Henkel's Margin Recovery Well on Track Driven by Cost Savings and Lower Direct Material Inflation

In January 2022, Henkel announced the decision to combine its beauty care and laundry and home care business units into one consumer unit in an attempt to achieve more synergies in its customer and channel execution after years of subpar performance, especially in North America. While we believe that operating an overall larger portfolio is important in driving customer management, we see limited upside in terms of growth as there is little marketing and innovation expertise to be shared between the units. Moreover, large competitors in the space are moving in the opposite direction, with Unilever for instance recently announcing that it would move from three divisions to five business groups, with each responsible for end-to-end strategy and execution.