Henkel is forecasting a slower than expected start to 2025 due to subdued consumer spending and a challenging industrial environment in some markets, particularly in North America.
The Schwarzkopf and got2b owner said it expects organic sales growth of between 1.5% and 3.5% in 2025, “despite a business environment that remains challenging”, with stronger growth expected to be weighted to the second half of the year.
It follows a positive year for the German consumer goods company with sales of €21.6bn in 2024 and organic growth of 2.6% year-on-year across the business, according to its latest annual financial results.
That was helped by its Consumer Brands business which grew 3%, driven by “continued strong pricing”, said Carsten Knobel, CEO of Henkel, in a call with investors.
“We also saw an all-time high in gross profit margins of our Consumer Brands business and an absolute EBIT [earnings before interest and taxes] record high in our adhesive technologies business.
“Thus, both businesses contributed to the excellent full year results while keeping up with elevated investment levels to fuel further growth.”
The top ten brands in its Consumer Brands business represented more than 50% of Henkel’s sales last year.
Schwarzkopf’s Gliss, which was relaunched in 2024, contributed double-digit organic sales growth.
Henkel announced plans to merge its consumer goods businesses under one brand in 2022, bringing together beauty, laundry and homecare brands, such as Schwarzkopf, LIVE hair colour, got2b, Bloo, Dylon and Jeyes under one division.
Knobel said the company is in the process of concluding this integration ahead of time.
The full cost-savings from integrating supply chains are expected to be achieved by the end of 2025, following completion of the merger of its sales and marketing teams in 2024.
Last year it sold its retailer brands business in North America, including detergents and dishwasher categories after being identified as not core to the new Consumer Brands unit.
Meanwhile it acquired Vidal Sassoon in Greater China from Procter and Gamble (P&G) as part of the company’s wider strategic plans for growth in the Chinese market
Knobel said this will contribute to top line growth.
“Fiscal 2024 was once again marked by major challenges and many economic uncertainties,” he said.
“Nevertheless, we have consistently advanced Henkel over the past year and reached or even exceeded important milestones.
“Above all, the very good business results for 2024 demonstrate the successful implementation of our purposeful growth agenda.”
He added: “The targeted enhancement of our products' value for customers and consumers was a key driver of our earnings improvement. Additionally, savings from the Consumer Brands integration, as well as the announced portfolio optimisation measures contributed to these strong results.”
Organic growth of between 1% and 3% is expected in 2025 for its Consumer Brands business.
The start of the year is expected to come in lower than last year due to strong launches in the same period in 2024, along with promotional phasing and one-off costs associated with supply chain integration.
Sales and product launches in this division are expected to be skewed to the second half of the year.