Henkel sets direction for purposeful growth

New strategic framework will drive Henkel’s successful development in the future

 

SINGAPORE
– Media OutReach – 10
March 2020 – Henkel has introduced its new
strategic framework for the future. The main elements of this framework are a winning
portfolio, competitive edge in the areas of innovation, sustainability and
digital as well as future-ready operating models, underpinned by a strong
foundation of a collaborative culture and empowered people.

Carsten Knobel, Chief Executive Officer of Henkel

“At Henkel, we are building on
a strong foundation for the future: strong brands and innovative technologies,
attractive businesses with many leading market positions around the world, a
highly dedicated team as well as an excellent balance sheet with high cash generation
capabilities,” said Carsten Knobel, Chief Executive Officer of Henkel.

Rigorously
shape a winning portfolio

A key element of the future direction
is active portfolio management. Henkel has identified brands and categories with a total sales volume of
more than one billion euros, predominantly in its consumer businesses, of which
around 50 percent are marked to be divested or discontinued by 2021.

In addition, M&A will remain
an integral part of Henkel’s strategy. The key criteria for acquisitions are availability,
strategic fit and financial attractiveness of potential targets. Henkel will
utilize its strong balance sheet to pursue high-impact acquisitions. While Henkel
aims to expand its technology leadership in Adhesive Technologies with acquisitions,
the company will focus in its consumer businesses on leading country and category
positions as well as on “white spots” and new business models.

Competitive
edge: innovation, sustainability, digital

In order to further strengthen
its competitive edge, Henkel will focus on accelerating impactful innovations, boosting
sustainability as a differentiating factor and transforming digital into a
customer and consumer value creator.

Accelerate
impactful innovations with increased investments

Henkel aims to accelerate impactful
innovations, supported by increased investments. This will include an enhanced innovation
approach, for example by expanding the use of digital tools and data for faster
and better insights.

While Henkel will also push decision-making
across the organization closer to the market and leverage the potential of open
innovation and idea crowdsourcing, Henkel will also scale its agile approaches
and continue to invest in incubators and innovation centers. This shall enable
the development of impactful innovations in all three business units.

Innovations and brands will be
supported with consistent investments in core categories and regions. Therefore,
Henkel is committed to further step up growth investments in advertising,
digital and IT by 350 million euros compared to the year 2018.

Boost
sustainability based on strong track record with ambitious targets

Building on
its strong track record and further progress towards its targets for 2020 and
beyond, Henkel aims to strengthen sustainability as a competitive differentiator.

The company
has defined the next milestones for three key topics:

• On the way to becoming climate-positive by 2040, the
  company plans to reduce the carbon footprint of its production by 65 percent and
  save 100 million tons CO₂ together with its consumers, customers and
  suppliers by 2025.
• Working towards a circular economy and zero plastic
  waste in the environment, Henkel has defined ambitious packaging targets for
  2025: 100 percent of Henkel’s packaging will be recyclable or reusable* and the
  company aims to reduce fossil-based virgin plastics in its consumer product packaging
  by 50 percent.
• Henkel also wants to enhance its positive social impact
  on communities — through 100 percent responsible sourcing, by leveraging its more
  than 50,000 engaged employees and by helping to improve 20 million lives globally
  by 2025.

Sustainability
will be firmly anchored in all activities. By establishing sustainability as a
central pillar in their innovation strategies, the consumer businesses Beauty Care
and Laundry & Home Care will advance their product portfolios with a particular
focus on sustainable packaging solutions and the further roll-out of brands
with purpose. Adhesive Technologies will continue to leverage.

Transform
Digital into a customer and consumer value creator

Going forward, Henkel aims
to transform Digital into a customer and consumer value creator. Henkel wants to
boost 1:1 engagement and digital sales in the consumer businesses by expanding
existing and establishing new digital platforms for direct consumer relationships.
The end-to-end customer-centric digitalization in the industrial businesses will
be driven to generate new business and to further digitalize customer experience
across all touchpoints.

In addition, Henkel will further
pursue its end-to-end data integration. This shall enable the company, for
instance, to create AI-driven innovative and customized solutions. Henkel will also
invest in digital talent, especially data scientists and engineers with future
capabilities and deep technological industry expertise.

And finally, Henkel wants to
enable digital business focus and efficiency. Henkel will completely reorganize
its digital setup, establishing a new digital structure called “Digital Business.”
Henkel has established a new CDIO (Chief Digital and Information Officer) position
at the end of last year. Digital and IT teams across Henkel will now be combined
under the leadership of the CDIO who will directly report to the CEO.

Henkel’s new “Digital Business”
is built on two pillars: first, “Business Technology,” which is a vehicle to
drive efficiency across the value chain through continuously optimizing business
processes and IT systems. The second pillar is “Henkel Digital,” a new
dedicated unit for market-oriented incubation and innovation. Under this roof, Henkel
is planning to establish digital innovation hubs in Berlin, the Silicon Valley
and Asia.

Reshape operating models to be lean, fast and simple

Henkel is reshaping its
operating models across the entire company to be lean, fast and simple and to continuously
improve the competitiveness of its processes and structures. The company aspires
to intensify its efforts to enable new business models, to step up customer
& consumer proximity with faster decision-making and continuously increase
efficiency.

Strengthen
collaborative culture with empowered people

A strong culture, shared
values and a clear framework for collaborating as one team are key for Henkel’s
future success. As a first step, Henkel introduced new Leadership Commitments
to all employees globally in 2019. Henkel plans to accelerate this cultural journey
with these commitments at the core and will foster a culture of collaboration and
empowerment, upskill its employees on future capabilities and enable its people
to grow and develop.

For more information, please visit www.henkel.com.

* Excluding adhesive products where residue may affect recyclability or
pollute recycling streams.