Henkel Restructures its Business for Creating 10 Billion-Euros Platform
- Chaileedo Press
- May 16, 2022
- 3 min read
Henkel announced to merge its Laundry & Home Care and Beauty Care units into one business unit, Henkel Consumer Brands to create a multi-category platform with sales of around 10 billion euros(about $10.43 billion). In February this year, Henkel acquired Shiseido's professional hairdressing business in the Asia-Pacific region.
Henkel recently announced plans to merge its Laundry & Home Care and Beauty Care units into one business unit, Henkel Consumer Brands, and plans to have the new organization in place by early 2023 at the latest. With the new business unit, Henkel is bringing together its consumer brands and businesses, including many iconic brands such as Schwarzkopf and Persil, as well as its professional hairdressing business.
"Despite an exceptionally difficult external environment, we are advancing a clear and targeted growth strategy. As a global market leader, our Adhesive Technologies business unit has a clear focus on future trends such as mobility, connectivity and sustainability, providing innovative solutions for a wide range of key industries. By merging the consumer goods businesses Laundry & Home Care and Beauty Care into Henkel's Consumer Brands unit, we are creating a multi-category platform with sales of around 10 billion euros(about $10.43 billion). Our goal is to establish the Consumer Brands business of the future by early 2023 at the latest. It will provide a broader basis for more consistent optimization of our product portfolio and drive higher business growth and profitability." Carsten Knobel, CEO of Henkel, said.
Henkel is focusing on a portfolio of businesses with good growth and profit potential. In addition to the active portfolio management to be completed by the end of 2021, the Consumer Brands business will give the company the opportunity to better capture organic and inorganic growth potential. Further portfolio management measures will include divestment or discontinuation of non-core brands and businesses, as well as acquisitions in categories across the consumer goods sector.
The merger is designed to drive growth and profitability in the Consumer Products business and the company. This is also reflected in the new medium- to long-term financial targets set by Henkel: Henkel now expects organic sales growth at the Group level in fiscal 2022 of +3.5 to +5.5 percent (previously: +2.0 to +4.0 percent) and its adjusted return on sales (EBIT margin) is now expected for the Henkel Group in the range of 9.0 to 11.0 percent (previously: 11.5 to 13.5 percent), for Beauty Care in the range of 5.0 to 7.0 percent (previously: 7.5 to 10.0 percent) and for Laundry & Home Care in the range of 7.0 to 9.0 percent (previously: 10.5 to 13.0 percent).
By integrating these two business units, Henkel will create greater scale and significant synergies and efficiency gains that will help strengthen the profitability of the business unit. Creating synergies in areas such as administration, distribution, marketing and supply chain, becomes more efficient and agile and helps the company act faster in a volatile environment. The new Consumer Brands business was able to free up resources for greater investments and to target these investments more specifically to enhance strategic capabilities, such as digital R&D, e-commerce capabilities or sustainability programs around recyclable packaging.
The integration process and the fact that the new combined division will be led by Wolfgang K%uFnig, currently Executive Vice President of Henkel's Cosmetics/Beauty Products business unit, gives the new Consumer Brands business unit a clearer leadership structure.
The new business unit will create a leaner structure, faster decisions and attractive opportunities with joint teams. Formed with an integrated approach for retailers, trade or channel partners across all consumer product categories, with a customer and channel focus. The combined team will focus on advancing the entire consumer goods business, and Henkel will offer better positions and greater opportunities.
Carsten Knobel, Henkel's CEO, said, "We are integrating our Consumer Products business to create a strong integrated business unit as a basis for profitable future growth. The integrated Consumer Brands business will bring significant benefits to Henkel, our shareholders, our customers and the teams involved, and will facilitate the active shaping of the future in an ever-changing industry."
In fact, Henkel had already invested in this division of its business, Consumer Brands, before that. In February this year, Henkel announced that it had signed an agreement with the Shiseido Group to acquire its professional hairdressing business in the Asia-Pacific region. The deal includes the core brands Sublimic and Primience under the Shiseido Professional license.
Carsten Knobel, Henkel's CEO, said: "As an important part of Henkel's targeted growth strategy, the acquisition of market-competitive brands plays a crucial role in actively shaping our business portfolio. This acquisition will take Henkel's professional hairdressing business to a new level of growth. By expanding our professional hairdressing business in the Asia Pacific region, we will become one of the industry leaders in a region with dynamic and future growth potential. "
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