Henkel to invest 3 billion euro in next 4 years to drive growth

The firm is also looking to increase sales of its top performing global brands as well as its leading local brands and expects that sales of the top 10 brands would increase to 75 per cent of total group sales by 2020.

By: PTI | New Delhi | Published:November 18, 2016 3:23 pm

Global adhesives and FMCG major Henkel plans to invest up to 3 billion euros (USD 3.2 billion) from 2017-20 for organic growth and acquisitions in the emerging markets. It has outlined growth in mature and emerging markets as its “key strategic priority”, the firm said in its vision ‘Henkel 2020+, new strategic priorities and financial ambition for the company’. The firm is also looking to increase sales of its top performing global brands as well as its leading local brands and expects that sales of the top 10 brands would increase to 75 per cent of total group sales by 2020.

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“Henkel aims to achieve an average organic sales growth between 2 per cent and 4 per cent with an over-proportionate contribution from emerging markets. For adjusted earnings per preferred share, Henkel targets a CAGR of 7 per cent to 9 per cent,” the company said. The German major would continue to drive its organic growth and has plans for acquisitions in the emerging markets to strengthen its portfolio, it said.

“In order to support its growth ambition, Henkel will increase its investments and raise capex from around 2 billion euros in the period 2013-2016 up to 3 billion euros over the period 2017 to 2020,” it added. As per plans, it would continue to generate profitable growth and has identified four strategic priorities, which includes accelerating digitalisation, increasing agility and funding growth.

“In order to achieve this ambition, we will focus on driving growth, accelerating digitalisation across all our businesses and functions, increasing agility in our organisation and teams, and funding our growth through targeted initiatives,” said Hans Van Bylen, Chief Executive Officer of Henkel.
He further added: “In addition to organic growth, acquisitions will continue to be an integral part of our strategy in order to further strengthen our portfolio”. According to the company, targeted acquisitions will also help complement “Henkel’s portfolio, strengthen its position in attractive markets and categories and expand into adjacent categories”.

In 2015, sales in emerging markets accounted for 43 per cent of Henkel’s total sales and in 2016, it is expected to account for half of total sales.
At present, emerging markets, which include India, account for 55 per cent of Henkel’s 50,000 employees. “In India, Henkel has been constantly driving innovations and investing heavily to reiterate its leadership position.

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,” the company added. Henkel has also established its largest research lab in the IMEA (India, Middle East, and Africa) region at Pune.