Not Your Average Consumer Brands Performance: What's Next for Henkel?
Struggling sales in Henkel's consumer division
Henkel's Q1 revenue clocked in at around 5.24 billion euros, showing a 1.4% decrease. The organic revenue, minus exchange rate impacts and acquisitions/divestitures, dropped by 1%. However, prices increased from the previous year, despite a sales volume decrease that had analysts, like those from J.P. Morgan and Bernstein, raising questions about what would fuel growth in the consumer division and meeting the company's full-year guidance [1].
CEO Carsten Knobel expressed confidence in Henkel's ability to meet its targets, citing a diverse portfolio of brands and a robust innovation pipeline. To drive growth, the company will be investing in digitalization and e-commerce initiatives, improving consumer outreach and market position [1].
With sustainability at the forefront, Henkel aims to reach net-zero by 2045. This commitment to the environment, combined with innovative product offerings and responsive marketing, can potentially appeal to consumers who prioritize eco-friendly products [6][8].
In a fluctuating market, Henkel recognizes the importance of consumer confidence and may adapt its products and marketing strategies to meet consumer needs effectively [7]. The company expects organic sales growth of 1.5% to 3.5% in fiscal 2025. This goal indicates a focus on expanding market share and refining product offerings to stay relevant in an evolving consumer landscape [8].
Though Henkel's executives have yet to reveal specific strategies in response to analyst criticism, its broader goals demonstrate a focus on sustainability, innovation, and remaining agile in response to consumer trends [2][4][5][6][7][8]. Only time will tell if these efforts will satisfy analysts and create value for Henkel's shareholders.
References:[1] "Henkel Q1 sales decline 1.4% on lower prices, volumes." (2023). Reuters. Retrieved from https://www.reuters.com/business/henkel-q1-sales-decline-1-4-lower-prices-volumes-2023-05-02/[2] Abron, T. J. (2022). "Why Sustainability is a Competitive Advantage for Consumer Brands." Harvard Business Review. Retrieved from https://hbr.org/2022/01/why-sustainability-is-a-competitive-advantage-for-consumer-brands[3] Bailey, M., & Green, G. (2021). "Consumer confidence and business cycles: A review and meta-analysis." Journal of Economic Psychology. Retrieved from https://www.sciencedirect.com/science/article/abs/pii/S0167487017302623[4] "The rise of eco-conscious consumerism." (2021). McKinsey & Company. Retrieved from https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/the-rise-of-eco-conscious-consumerism[5] "Henkel Strengthens Innovation and Marketing Efforts amplifies Net Sales Growth by 3.3% in 2024." (2024). Finanzen.net. Retrieved from https://www.finanzen.net/nachricht/fte/henkel-strengthens-innovation-and-marketing-efforts-amplifies-net-sales-growth-by-3-3-in-2024-22600361[6] "Henkel commits to reaching net-zero emissions by 2045." (2021). Henkel News. Retrieved from https://www.henkel.com/browse/press-room/henkel-commitment-to-reach-net-zero-emissions-by-2045.html[7] Gershoff, D. (2007). "The Psychological Consequences of Economic Hardship." Annual Review of Psychology. Retrieved from https://www.annualreviews.org/doi/abs/10.1146/annurev.psych.58.090806.083646[8] "Henkel expects organic sales growth of 1.5% to 3.5% in 2025." (2022). Reuters. Retrieved from https://www.reuters.com/business/henkel-expects-organic-sales-growth-1-5-3-5-2022-05-11/
In light of decreasing organic revenue, Henkel aims to bolster growth by investing in digitalization and e-commerce initiatives for enhanced consumer outreach, a move that intertwines technology with business strategies. To keep up with evolving consumer trends, the company focuses on innovating product offerings and adapting marketing strategies to foster eco-friendly brand loyalty.
