Henkel to combine Beauty Care and Laundry & Home Care to create “agile” Consumer Brands unit
02 Feb 2022 --- Chemicals and goods supplier Henkel has announced its “Purposeful Growth Agenda” with plans to combine its Laundry & Home Care unit with its Beauty Care unit to create a Consumer Brands unit by 2023. Henkel predicts placing legacy brands like Schwarzkopf and Persil under one roof will make operations more efficient and agile in the long run.
A more agile unit translates to greater flexibility and faster responses to market volatility and unforeseen circumstances. By integrating the two previous units, Henkel will create a platform for growth with a value of €10 billion (US$11.3 billion) in sales.
The integration process will be led by Wolfgang König, currently executive vice president for Henkel’s Beauty Care business unit.
“Synergies are expected in areas such as administration, distribution, marketing and supply chain,” says Henkel, who hopes the move will allow for more investments in things like the digitalization of R&D, expanding e-commerce capabilities and improving sustainability practices.
Last year, the Germany-based company’s organic sales grew 7.8% compared to 2020, with an earnings per share growth of 9.2%. Henkel expects a growth of 2-4% in 2022.
Preliminary performance figures
Knobel says, “Despite a very challenging business environment with unprecedented disruptions in global supply chains, shortage of raw materials and significantly surging prices, we achieved an overall good performance.”
The COVID-19 pandemic has sharply increased the price of raw materials and strained supply chains, impacting profitability for the company.
The company predicts that 2022 will bring high levels of market volatility and uncertainty.
Henkel Group’s sales in 2021 saw an increase of over €20 billion (US$22.6 billion) based on preliminary figures.
Henkels says its 2021 performance was primarily driven by the growth of its Adhesive Technologies unit, which recorded over €9 billion (US$10 billion) in sales last year. This figure means the division saw an organic growth of 13.4%. The company predicts the unit will grow by another 5-7% in 2022.
Henkel’s Beauty Care unit recorded a growth of 1.4% in 2021, with Henkel expecting the unit’s organic sales to decline by a further 3-5% before being incorporated into the Consumer Business unit. In contrast, Henkel’s Laundry & Home Care unit sales grew by 3.9% last year and are expected to see 2-5% organic growth in 2022.
Creating new opportunities
CEO Carsten Knobel says: “The integrated Consumer Brands business unit will bring significant benefits to Henkel, our shareholders, customers and teams and will be well-positioned to actively shape its future in a highly dynamic industry.”
Henkel’s plans for the unit include discontinuing or divesting from non-core brands and businesses, in addition to new acquisitions “across the consumer space.”
Knobel also thinks the move will improve Henkel’s talent pool.
“We will become an even more attractive employer of choice, offering bigger roles and growth opportunities in an exciting industry.”
Henkel also intends to launch a share buyback program to run from February 2022 to March 2023 with a value of up to €1 billion (US$1.13 billion). Preferred shares with a total value of up to €800 million (US$905 million) and ordinary shares with a total value of up to €200 million (US$226 million) are set to be repurchased, representing 3% of Henkel’s capital stock.
Henkel also stated its financial ambitions are to increase its organic sales growth by 3-4% in the long term.
Edited by Olivia Nelson
