Henkel recently presented its new strategic priorities and financial ambition, which will shape Henkel until 2020 and beyond, summarized as “Henkel 2020+”. Based on its strong
foundation, Henkel aims to generate continued profitable growth by focusing on four strategic priorities: Driving growth, accelerating digitalization, increasing agility, and
funding growth.
“We will build our future on a strong foundation, which will enable us to generate sustainable profitable growth in the coming years. At Henkel, we share the common purpose of creating sustainable value and our values guide all our actions, decisions and behavior,” said Hans Van Bylen, chief executive officer of Henkel.
Ambition for 2020
Citing the company’s ambitions for the year 2020 and beyond, Bylen says, “By 2020 and beyond, Henkel’s ambition is to generate more profitable growth and to become more customer-focused, more innovative, more agile, and fully digitized in our internal processes
and customer-facing activities. In addition, we aim to promote sustainability in all our business activities, reinforcing our leading position,” Bylen explained.
Profitable growth and attractive returns
Over the next four years, Henkel aims to achieve an average organic sales growth between 2% and 4% with an over-proportionate contribution from emerging markets. For adjusted earnings per preferred share, Henkel targets a CAGR of 7% to 9%. This ambition for EPS growth includes the impact of currency developments and excludes major acquisitions as well as share buy-back. In addition, Henkel aims for continued improvements of its adjusted EBIT margin and free cash flow expansion.
“We will continue to focus on cost discipline, improving our profitability, optimizing net working capital and generating strong cash flows. This will enable us to further invest in both organic and inorganic growth,” said Carsten Knobel, chief financial officer of Henkel.
Overview of strategic priorities
Driving growth in mature and emerging markets will be a key strategic priority for Henkel for which the company will launch a range of targeted initiatives to create superior customer and consumer engagement, further strengthen its leading brands and technologies, develop exciting innovations and services, and capture new sources of growth.
As part of its strategic footprint, Henkel aims to fuel growth by looking at acquisitions in emerging markets. The company has made a key investment of about Rs.220 crore for setting up the first phase of India’s largest adhesives plant in Kurkumbh, near Pune. Henkel has also established its largest research lab in the IMEA (India, Middle East, and Africa) region at Pune.
The company plans to increase sales of its top-performing global brands as well as its leading local brands. Targeted acquisitions will also help complement Henkel’s portfolio, strengthen its position in attractive markets and categories, and expand into adjacent categories. In addition, the company will set up a dedicated Venture Capital Fund with up to EUR 150 million to invest in start-ups with specific digital or technological expertise. Henkel also plans to implement a range of initiatives to drive its digital business, leverage industry 4.0 projects, and transform the organization.
