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Henkel SWOT and PESTLE Analysis

ID : 52441753| Nov 2018| 15 pages

COMPANY PROFILE -Henkel

Business Sector :FMCG and Industrial Goods

Operating Geography :Germany, Europe, Global

About Henkel :

Henkel is a Germany based Chemical and Consumer Care Company founded in 1876. The company specialises in manufacturing adhesives for consumers, craftsmen and building, industrial adhesives, beauty care and laundry and home care. The company operates in three business units--- Adhesive technologies, Beauty care, Laundry and home care. The adhesive technology segment is the most profitable segment. The company has highly diversified operations across Western Europe, Eastern Europe, Africa/Middle East, North America, Latin America and Asia-Pacific. The Company's Adhesives segment markets a range of brand name products for private users, craftsmen and the construction industry for Consumers, Craftsmen and Building operating segment. Packaging and consumer goods adhesives, transport and metal, general industry, and electronics are covered in the Industrial Adhesives segment. The Beauty Care segment includes active branded consumer goods operating segment involving hair care, hair colorants, hair styling, body care, skin care and oral care. The laundry and home care segment have its presence in laundry and home care branded consumer goods. Henkel employs more than 53,000 people globally.
Henkel’s vision as per their annual report is to “Lead with its innovations, brands and technologies.” Henkel’s mission as per their website is “Serving our customers and consumers worldwide as the most trusted partner with leading positions in all relevant markets and categories – as a passionate team united by shared values.”

Henkel Revenue :


€ 20,029 million (FY ended December 31st 2017) (y-o-y growth of 7%)
€ 18,714 million (FY ended December 31st 2016)

Ownership / Major shareholders :

Henkel’s 61.02% shares are owned by members of the Henkel family through a share pooling agreement.

Competitive Analysis of Henkel

SWOT
PESTLE
The SWOT Analysis for Henkel is presented below:
Strengths
Weaknesses
1. Consistent financial performance and clear growth strategy
2. Strong global presence
3. Focus on innovation and creativity
4. Strong brand portfolio
5. Strong focus on R&D
1. Slow progress to online channels
2. Improper product and price positioning
3. Improper geographical positioning of Henkel beauty

Opportunities
Threats
1.Growing demand for beauty care
2. Scope to enter new markets
3. Evolving Private labels
4. Scope for digitization.
1. Rigorous laws and regulations
2. Exchange rate and currency fluctuations
3. Highly volatile politico-economic market
conditions
4. Intense market competition.
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Detailed SWOT Analysis of Henkel

Strength

1. Consistent financial performance and clear growth strategy: Henkel has been a consistent performer in terms of revenue with operating income in FY 2016 being 2093 million Euros and growing to 2541 million Euros in FY 2017. The reported growth over 2016 is 25.41%. The organic sales growth was observed to be around 3.1%. The company’s sales grew to 20029 million Euros compared to 18714 million Euros in 2016.The EBIT was seen to be 3461 million euros in 2017 as compared to 3172 million euros growing by 9.1 percent. Adjusted return on sales grew t 17.3 percent as compared t 16.9 in previous year. EPS grew to 5.85 euros compared to 5.36 euros in 2016. The Emerging markets generated an organic growth of 5.3 percent which amounted to 8130 million Euros. All the individual business segments saw a good growth in 2017. The sales for adhesive technologies stayed at 9387 million Euros, Beauty care at 3868mn Euros and Home care at 6651 million Euros. The company strategy has been focussed towards digitization, having an agile development accelerating fund growth. The company has a clear strategy of driving growth by engaging with consumers, focus on innovation, identifying new sources of growth and developing new brands while nurturing existing brands.

2. Strong global presence: Henkel has developed its global presence over the years. Henkel has been expanding its global footprint by using a strategy of strategic acquisitions and partnerships. The company has diversified its presence across strong markets like Western Europe, Eastern Europe, Africa/Middle East, North America, Latin America and Asia-Pacific. The company’s operations are diversified in broad geographical region including 37 countries in Europe, 11 countries in Africa & Middle East, 14 countries in Asia-Pacific, 12 countries in Latin America, 3 countries in North American region. Sales this year in Western Europe was around 6000 million Euros, in Eastern Europe being at 2897 mn Euros. At Africa and Middle East, the Sales decreased to 1302 million Euros. Sales in North America increased to 5162 million Euros, in Asia Pacific at 3371 million Euros and at Latin America it was at 1142 million Euros.

3. Strong brand portfolio: Henkel overall global presence and reputation across various countries has led to its brand development over the years. Henkel is also a major player when it comes to laundry and home care , Industrial adhesives and personal care as well. The company is well recognized in major countries like India, North America, in European countries. The main brand values for the company lie along the lines of performance, growth, and Innovation. The company further invests to strengthen its brand portfolio across the world through innovating new products. The company brands are diversified across different segments based on applications for example the consumer goods are mainly covered by the laundry & home care unit. Beauty care product unit covers both consumers goods such as oral care and body & skin care areas as well as professional hair salons. Consumer brands for households and craftsmen as well as Industrial clients like automobile, aircrafts, computers manufacturing and constructions are taken care by the Adhesive Technologies, Sealants product line. Some of the leading brands include Loctite, Technomelt, Teroson under adhesive technologies, Schwarzkopf ,Dial ,Syoss under Beauty care and Persil , all ,Purex under laundry and home care. Sales in adhesive technologies grew by 5% organically, Beauty care by 0.5% and Home care by 2%.

4. Focus on Innovation and creativity: Henkel has always kept themselves at par with the market needs and developed their product and services offerings over the years across different segments. The company has always focused on research and development and innovation as its key strategy. The strong focus on innovation has improved the product portfolio and customer engagement for the company. Further the company has laid its focus on innovation in its strategy 2020 on advanced manufacturing technology like 3D printing, industry 4.0. The company has showed an interest in accelerating digitization in its future strategy and aims to increase its sales compared to 2016 by 4 billion Euros in 2020.The company aims to digitize its complete value chain by offering a state of art ecommerce platform to improve the integrated consumer experience. The company has launched a new operating unit called Henkelx: It aims to accelerate digitization, innovation and creativity by bringing together expertise from across all business units and internal experts with the insights and creativity of different partners. The unit is developed with a strategic focus on driving innovation and exploring disruptive new business models. The innovation rate for adhesive technologies is 30%, for beauty care is 40% and for home care is 45%.

5. Strong R&D focus: The product success and growing sales of products in various segments for Henkel is mainly due to the continuous development in existing product portfolio and innovating in new offerings. The company has a strong focus on research and development across different business segments. In 2017 the R&D expenditures were 476 million Euros. The company had invested around $130 million in RD&E for Loctite business in last five years with last year the investment in RD&E rising to $30 million. The adhesive technology business segment has 12 major R&D centres worldwide. The business segment offers product based on tailored innovations based on 40 technologies. The research and development team for Henkel beauty care segment is spread across Düsseldorf and Hamburg (Germany), Scottsdale (USA), Tokyo (Japan), Shanghai (China) and Johannesburg (South Africa). Most recently the company has further expanded its R&D capability by investing and opening up new R&D centres. The company has Henkel Opens State-of-the-Art Research and Development Facilities in Stamford and Trumbull, Conn. Further in beauty segment the company has just expanded its R&D facility in North America. Recently the company has also opened a hub for 3D printing at Europe.

Weakness

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Opportunity

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Threat

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Major Brands :

Loctite, Technomelt, Teroson, Schwarzkopf, Dial, Syoss, Persil, All, Purex

Key Business Segments / Diversification :

Henkel
Adhesive technologies Beauty care Laundry and Home Care

Recent Acquisition / Mergers / Alliance / Joint Ventures / Divestitures :

Name
Business Segment
Year
Type
Objective/Synergy Achieved
Zotos InternationalHair salon business2017Acquisition Acquisition to further strengthen our Henkel’s Hair Professional business in the US and bring hair professional brands such as Joico and Zotos Professional under its ownership.
Nattura LaboratoriesHair salon business2017AcquisitionAcquisition to strengthen its Hair Professional business and significantly expands its market positions in Mexico and the USA.
Source: Company website and other reliable sources. The detailed table is available in the Complete Report.
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TABLE OF CONTENTS
DELIVERY AND FORMAT
WHY CHOOSE US?
References used in Henkel Analysis Report

1. Sustainability Report -https://www.henkel.com/blob/829908/39f83215191c5aaae9a697e899e1f4b4/data/2017-sustainability-report.pdf
2. Annual Report - https://www.henkel.com/blob/829904/373f970c22c5a67b4e1a8bf720eed6f4/data/2017-annual-report.pdf
3. Fact Sheet - https://www.henkel.com/investors-and-analysts/strategy-and-facts/henkel-fact-sheet
4. Henkel Roadshow Presentation May 2018 - https://www.henkel.de/blob/596844/efdaadd0c1ad13f4e225c7639442c1cb/data/2018-05-11-henkel-roadshow-presentation-may-2018.pdf

Copyrights and Disclaimer
Henkel SWOT and PESTLE analysis has been conducted by Soumya Surya Adhikari and reviewed by senior analysts from Barakaat Consulting.

Copyright of Henkel SWOT and PESTLE Analysis is the property of Barakaat Consulting. Please refer to the Terms and Conditions and Disclaimer for usage guidelines.

Henkel SWOT and PESTLE Analysis
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