The manager is rebuilding the consumer goods company.
(Photo: Henkel)
Carsten Knobel knows the criticism. “I know that not all of you are convinced that this is the right step,” said the Henkel boss on Tuesday at an investor day. The manager is currently remodeling the Persil manufacturer. He merges the cosmetics business with the detergents and cleaning agents division. Knobel wants to take growth to the “next level”, as he likes to say.
The applause of those present after almost four hours of presentations was muted. Is that a sign that industry experts are still not convinced? They complain that merging two divisions does not automatically generate growth.
Henkel’s cosmetics business is small and there is a lack of high-margin products such as face creams. Knobel is already hiring poorly performing brands with sales of 250 million euros. The business will be even smaller, but Knobel wants to increase the margin – and the profits. He wants to invest the additional income in existing brands. This strengthens the relevance of all Henkel products in retail and makes it easier to enforce price increases – in theory.
Bargaining power is only as great as the weakest product
But even if in future there are no longer two Henkel salespeople negotiating with Edeka and Co., but only one, he can come up with strong brands such as Persil or Pril. But the cosmetics business remains weak in comparison. And in practice, bargaining power is only as great as the weakest product.
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After all: The view from the outside has shown that change is necessary. With Wolfgang König, a manager heads the division who did not grow up in the group.
>> Read more: “Building a new company within the company” – what the future boss intends to do with the new Henkel division
He had to realize that both areas existed side by side almost like two companies: Developers researched similar technologies, preliminary products were bought from a supplier with two invoices and sometimes goods were delivered to the same warehouse with two trucks. If such inefficiencies are eliminated, Henkel has already achieved something.
But that still doesn’t increase revenue. Knobel remains hopeful that with a large division it will be easier to make acquisitions that have so far not suited either one or the other. “We are convinced of our plans,” says Knobel. What else is he supposed to do?
The restructuring of the group will soon be completed. Then it will be seen whether margins and profits will increase or just costs will fall – and whether Knobel is right or the analysts.
More: 7.5 percent more growth – Persil manufacturer Henkel again increases the forecast