Dusseldorf It was a pleasant performance for Carsten Knobel. For the first time in two and a half years, the Henkel boss invited to a press conference at the main plant in Düsseldorf on Monday. The occasion: the inauguration of a new innovation center for the adhesives division. The group spent 130 million euros on the building – the largest single investment in the company’s history.
This “should further advance the potential of the division,” says Knobel. Henkel is best known to the public for its Persil and Pril brand detergents and cleaning products. In fact, however, the adhesives business is the more profitable. With adhesives, the Dax group achieves almost half of its sales with around ten billion euros and even 60 percent of its profit with 1.6 billion euros – 90 percent of it with industrial customers, the rest with the consumer brand Pritt.
Knobel, who, as so often, wears a jacket with a handkerchief when performing, likes to talk about the topic. After all, Henkel is the world’s largest adhesives manufacturer with a market share of 17 percent. The company began developing adhesives 100 years ago: initially for its own use, to seal its detergents.
Adhesives business is a 65 billion euro market
Today, the adhesives business is a 65 billion euro market that will continue to grow. Consumers constantly come into contact with adhesives: Henkel ensures that packaging sticks, that wooden buildings are glued correctly or that the wings are attached to the fuselage of the airplane. In smartphones such as the iPhone, Henkel adhesives conduct heat so that the electronics are not damaged.
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Knobel sees a lot of potential in electric cars. It uses high-tech glue to hold the batteries in place, keeps them from overheating, and coatings to keep a fire from spreading too quickly. Innovations are required in this area. According to Knobel, they should be built faster in the new building and increase sales.
650 employees work in the innovation center on an area the size of seven soccer fields. They used to be scattered across the factory premises, although they had dealt with similar technologies. Knobel is convinced that “innovations can develop better in a team, also through spontaneous exchange”.
The Dax group has inaugurated the new building.
(Photo: Henkel)
In addition to offices and conference rooms, there are 30 laboratories, the heart of which is a bright atrium with a coffee bar. Tests are automated in the building, and all measurement data is recorded digitally so that all employees worldwide have access to it.
The euphoria about the new building should not hide the fact that Knobel has to work on several construction sites at Henkel. In January 2020 he became head of the traditional company – and has since been confronted with a pandemic, incomplete supply chains and skyrocketing raw material costs as well as more recently with inflation and rising energy prices. Before he rose to the top, he was CFO for seven and a half years. All in all, the native of Hesse has been with Henkel since 1995.
Knobel does not want to spin off the adhesives division
Unlike the adhesives business, the cosmetics division has been in crisis for years because it is too small and not profitable enough. Henkel is primarily active in the low-margin mass consumer goods business. Knobel is reacting to this with a company restructuring: He is merging the cosmetics business with the better-performing detergents and cleaning agents division, so that by the beginning of 2023 Henkel will have two pillars of roughly the same size – the adhesives and the consumer area under the name “Consumer Brands”.
Knobel expects more growth from this, analysts are skeptical. The manager, who studied business administration and technical chemistry, also wants to cut costs as part of the conversion. He is cutting 2,000 jobs, and 300 are affected in this country. The unrest among the employees is growing because talks are currently being held with the works councils.
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In addition, Henkel is burdened by giving up its business in Russia. The group had withdrawn at the end of April after great public pressure because of the war of aggression. Henkel was invested in Russia like no other Dax group, generating five percent of its sales there, a total of one billion euros. In the first half of the year, write-downs of around 184 million euros were therefore due.
The adhesives business is not a sure-fire success either. In the first half of the year, the division grew by a good twelve percent under its own steam, but the 27 percent higher costs weighed on the margin. It was 13.6 percent, after 17.3 percent a year ago. According to Knobel, most of the costs could be passed on to industrial customers.
Company observers have long been advising the top manager to spin off the adhesives division in order to achieve faster growth. Knobel rebuffed him again when asked. The new building is “no indication that the company structure will continue to change”.
More: Henkel’s profit collapses by 18.5 percent – costs are a problem for Persil manufacturers