Henkel looks to emerging markets to continue beauty growth

In its results for 2015 the company reported organic sales growth of 3% to €18,089 million, while the Beauty Care business unit also extended its profitable growth of previous years with 2.1% organic sales growth to €3,833 million.

“Emerging markets continued to be the main growth drivers contributing to our good performance. We also achieved further organic sales growth in mature markets,” ​says Henkel CEO Kasper Rorsted.

“Despite the difficult economic environment, we delivered a strong financial performance, continued to successfully implement our strategy and laid a strong foundation for our future. After three years of our four-year strategy cycle, we are well on track to meet our main targets for 2016.”​

Challenges​

Results in Western Europe, a market which accounts for a third of Henkel’s sales, were slightly down with sales in Switzerland and the Nordic countries having a negative impact; though there were positives in North America, and Rorsted points to China as also being particularly promising.

Whereas, some mature markets continue to be impacted by fierce crowding-out competition and intense price and promotional pressure, sales in North America recorded solid growth compared to the previous year.

“​[In] beauty care we saw very strong margin improvement in 2015. Retail was solid and hair salon was positive, so it's good to see the professional hair care side became positive,” ​comments Rorsted, noting that the company is seeing a turnaround in North America, thanks to the introduction of hair care brand Schwarzkopf to the retail side in the US, with the first results for the year described as ‘promising.’

China online boost​

It is in China though that there has been the biggest boost with double-digit growth in beauty care predominantly driven by very strong online sales, thanks to partnerships that have been initiated with consumer sites.

“We are seeing our beauty business continue to grow double digit in China… And we are seeing that the primary growth driver in China is coming from online,”​ Rorsted said in a conference call.

The Henkel boss has also said that with the company going through a management change in May, with Hans Van Bylen announced as the new CEO to succeed the departing Rorsted​, a new strategy will be announced by his successor in November.