autodish Unique polymer with enhanced anti-scaling performance Exclusive surfactant technology for unique Extra-Dry claim Open Innovation Network 20
21 Suppliers as Major Innovation Contributors Examples from Autodish Unique polymer with enhanced anti-scaling performance Exclusive surfactant technology for unique Extra-Dry claim "Borrow with Pride" Open Innovation Network 21
22 Agenda Organization Key Data Innovation Process Open Innovation Network Leading Technologies Key Take Aways 22
23 Key Technologies Match with Strategic Search Fields Strategic Search Fields Hygiene Well Being Sustainability Simplicity Automation Demographics Key Technologies Washing performance Surface modification Long-lasting effects Activated release Biotechnology Nanotechnology Alternative washing & cleaning technologies / robotics Leading Technologies 23
24 Washing Performance Main Driver is Smart Chemistry Sinner Circle (Dr. Herbert Sinner, 1959) Past Today Chemistry Mechanics Time Shorter washing cycles Lower temperatures Less mechanics Lower dosage Chemistry Time Temperature Temperature Mechanics Leading Technologies 24
25 Activated Release Encapsulation Technology Example: Controlled Release of Fragrance 100 µm Scent Impression Release by Friction encapsulated perfume free perfume Time Microcapsules with perfume in fabric softener (smaller than hair diameter) are transferred to textiles (fluorescence-marked in light microscope)... and produce a scent experience when touching the textile Leading Technologies 25
26 Activated Release Switchable Surfactants Surfactants Active Ingredients for Cleaning Water-repellent / Oil-attractingTail Water-attracting / Oil-repellent Head Water Soil Soiled Textile Clean Textile Leading Technologies 26
27 Alternative Washing Technologies Partial Re-Usage of Wash / Rinse Water Based on Smart Chemistry Clothes Products Water Clothes + Water Water Water Source: Flavio Marin Flores, Univ. Tec de Monterrey Leading Technologies 27
28 Alternative Washing Technologies Solvent Systems Aqueous Wet clean Micro emulsions Foam Non-Aqueous PER Carbon hydrates Siloxanes Liquid CO 2 Non-Solvent Systems Gases Ozone Ionized gases Steam In cooperation with: WfK Cleaning Technology Research Institute Physical Systems Ultrasound Electrolysis Electro dialysis Magnetic devices / Water treatment Physical Systems Plasma Laser Microwaves Vacuum Leading Technologies 28
29 Biotechnology Probiotic Cleaning 1 Cleaner with stabilized probiotic bacteria 2 Application of probiotic bacteria to soiled surface and activation of bacteria 3 Probiotic bacteria replicate and degrade the soil 4 After degradation of soil some bacteria remain until re-soiling Leading Technologies 29
30 Biotechnology Low Temperature Enzymes Consumer benefit Better stain removal at 20 C Shorter washing cycles Sustainability benefit Energy saving Higher concentrated products Substitution of petro-chemically based ingredients e.g. low temperature protease Leading Technologies 30
31 Nanotechnology New Bleaching Technology Example: Titanium dioxide-technology Consumer benefit On-the-go bleach Malodor control Germ killing Sustainability benefit Sun powered bleach Natural mineral Titandioxide R Reactive species e.g. Photocatalytic bleach TiO 2 activation by sunlight -0,6 V hv 390nm 2,5 V TiO 2 O 2 hv O 2 H + + OH H 2 O OH C 6 H 5 OH 6CO 2 + 3H 2 O Leading Technologies 31
32 Agenda Organization Key Data Innovation Process Open Innovation Network Leading Technologies Key Take Aways 32
33 Key Take Aways Innovation strategy and leading innovation process aligns market needs with technology development Well balanced innovation pipeline guarantees continuous output short and long term Steering best-in-class open innovation network Exclusive access to future leading technologies Essential contribution to profitable growth Leading in Innovation MARGINNOVATION Key Take Aways 33
34 Lab Tour Laundry Innovation Purex Complete 3-in-1 Sheets Nanotechnology: Photocatalytic Bleach Automatic Dishwashing High-Throughput-Experimentation Quick-Dry Technology Multifunctional Liquid Activated Release Switchable Surfactants / Alternative Washing Technologies Fragrance Release Mechanisms Biotechnology Probiotic Cleaning Enzyme Technology as Enabler for Compactation Key Take Aways 34
35 Lab Tour Biotechnology 1 Laundry Innovation 4 3 Activated Release 2 Automatic Dishwashing B 02, Ground Floor Key Take Aways 35
36 Henkel is a leader with brands and technologies that make people's lives easier, better and more beautiful. 36
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