Henkel struggles with drastic price hikes

Henkel‘s sales are on the rise, but profits are not keeping up. In the first half of the year, the manufacturer of adhesives and personal care products suffered from the sharp rise in raw material prices.

Unable to compensate

Sales went up almost 9 % in the first half of this year, to 10.91 billion euros. However, the company was unable to fully pass on the strong inflation and price increases to customers. Gross profit (EBIT) therefore fell by 18.7 % to 1.17 billion euros. Net profit was halved from 942 million to 447 million.

The Persil and Schwarzkopf manufacturer talks about a very challenging market situation, blaming the drastic increase in material and logistics prices. “Despite significant price increases, strict cost management and further efficiency improvements, these effects could not be fully offset”, the company explains.

Slimming down

The ongoing restructuring is also proving costly. By the beginning of 2023, the FMCG group wants to merge its two consumer divisions – Beauty and Home Care – into one division. At the same time, however, the company is reviewing its brand portfolio: all operations and brands with a total turnover of less than one billion euros are currently under review. Moreover, in response to the war in Ukraine, the group is withdrawing completely from Russia and Belarus.

In the first half of the year, Henkel already divested several smaller brands in the beauty care category; by the end of the year, the branch is to be slimmed down further. The consumer beauty branch was also the only one to suffer a decline in sales last half-year. In July, however, the group purchased the hairdressing products of Shiseido in order to further penetrate the successful professional care market.