Henkel to cut 2,000 jobs amid rising costs and slowing demand

BERLIN (Reuters) – German Henkel is cutting 2,000 jobs in response to rising costs and weak demand for its shampoos and hair sprays and is aiming to make 500 million euros ($530 million) in gross savings in the medium term thanks to the merger of its cosmetics and detergents units.

The job-cutting and cost-savings targets, announced on Thursday, illustrate the scale of the problems facing consumer goods companies as they find ways to offset rising costs that cannot be passed on to consumers. clients. Global supply chain issues add to the difficulties that caused Henkel to downgrade its outlook last month.

Henkel shares gained as much as 2% after Thursday’s announcement and traded unchanged at 60.72 euros at 09:19 GMT.

The company, which has more than 52,000 employees worldwide, reported sales growth of 11% in its adhesives business year, but its cosmetics business struggled.

Beauty care brands such as Schwarzkopf and Dial generated sales of 3.7 billion euros in 2021 compared to just under 3.8 billion in 2020 and 3.9 billion euros the previous year.

Revenues from laundry and home care products, including Persil, Perwoll and Pril, reached €6.6 billion last year, compared to €6.7 billion in 2020 and 2019 respectively.

The merger of the two units, which have nearly 20,000 employees in 60 countries, will be implemented in two stages, resulting in net savings of around 250 million euros on an annualized basis until the end of 2023, Henkel said. .

“Looking ahead to today, around 2,000 jobs will be affected globally, mostly in sales and administration,” he said. Discussions with worker representatives are about to begin, chief executive Carsten Knobel said in a conference call.

Leveraging its brands, Henkel is targeting organic sales growth of 3-4% and an adjusted profit before interest and tax margin of around 12% for the new unit in the medium to long term.

Henkel said companies that don’t meet its criteria for growth and profitability could be shut down or sold.

Companies and brands with a total turnover of up to 1 billion euros were considered.

On the other hand, Henkel is open to big acquisitions to promote growth, Knobel said.

Henkel confirmed that first quarter sales were around 5.3 billion euros and that it expects organic sales growth of 3.5% to 5.5% for the whole year. Adjusted Earnings Per Preferred Share (EPS) is expected to decline in a range of -35% to -15%.

($1 = 0.9443 euros)

(Reporting by Kirsti Knolle in Berlin and Matthias Inverardi in Düsseldorf; Editing by Miranda Murray and Emelia Sithole-Matarise)

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