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More Henkel Corporate Reporting 2014
Henkel’s strategic priority “Globalize” is based on capturing growth opportunities in both emerging and mature markets through differentiated regional strategies. We aim to expand our footprint in emerging markets while leveraging our strong positions in mature markets.
In 2014, we delivered very strong organic growth in emerging markets, where we see significant growth potential for the future. The share of sales generated in these markets reached 44 percent, driven by a strong performance across all three business units. In mature markets, sales were positive overall, despite a persistently difficult economic environment, especially in Western Europe, and intense competition. In the course of 2014, we invested in total around 1.8 billion euros across all three business units to acquire brands and technologies in both emerging and mature markets that will complement and reinforce our portfolio.
In 2014, emerging markets again delivered an above average contribution to growth, with total organic sales growth of 7.8 percent. The Asia-Pacific region (excluding Australia and Japan) recorded very strong organic growth while the Latin America region reported solid organic growth. Despite the serious conflicts in parts of Eastern Europe, our businesses continued to grow in this region and reported 4.5 percent organic growth. The Africa/Middle East region was also affected by continued political and social unrest in some countries, yet we managed to deliver double-digit organic sales growth.
We further expanded our current positions and gained market shares in emerging markets across all business units. The share of employees in emerging markets increased to around 57 percent (excluding acquisitions).
We closed several acquisitions in emerging markets in 2014, thus further strengthening our presence and market position. In February, we completed the acquisition of a Polish laundry and home care business, including predominantly detergents and fabric softeners of the “E” brand, and other smaller brands. In May, we completed the acquisition of the hair cosmetics brand Pert in Latin America.
Our Adhesive Technologies business continued to grow at an above-average rate in emerging markets. We benefit from our global reach and proximity to the technical design centers and manufacturing hubs of major customers in different industries. By moving innovation capabilities closer to our growing customer base in emerging markets, we are able to provide local solutions while leveraging global technologies and expertise. We opened a new technology center in Seoul, South Korea, to focus on the advanced materials and new process needs of producers of mobile devices and display screens. The Transport and Metal business performed successfully, particularly due to close partnerships with customers, for example by providing customized solutions for the automotive industry.
Our Laundry & Home Care business further continued its successful performance in emerging markets with very strong growth. In the Africa/Middle East region, Laundry & Home Care delivered double-digit growth, also thanks to successful product innovations developed in the new R&D center in Dubai, which are specifically tailored to consumer needs in the region. Mexico likewise reported strong growth, while in South Korea, Henkel’s leading detergent brand Persil achieved market leadership just five years after its launch. We also expanded production capacities for toilet rim blocks, one of the fastest growing product categories for Laundry & Home Care, with the opening of a new production line in Kruševac, Serbia. This new line supplies more than 20 European markets.
Our Beauty Care business continued to develop successfully, especially in China, where we now hold a leading position in the hair cosmetics category. Also, Turkey recorded double-digit growth rates. In addition to reinforcing current strongholds in emerging markets, Beauty Care entered new markets and categories where we see potential for further growth. Henkel is now present in Sub-Saharan Africa with the innovation Schwarzkopf Smooth ’N Shine, creating a platform for further growth and leveraging our lab and test salon for afro-textured hair in Johannesburg. Beauty Care also reinforced R&D capabilities for Asian hair care innovations with the strengthening of our competence center in Shanghai. These R&D hubs address the wide range of specific consumer needs in emerging markets with tailored innovations.
Henkel holds leading positions in many mature markets across all business units. Mature markets will continue to play an important role for Henkel. Overall, we saw positive development in Western Europe, especially driven by solid growth in Germany with all business units contributing. Our performance in North America was impacted by intense competition, and we were not able to capture the full growth potential in this market.
In 2014, Henkel acquired a number of leading brands and technologies and further expanded its strong market positions in mature markets.
In June, Henkel completed the acquisition of three US hair professional companies – Sexy Hair, Alterna and Kenra. They strengthen the hair professional portfolio of our Beauty Care business in the USA, especially in the categories of Hair Care and Styling. This acquisition makes Henkel one of the top three players in the world’s largest hair professional market. As one of the fastest growing players in Europe, Beauty Care expanded its market position in Germany with a focused portfolio of strong, leading brands and superior innovations.
Also in June, Henkel agreed upon and signed the acquisition of the French company Spotless Group SAS, which operates in the categories of laundry aids, insect control and household care in Western Europe and holds leading market positions in established European markets such as France, Italy, Spain and the UK. This acquisition is part of Henkel’s strategy to invest in attractive country category positions.
In September, Henkel acquired The Bergquist Company in the USA, a supplier of thermal management solutions for electronic applications. This acquisition strengthens the position of our Adhesive Technologies business as a global market and technology leader and is in line with our strategy to invest in complementary leading technologies, which we market to customers on a global scale.
At our headquarters in Düsseldorf, Germany, we opened our largest automated storage facility, which has capacity for more than 25 million packages of laundry and home care products. This warehouse supplies Germany and neighboring European countries. We also commenced the production of Vernel Soft & Oils fabric softener in Düsseldorf. These investments underpin our commitment to our home market Germany, overall the second biggest national market for Henkel globally.