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Henkel Integrative Case
By Professor David Wessels, the Wharton School of the University of Pennsylvania
This is a comprehensive case that analyzes and values Henkel AG, a $13 billion German
consumer products company. The case builds upon material in Chapters 5 to 14 of Valuation:
Measuring and Managing the Value of Companies, University Edition, 5th Edition, by
McKinsey & Company, Tim Koller, Marc Goedhart, and David Wessels (Hoboken, NJ: John
Wiley & Sons, 2010), ISBN 978-0-470-42470-4.
Case Structure
The integrative case contains five parts or cases. In the first case, we introduce the class to
Henkel at the most fundamental level (i.e., how large is the company, what does it sell, and
where in the organization do growth and profit come from?). In the second section, students
reorganize the income statement and balance sheet for Henkel into net operating profit less
adjusted taxes (NOPLAT) and invested capital, respectively, in order to determine return on
invested capital (ROIC). The third section uses reorganized financial statements to benchmark
Henkel AG to Reckitt Benckiser (line by line) and a broader set of companies (for selected data).
In the fourth case, students determine the cost of capital for Henkel AG (using an unlevered
industry beta) and a cost of capital for each division. In the final case, we value Henkel using
discounted cash flow (DCF) and as-is forecasts.
Case Instructions
Each subcase contains (1) student instructions, (2) an annual report or Excel spreadsheet (to be
distributed with the instructions), and (3) an Excel solution and/or sample presentation. When
running the case, release only PDFs of answer keys; otherwise you may find the Excel key being
turned in as original work in subsequent years! To protect the case for other instructors, please
do not post any material (especially solutions) on a public web site.
Although the case follows the Valuation text closely, the case does not make every possible
adjustment. For instance, a £3 million hedging asset in other assets of Reckitt Benckiser was
ignored (it was treated as operating, rather than as a nonoperating asset). To make every
adjustment would have made the case unbearably complex. Each student instruction provides
details on how to treat various line items. Beyond that, I leave it to each instructor to decide the
level of appropriate complexity. Good luck!
Case Updates?
If you find an error, inconsistency, or potential improvement to the case, please e-mail the author
at wessels@wharton.upenn.edu.
Case Materials
Case
Student Instructions
Data for Students
Sample Solution1
Sample Presentation
1
Who Is Henkel?
Annual Report —Henkel
Not applicable
Henkel Overview
Henkel Overview
(supporting graphs)
2
Reorganizing the
Balance Sheet
Annual Report—Henkel
Henkel—Reorganized
(spreadsheet or PDF)
Not applicable
3
Competitive
Benchmarking
1. Annual Report—Henkel
2. Annual Report—Reckitt
Benckiser
3. Financial Data—Henkel
4. Financial Data—Reckitt
Benckiser
5. Select Financial and
Market Data
Henkel—Ratios
(spreadsheet or PDF)
Reckitt—Ratios
(spreadsheet or PDF)
Henkel Benchmarking
Henkel Benchmarking
(supporting graphs)
4
Cost of Capital
1. Annual Report—Henkel
2. Annual Report—Reckitt
Benckiser
3. Select Financial and
Market Data
Henkel—Cost of Capital
(spreadsheet or PDF)
Henkel Cost of Capital
Henkel Cost of Capital
(supporting graphs)
5
Valuation
No additional data
Henkel—Valuation
(spreadsheet or PDF)
Not applicable
1I do not recommend releasing Excel spreadsheets to students. Otherwise you may find the Excel key being turned in as
original work in subsequent years!
