Henkel To Merge Laundry & Home Care and Beauty Care in New Consumer Brands Unit

Henkel today announced plans to merge its  Laundry & Home Care and Beauty Care units into a single organization known as Henkel Consumer Brands. The company will start preparations for the integration process immediately; the firm plans to have the new organization in place by the beginning of 2023.

“We will join forces in our consumer goods businesses to create one strong, integrated business unit as a foundation for future profitable growth. 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 highly dynamic industry,” said Carsten Knobel, CEO of Henkel.

“We are creating a multi-category platform with around 10 billion euros in sales. This will provide a broader basis to further optimize and shape our portfolio towards a higher growth and margin profile. We will also capture significant synergies and efficiency gains, allowing us to free up resources which will be used in part for targeted investments in our strategic priorities, such as innovation, sustainability, and digitalization. We will become an even more attractive employer of choice, offering bigger roles and growth opportunities in an exciting industry. In summary: I am convinced that this merger will take our Purposeful Growth Agenda to the next level.”

The merger is designed to drive growth and profitability for the consumer business and the company. This is also reflected in the new mid- to long-term financial ambition which Henkel provided: the company now aims for 3-4% organic sales growth, an adjusted EBIT margin of around 16% and mid- to high-single-digit percentage growth in adjusted earnings per preferred share (at constant exchange rates, including M&A), it said.

Henkel Consumer Brands will offer the opportunity to better capture the full potential for organic and inorganic growth and to focus on products with attractive growth and margin potential – beyond the measures of the active portfolio management completed by the end of 2021, the company said.

Further portfolio measures will include divestments or discontinuation of non-core brands and businesses as well as acquisitions in categories across the consumer space, said Henkel. The company said first measures relating to the Beauty Care portfolio will be already implemented in the course of 2022.

Henkel’s brands such as Dial soap, Sexy Hair and Schwarzkopf hair care as well as Snuggle, All, and Purex in fabric care.

By integrating both business units, Henkel will create more scale, allowing the company to capture significant synergies and to become more efficient and agile as well as helping the organization to act faster and more flexible 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 to free up resources for higher investments and better target these investments in strategic capabilities, for example digitalization of R&D, e-commerce capabilities or sustainability efforts around recyclable packaging, Henkel said.

The new business unit will be organized around customer and channel centricity—with an integrated approach for retailers, trade or
channel partners across all consumer categories.

Under one leadership, the combined team will focus on advancing the entire consumer business, with leaner structures and faster decision-making. In the combined business, Henkel will offer bigger roles and opportunities, becoming an even more attractive employer for teams, leaders, talents and new hires, it said.


Leadership

The integration process and the new combined unit will be led by Wolfgang König, currently executive VP for Henkel´s Beauty Care business. Bruno Piacenza, who has lead Henkel´s Laundry & Home Care business as EVP since 2011, will continue to lead the Laundry & Home Care business; he will work closely with König on the transition process and stay with Henkel latest until the end of 2022.

Henkel also announced a share buyback program with a total volume of up to €1 billion. Henkel preferred shares with a total value of up to €800 million and ordinary shares with a total value of up to €200 million are to be repurchased. Based on current stock market prices, this corresponds to a share of about 3%  of the company's capital stock. The program is expected to start during the month of February 2022 and to be carried out until March 31, 2023, at the latest.

“With this program, we are creating value for our shareholders and are underpinning our confidence in our financial strength and future potential of our businesses. Given our strong balance sheet and low debt levels as well as our strong cash flow generation, this will not impact our ability to pursue strategic acquisitions – in both our Consumer Brands and our Adhesive Technologies business units,” said Henkel CEO Carsten Knobel.

2021 Performance

On a preliminary basis Henkel Group sales in fiscal 2021 increased to €20.06 billion. Organic sales growth was at 7.8%. Beauty Care recorded sales of €3.678 billion and organic growth of 1.4%. In Laundry & Home Care sales grew to €6,6, billion representing organic growth of 3.9%.