Henkel CEO Predicts Four More Difficult Years for Europe

October 3, 2013 Leave a comment

Henkel CEO Predicts Four More Difficult Years for Europe

Henkel AG Chief Executive Officer Kasper Rorsted said Europe’s economic struggles may last another four years, downplaying the prospect of any imminent recovery. “We don’t expect a lot of growth, if any at all in western Europe” by 2017, Rorsted said in an interview with Bloomberg TV at the company’s headquarters in Dusseldorf, Germany. “Europe overall in the next four years will have quite a challenging position.”The maker of Dial soap and Loctite adhesives gets about a third of revenue from western Europe, where its sales have barely risen in the past two years, leaving Henkel to rely on growth in North America and emerging markets. The euro area came out of a record-long recession in the second quarter amid the first sustained period of financial-market calm since the start of the sovereign-debt crisis, yet recovery remains fragile, with record unemployment and declining industrial production.

Henkel fell as much as 0.7 percent to 74.37 euros and was trading down 0.5 percent at 74.53 euros as of 9:33 a.m. in Frankfurt. The stock has gained 20 percent this year, outpacing a 13 percent increase in Germany’s benchmark DAX Index. (DAX)

Rorsted said he’s more optimistic about the U.S., where he foresees growth accelerating after modest gains this year.

“The U.S. has made a lot of long-term decisions in the last four years,” the CEO said. Falling unemployment, lower energy costs than in Europe and a growing population mean the “underlying assumptions” are “quite attractive,” he said.

Market Strategy

Henkel is shifting resources toward emerging markets, where it plans to have 60 percent of its employees and 50 percent of revenue by 2016.

Unilever, the world’s second-largest consumer-goods maker, said Sept. 30 that sales growth weakened in the third quarter amid a further slowdown in emerging markets because of declining currencies in some developing countries.

Henkel anticipates having to contend with continued “volatility in the market,” Rorsted said.

A “solid balance sheet” means Henkel will buy assets over time, the CEO said. Rorsted said he doesn’t plan to change the dividend policy of Henkel, whose free cash flow doubled to a record 2.02 billion euros ($2.7 billion) last year.

To contact the reporters on this story: Julie Cruz in Frankfurt at jcruz6@bloomberg.net; Hans Nichols in Washington at hnichols2@bloomberg.net

Filed under Macro Trends

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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