Henkel mulls selling underperforming consumer brands; in race for Coty unit

DIPPING FORTUNES

German FMCG major, Henkel, has announced plans to sell or discontinue some brands in its consumer businesses by 2021 while looking for acquisition opportunities in response to flatlining sales and three consecutive profit warnings.

The company’s CEO, Mr. Carsten Knobel, who has been in charge of the Euro 34.5-bn family-controlled German group since January, has promised to “rigorously optimise and shape” the brands that Henkel owns.

The worst performers, which account for Euro 500-mn in revenue, will be sold or divested by the end of 2021. He has also earmarked operations generating a further Euro 500- mn in revenue for restructuring.

The consumer units – beauty, laundry and home care – made combined sales of Euro 10.5-bn in 2019.

Mr. Knobel stressed that Henkel was not turning its back on mergers and acquisitions but would continue to look for takeover targets. Since 2008, it has spent Euro 12.5-bn on 73 deals.

Last year, operating profits fell at all three of Henkel’s business units – adhesive technologies, beauty care and laundry & home care. The biggest drag on the business is the beauty care division, which makes Schwarzkopf shampoo and Dial soap. It has been struggling for years and in 2019 operating profit dropped 23 per cent.

“Our performance in beauty is clearly below the expectations and we are not satisfied and we are having to change that,” said Mr. Knobel.

Chief Financial Officer Mr. Marco Swoboda warned that the group also expected to lose about Euro 100-mn in sales during the first quarter because of the coronavirus outbreak, adding that “the situation overall is highly uncertain and unpredictable”. Henkel, KKR advance in Coty unit bidding

In another development, Henkel and buyout firm KKR & Co. are reported to be among a small group of suitors proceeding to the second round of bidding for Coty Inc’s professional hair and nail products business.

Advent International and a separate consortium of Cinven and the Abu Dhabi Investment Authority weren’t chosen to advance to the next round after they submitted initial offers. Private equity firms Bain Capital and Clayton Dubilier & Rice dropped out of the race.

The Coty unit, which owns brands including Wella and Clairol, could fetch $7-bn to $8-bn, according to reports.

PACKAGING FILMS

Kuraray plans PVA water-soluble films in Poland

Japanese chemicals and polymer firm, Kuraray, has announced its USbased water-soluble polymer films manufacturing subsidiary, MonoSol, is planning to set up a new facility for PVA water-soluble films in Poland as demand grows for packaging film

20 for unit dose detergents, cosmetics, pharmaceuticals, and other products.

The PVA films, which dissolve completely upon contact with water, are biodegradable, meaning they will not contaminate the recycling stream. The new production base in Poland will help optimise global supply chain and expand sales in Europe, the company said. The new facility, which will be built with an investment of around $45-mn in Zimna Wodka, is expected to start in the middle of 2022.