Henkel is cutting 2,000 jobs by merging its home care and beauty care products divisions. The reorganisation had been announced for some time, but now the consequences for the employees are becoming clear.
2,000 people for 500 million
The German manufacturer of detergents and beauty care products such as Persil and Schwarzkopf is carrying out a major restructuring. The beauty and laundry divisions will be combined into one business unit, aimed at consumers. The adhesives division will remain separate, as it also serves professionals and businesses.
Henkel announced the reorganisation in January, but the consumer products company did not say what the consequences would be for its employees. After meetings with the unions, management has made its decision public: the restructuring will result in the loss of 2,000 jobs worldwide, mainly in sales and administration, MarketScreener reports.
The deal is expected to generate savings of 500 million euros in the medium term, amounting to 250 million euros for both this year and the next. The merger will take place in two phases over the next two years.
High margins only
In the long term, further redundancies could occur, as the company also re-evaluates its brand portfolio. All brands and divisions with a turnover of less than one billion euros are being examined. Businesses that do not grow sufficiently or are not profitable enough may be discontinued or sold. The aim is to achieve organic sales growth of 3 to 4 % and a profit margin of around 15 % in the medium to long term.
“By systematically focusing on companies and brands with high gross margins, we are creating the conditions for improving our results, as well as additional resources for further investments in growth,” said Wolfgang König, who will soon be heading the new Consumer Brands unit. At the same time, the new chief is interested in acquisitions to enrich the department.