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Henkel Strengthens Long-term Competitiveness

Published on 2004-11-26. Author : SpecialChem

With the launch of a new program Henkel continues the restructuring initiatives of recent years. In a business environment that remains challenging, the company is taking measures that will enhance efficiency and reduce costs as it consolidates its market position.

With the restructuring program launched in 2001 and expanded in fall 2003, Henkel has boosted profitability and sharpened its competitive edge. But as competition becomes increasingly global and cost pressures from low-wage countries are ever more acute, the environment in the key markets remains challenging. For this reason the managing board of Henkel KGaA has decided on the basic principles of a new approximately 400 million euros restructuring program that is expected to achieve annual savings of about 125 million euros from 2007.

"This step is an early and flexible response to changes in the markets in which we operate," says Ulrich Lehner, Chairman of the Board of Henkel KGaA. "With this step we are preempting obstacles and, from a position of strength, securing the sustain-able success of the company and the achieving of our long-term goal of profitable growth."

With the restructuring program launched in 2001 and expanded in fall 2003, Henkel has boosted profitability and sharpened its competitive edge. But as competition becomes increasingly global and cost pressures from low-wage countries are ever more acute, the environment in the key markets remains challenging. For this reason the managing board of Henkel KGaA has decided on the basic principles of a new approximately 400 million euros restructuring program that is expected to achieve annual savings of about 125 million euros from 2007.

"This step is an early and flexible response to changes in the markets in which we operate," says Ulrich Lehner, Chairman of the Board of Henkel KGaA. "With this step we are preempting obstacles and, from a position of strength, securing the sustain-able success of the company and the achieving of our long-term goal of profitable growth."

With the business environment still marked by heightened consumer price con-sciousness coupled with rising production costs, the program seeks to bring about further effective cost-cutting at the same time as boosting efficiency in production, sales and administration.

Besides the restructuring costs already planned for 2004, Henkel expects to allocate an additional approximately 400 million euros for restructuring measures between 2004 and 2006. The future savings anticipated from the program will amount to about 125 million euros per annum from 2007.

The priority of the new restructuring program will be to reorganize production sites and streamline administrative departments. Beyond that it will also accelerate the improvement potential of recent acquisitions. In principle this will affect all business sectors, although region-wise the primary focus will be on Europe and North America. The program will also entail a loss of some 3,000 jobs worldwide by 2006.

"This aspect of the program represents a particularly difficult decision for us," Ulrich Lehner says. "However we are not talking about merely cutting costs, but about in-vesting in sustainable structures which is required of us to fulfill our entrepreneurial responsibility. The personnel cutbacks will satisfy our requisite for social acceptabil-ity, as in the past, and be in accordance with our tradition and our values."

Henkel will determine the actual details of the program only after finalizing the various individual measures and consulting with the affected employee representatives, tak-ing into consideration country-specific statutory regulations.

Source: Henkel


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