Henkel 2020+: Focus on Growth, Digitalization and Agility

On November 17, Henkel 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. We have an excellent track record of outperforming our markets, a balanced and well-diversified business portfolio with exciting brands, innovative technologies and leading positions in highly attractive markets and categories – and a passionate global team with a strong culture, common purpose and shared values,” said Hans Van Bylen, Chief Executive Officer of Henkel.
“At Henkel, we share the common purpose to create sustainable value – for our customers and consumers, our employees, our shareholders, as well as for our stakeholders and the communities in which we operate. In addition, our values guide all our actions, decisions and behavior,” said Hans Van Bylen.
“By 2020 and beyond, our ambition for Henkel 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,” Hans Van Bylen explained.
In a highly volatile and uncertain market environment, Henkel has defined a concrete financial ambition for the period until 2020: 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 compound annual growth rate (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.
In order to support its growth ambition, Henkel will increase its investments and raise capital expenditures (Capex) from around Euro 2 billion in the period from 2013 to 2016 up to Euro 3 billion over the period from 2017 to 2020.
While Henkel aims to drive organic growth, acquisitions will be an integral part of the company’s strategy to further strengthen its portfolio. Henkel will continue to pursue potential options with a highly disciplined approach based on clear criteria: strategic fit, availability and financial attractiveness. At the same time, Henkel is committed to its “Single A” rating.
By 2020, Henkel will implement a range of initiatives to drive its digital business, leverage industry 4.0 projects and transform the organization.
To drive its digital business, Henkel aims to digitize its interaction with customers, consumers, business partners and suppliers along the entire value chain in both its consumer and its industrial businesses. “Digitally-driven” sales should be doubled to more than Euro 4 billion by 2020.
In addition, the position of a Chief Digital Officer with a cross-business responsibility will be established.
In order to fund growth, Henkel will implement new approaches to optimize resource allocation, focus on net revenue management, further increase efficiency in its structures, and continue to expand its Global Supply Chain organization. Together, these initiatives will contribute to further improve profitability and enable Henkel to fund its growth ambitions for 2020 and beyond.
Following the successful start in Europe, and the set-up of hubs in both Europe and Asia, Henkel’s integrated Global Supply Chain organization will be further rolled-out in all regions.
To reinforce its commitment to sustainability, Henkel has defined clear targets to improve its resource efficiency, for example by creating more value with less resources. Henkel has defined ambitious sustainability milestones which would result in an overall efficiency improvement of 75% by 2020 compared to 2010. Engaging all Henkel employees globally to act as sustainability ambassadors toward customers and consumers, business partners and society will be a driver of Henkel’s sustainability leadership.