Outlook for 2020: Further step-up in growth investments in an uncertain industrial market environment
Germany’s global industrial and consumer business goods giant Henkel has reported mix results for the last fiscal calendar year 2019 impacted by slowing economic growth and increased investments in consumer businesses and digitalization across the company.
“In 2019, our business performance was overall mixed. Our adhesive technologies business unit was impacted by a marked slowdown in key customer segments, in particular in the automotive and electronics industry. At the same time, our consumer businesses, laundry and home care and beauty care, faced intense competition in many markets,” affirmed Carsten Knobel, CEO, Henkel.
“At the beginning of 2019, we announced our plan to increase growth investments by around 300 million Euro annually from 2019 onward to strengthen our brands, technologies and innovations as well as to accelerate the digital transformation of Henkel,” Knobel further explained.
In the course of the year, Henkel gradually ramped up these growth investments across the company, but the additional funding was not fully utilized. Both declining volumes and the increased growth investments impacted the earnings and the EBIT margin in 2019.
“Thanks to our continued focus on cost management, higher efficiency of our processes and the adaptation of structures, we were able to partially mitigate these effects,” asserted Carsten Knobel.
“We also continued to invest in the expansion and upgrading of manufacturing sites and innovation centers. In addition, we strengthened our different businesses through targeted acquisitions and partnerships with a total volume of almost 600 million Euro,” he continued.
“However, we are not satisfied with the results that we have achieved. We had higher ambitions for Henkel and, consequently, will take decisive action to fully leverage our potential for growth and improving financial performance in the future,” Knobel summarized the business development in 2019.
Outlook 2020
For 2020, Henkel expects to generate organic sales growth of zero to two percent. Henkel expects an adverse effect on its earnings performance in 2020, given the uncertainty prevailing in the industrial environment and the year-on-year higher growth investments in marketing and advertising, as well as in digitalization and IT to sustainably strengthen its businesses.
