Henkel announced today its plans to merge its Laundry & Home Care and Beauty Care business units into a single business unit: Henkel Consumer Brands. The company will begin the integration processes immediately and aims to have the new organization operational by the beginning of 2023 at the latest. With the new business unit, Henkel will build a growth-oriented multi-category platform, combining its consumer brands and businesses under one roof, including brands such as Persil and Schwarzkopf, which also encompasses the professional hairdressing business.
“We will join forces in our consumer goods businesses to create a strong and integrated business unit as a foundation for profitable growth in the future. The integrated Consumer Brands business will bring significant benefits to Henkel, our shareholders, customers and teams, and will be well positioned to actively shape its future in a very dynamic industry ,” says Carsten Knobel, CEO of Henkel.
“We are creating a multi-category platform with approximately €10.000 billion in sales. This will provide a broader base to further optimize and shape our portfolio towards a higher growth and margin profile. We will also capture significant synergies and efficiency improvements, allowing us to free up resources to use in part for specific investments in our strategic priorities, such as innovation, sustainability, and digitalization. We will be an even more attractive employer, offering greater roles and growth opportunities in an exciting sector. In short: I am convinced that this merger will take our Purposeful Growth agenda to the next level . ”
Fusion
The merger is designed to boost the growth and profitability of the consumer business and the company. This is also reflected in the new medium- and long-term financial ambitions that Henkel has presented: the company now aims for organic sales growth of between 3 and 4%, an adjusted EBIT margin of around 16%, and percentage growth in Earnings per Preferred Share in the mid-single to high single digits (at constant exchange rates, including mergers and acquisitions).
Focus on margin potential
Secondly, Henke's new division, Henkel Consumer Brands , "will offer the opportunity to better capture the full potential of organic and inorganic growth and focus on products with attractive growth and margin potential, in addition to the active portfolio management measures completed by the end of 2021".
Other portfolio management measures will include divestments or discontinuation of non-core brands and businesses, as well as acquisitions in consumer categories. The first measures related to the Beauty Care portfolio will be implemented throughout 2022.
To create significant synergies and efficiency gains.
By integrating both business units, Henkel will create greater scalability, allowing the company to leverage synergies and become more efficient and agile, as well as helping the organization to act more quickly and flexibly in a highly volatile environment. Synergies are expected in areas such as administration, distribution, marketing, and supply chain.
This will allow the new Consumer Brands business unit to free up resources for additional investments and to better target these investments towards strategic capabilities, such as R&D digitization, e-commerce capabilities, or sustainability efforts in terms of sustainable packaging. The synergies will also be used to strengthen the unit's margin profile.
Leadership structures for the new Consumer Brands unit
The integration process and the new combined business unit will be led by Wolfgang König (49 years old), currently executive chairman of the Beauty Care business unit. Bruno Piacenza (56 years old), who has led the Laundry & Home Care business unit as executive vice president since 2011, will continue to head the Laundry & Home Care business, working closely with Wolfgang König on the transition process and will remain at Henkel until the end of 2022.
“Under Wolfgang König’s leadership, the combined team will focus on advancing the entire Consumer Brands business, with more agile structures and faster decision-making. I would also like to express my personal appreciation for Bruno Piacenza and his achievements over more than three decades at Henkel ,” added Henkel CEO Carsten Knobel.
