In the first half of 2020, the global economy fell sharply, and demand in many industries fell sharply. Henkel was also severely affected by this. However, Henkel achieved strong organic sales growth in the third quarter, an increase of 3.9%. Sales reached approximately 5 billion euros, and all business units contributed to this good performance.
In this unprecedented global crisis, Henkel still maintains an attitude of being in danger, focusing on protecting employees, supplying customers, ensuring continuous business operations, and providing support to the community. With excellent team spirit and hard work of global employees, these goals can be achieved in the first half of 2020. It is such a tenacious attitude that enables Henkel's broad product portfolio in the consumer goods and industrial sectors to alleviate the impact of this crisis on overall sales and profit performance: in the first six months of 2020, Henkel has achieved a Sales of 9.5 billion euros, operating profit of 1.2 billion euros, and an EBIT margin of 12.6%. In addition, we paid all dividends for 2019 to shareholders. At the same time, it achieved very strong free cash flow, which further improved the net financial position. During the epidemic, Henkel did not shorten the working hours of its employees, did not apply for government assistance, and did not lay off employees due to the epidemic. All in all, Henkel's overall performance remains stable in a severe environment.
In the Adhesive Technology business unit, all business areas showed signs of recovery compared to the second quarter. In the cosmetics/beauty products business unit, compared with the second quarter, the hair salon business also recovered, while the retail business achieved significant organic sales growth compared with the same period last year. The Detergent and Home Care business unit has also achieved tremendous growth and continues to maintain a good momentum of development. Previously, due to the high degree of uncertainty caused by the new crown pneumonia epidemic, Hengoe withdrew its full-year forecast in April 2020.
As far as Henkel is concerned, organic sales in fiscal 2020 are currently expected to decline by 1.0% to 2.0%. Despite strict cost control, due to the sharp decline in demand for industrial business and hair salon business, as well as increased growth investments in marketing, advertising, digitalization and IT, the full-year profit performance will be relatively more affected than sales revenue. Therefore, Henkel expects the adjusted EBIT margin of the group to be 13.0% to 13.5%. Calculated at a constant exchange rate, the adjusted earnings per share of preferred stock is expected to decline by 18% to 22%.
Mr. Carsten Nobel summarized and said: "The organic sales growth in the third quarter reflects our ability to provide customers and consumers in the industrial and consumer goods business with a robust and diverse product portfolio, including successful brands and innovative technologies. . We are particularly pleased to see that all business units have achieved positive development. This is partly due to the catch-up effect that we have been severely affected by the new crown pneumonia epidemic from the second quarter. We expect it will also be in the fourth quarter. We have been negatively affected by the epidemic, but we believe that the large-scale lockdowns that occurred in many countries in the second quarter will not recur. All in all, we firmly believe that we will continue to actively implement the strategic priorities for targeted growth and will change from the crisis I would like to thank our employees all over the world for their hard work and great contribution to this goal."
Preliminary data shows that the adhesive technology business unit achieved a 1.3% organic sales growth in the third quarter. Compared with the second quarter, demand in all business areas showed signs of recovery.
Preliminary data shows that the organic sales of the cosmetics/beauty products business unit achieved a strong growth of 4.3%. Although the development of the hair salon business has recovered, it is still lower than the same period last year. The retail business achieved significant organic sales growth in the third quarter.
Benefiting from the continued strong market demand for detergents and home care products and the catch-up effect in the second quarter, preliminary data shows that the organic sales of the detergent and home care business unit in the third quarter also achieved a significant growth of 7.7%.
In the first nine months of 2020, organic sales in the Adhesive Technology business unit fell 6.8%. Organic sales in the cosmetics/beauty products business unit fell 4.2%. The organic sales of the detergent and home care business achieved a strong growth of 5.8%.
Based on the business development in the first nine months of 2020 and the current performance forecast for the fourth quarter, Henkel has released a new outlook for the 2020 fiscal year. Due to the spread of the new crown pneumonia epidemic, and the high degree of uncertainty in the impact and development of the global economy this year, the management committee of Henkel Co., Ltd. and the Company made a decision on April 7, 2020, not to maintain 2019 The 2020 fiscal year forecast given in the annual report.
Affected by the new crown pneumonia epidemic, the global economy is expected to experience deep negative growth in 2020. The new fiscal year outlook is based on an estimate that, in the fourth quarter, Henkel's industrial demand and business activities in key areas will be lower than last year's levels, but will not decline significantly. Future changes in the global infection rate and the formulation of restrictions related to the epidemic will be the decisive factors in this regard. Under this circumstance, Henkel believes that in the fourth quarter of 2020, there will be no larger-scale blockade in core areas that are vital to the company.
It is understood that a key element of Henkel's future development direction is active product portfolio management. Henkel has reviewed brands and categories with total sales of more than 1 billion euros, mainly in the consumer goods business, of which about 50% will be sold or discontinued before the end of 2021. Despite the current market uncertainty, Henkel reiterated that it will implement measures to restructure its product portfolio according to the announced timetable. Since the beginning of this year, Henkel has suspended several businesses and signed a sale agreement with a total sales of approximately 80 million euros, mainly in the adhesive technology business unit.
For the Adhesive Technology business unit, this unit may be significantly affected by the sharp decline in overall industry demand, especially in the automotive industry. Henkel expects organic sales to decline by 5.5% to 6.5%. In the cosmetics/beauty products business unit, Henkel currently expects its organic sales to decline by 2.0% to 3.0%. Affected by the epidemic, especially the sharp decline in the hair salon business in the first half of the year, it will have an impact on the entire fiscal year of the business unit. For the detergent and home care business, Henkel expects organic sales to grow 4.5% to 5.5%.
As far as the group is concerned, Henkel expects the adjusted return on sales (earnings before interest and taxes) to be between 13.0% and 13.5%. Henkel expects that the EBIT margin of the Adhesive Technology business unit will be between 14.5% and 15.0%, and the EBIT margin of the cosmetics/beauty products business unit will be between 10.0% and 10.5%. Detergents and household care The EBIT margin of the business department is between 15.0% and 15.5%.
Henkel aims to accelerate efficient innovation by increasing investment, including strengthening the innovation model. Continued investment in core categories and regions will support innovation and branding. Therefore, Henkel is committed to further increasing growth investment in advertising, digitalization and IT. Despite facing macroeconomic challenges in the first half of this year, Henkel has increased investment by tens of millions of euros.
