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Henkel's CFO is optimistic about the economy this year
South African business is on track to benefit from consumer and industrial recovery says Henkel South Africa’s CFO, Dominik Anderhofstadt.
South Africa’s consumer, industrial and export-led sectors are expected to recover as global and local demand returns, says Henkel South Africa, recently celebrating 70 years in the country. Henkel, the manufacturer and marketer famous for bringing Pritt, Loctite, Pattex and Shwarzkopf to South Africa, celebrates 70 years in the country.
Henkel South Africa is a subsidiary of Henkel AG & Co. KGaA. The company is a century old German company that became a successful multinational presence in more than 100 markets. From a family business founded in 1876 to 145 years of success, Henkel operates globally with a well-balanced and diversified portfolio. The company holds leading positions with its three business units – Adhesive Technologies, Laundry & Home Care and Beauty Care. As a recognised leader in sustainability, Henkel holds top positions in many international indices and rankings. Henkel employs more than 53 000 people globally – a highly diverse team, united by a strong company culture, a common purpose and shared values.
We are extremely proud of our long, rich heritage in SA, supporting growth, economic development and opportunity across the communities we serve. Based on our history of success, we are now witnessing signs of recovery and future growth, following a difficult year for economies around the world.
Locally, I believe that there is a great deal of potential for the South African economy as the country has a lot of sectors with growth potential, but those that stand out are the consumer and industrial sectors, technology and innovation, and export-oriented areas like automotive.
Popular brands like Pritt, Pattex, Loctite and Schwarzkopf are now part of everyday life for millions of people in SA, and what we have noticed is that demand for essential products has proven resilient during the Covid-19 pandemic. However, to embrace a future that will no doubt be full of possibility and risk, we need to ensure we continue to innovate to stay a step ahead.
In its 13 th South Africa Economic Update, the World Bank says the current global outlook is looking better after the 2020 collapse and South Africa is positioned to grow at the fastest pace in over a decade, bouncing back from 2020’s 7% growth contraction. While there is still ‘considerable uncertainty,’ economic growth could rebound to 4.0% in 2021. More recently, other sources such as the South African Reserve Bank have even increased their GDP growth projections to above 5% for last year (2021).
Although South Africa has battled a third and fourth wave of Covid-19 infections, and a close watch is needed moving into the new year, talk of a recovery is extremely positive. Henkel is also noticing signs of stronger demand returning, as it trends ahead of the recovery in other regions.
The automotive sector, in particular, was driving growth for most part of last year as new locally produced models came on stream, together with general manufacturing on the back of infrastructuredemand. Other industries doing well includebeverages and packaging.
As a result, our commitment in South Africaremains strong and we are constantly seekingways in which to invest further in the country, albeitthrough innovation, technology, skills developmentor corporate social investment – our commitment isto keep growing.
Business risks include rising costs, driven primarilyby raw materials, electricity and logistics, but alsoglobal supply chain shortages. To achieve purposefulgrowth, we therefore need to intensify our effortsto step up customer and consumer proximity withfaster decision-making mechanisms and to increaseefficiency by constantly reshaping our operatingmodels to be lean, fast and simple.
Furthermore, Henkel worldwide aims to strengthensustainability as a competitive differentiator. Our aimis to reduce the carbon footprint of our productionby 65% by continuously improving energy efficiencyand by using electricity from renewable sources.In addition, we want to leverage our brands andtechnologies to save 100 million tons CO2 together with our consumers, customers and suppliers by2025. We are working towards a circular economy and zero plastic waste in the environment.We also realise the critical role we must playin our communities, and we want to enhance ourpositive social impact on communities throughresponsible sourcing. We continue to maintainan intense dialog with our suppliers to promotesustainable practices and the respect for humanrights along our value chain.
We supply a very wide array of consumer andindustrial needs, and while we often fly below theradar from a marketing perspective, our technologysolutions are holding many products together.
A key focus for the future will be on introducingsustainable solutions, both in our products andtowards socially driven initiatives. We will continueto contribute towards building a better worldand society.
With both business and consumer confidencereturning, Henkel’s diverse array of products –from household and industrial-grade adhesives tohair care – ensures we are well positioned for thenext 70 years in SA.
Dominik Anderhofstadt, CFO for Henkel South Africa.
