Sales volume shrunk
Henkel is planning the next price increase
05/04/2023, 03:19 p.m
The Henkel Group rejects the accusation of “greed inflation” for its products. Nevertheless, the manufacturer of brands such as Persil or Somat is already announcing the next sharp price increases. The situation is just as difficult for companies as it is for consumers.
The consumer goods manufacturer Henkel is planning further price increases for well-known brands such as Persil, Fa and Schwarzkopf. The group is still confronted with rising raw material and material costs and also expects a noticeable increase in wage costs in 2023, says CEO Carsten Knobel, explaining the further increase in prices. In addition, the cost increases of the past two years have not yet been fully passed on. Henkel is therefore currently in the process of raising prices, especially in the consumer goods business.
Strong price increases already characterized Henkel’s balance sheet in the first quarter. Overall, the Düsseldorf-based family company increased its sales from January to March by 6.4 percent to 5.6 billion euros compared to the previous year. However, the strong growth was not driven by increasing sales volumes, but solely by double-digit price increases. Volumes declined both in the consumer goods business and in the industrial business with adhesives.
Nevertheless, Knobel spoke of a good start to 2023. “Price increases can only be implemented on the market if you have attractive brands and technologies,” he said. The manager admitted that negotiations with the big retail chains about the required price increases are not always easy. However, Henkel is nowhere affected by complete delistings, as has happened with other large branded companies.
“Who is the winner of inflation? None”
The manager dismissed speculation that large branded companies were profiting from inflation through unjustified price increases. “Who is the winner of inflation? Nobody. It’s not good for consumers. But it’s also a very difficult situation for retailers and manufacturers,” he said. The fact that consumers are turning to private labels more and more frequently at the moment in view of tight budgets does not worry the manager very much. This can be observed again and again in times of crisis, but the development is reversed again when the situation normalizes. In addition, Henkel benefits from its broad product portfolio, which ranges from premium products to entry-level brands.
The company did not provide any information on the result in the first quarter. However, it reiterated its guidance for the year and announced organic sales growth of one to three percent. Henkel sees the adjusted return on sales at ten to twelve percent due to persistently high costs.