Henkel to cut 3000 jobs despite positive sales

Following the publication of its end of year results the German-based company has announced plans to increase its profitability in the face of rising raw material costs that could result in up to 3000 job losses. Sales increase across all divisions ​ Henkel reported full year sales of €13bn an increase of 2.6 per cent on the previous year. According to the company the figure was negatively impacted by the strong euro and after adjusting for foreign exchange and acquisitions/divestments sales increased by 5.8 per cent. Operating profit increased by 3.5 per cent to €1.3bn and operating margins increased 0.1 percentage points to 10.3 per cent. Cosmetics and Toiletries strong in Western Europe​ The company's cosmetics and toiletries sector that makes up 23 per cent of overall sales, enjoyed sales of €2.97 bn, up 3.7 per cent on last year's figures. Operating profit improved by 3.8 per cent to €372m - an improvement of 6.6 per cent adjusting for foreign currency exchange - however operating margins fell slightly from 14.4 per cent to 14.2 per cent. The company reported that business in Western Europe is growing substantially faster than that of the overall market, and double digit growth rates were achieved in Eastern Europe. Sales were boosted by a number of new product launches such as the Brilliance Fashion Collection of hair colorants and Men Perfect, the company's first men's hair colorant from Schwarzkopf. Henkel also noted the success of Right Guard in the North American market, even though overall sales in the region suffered. Fall in American sales​ Sales in the North American market fell by 6.8 per cent to €2.5bn, but after adjusting for foreign exchange, sales increased by 1.4 per cent. Organic sales growth amounted to 0.7 per cent and the majority of this the company put down to the cosmetics and toiletries sector. The Asia-Pacific region posted the best figures regionally with sales rising by 6.0 per cent to 1.1bn euros, closely followed by a strong performance in the Latin American region where sales increased 4.3 per cent. Job losses to increase profitability ​ Despite the relatively positive year end results, Henkel has announced plans to increase profitability that may result in as many as 3000 job losses. "With this step we are responding early and responsibly to the ever faster changes in our markets,"​ said chairman of Henkel's management board Ulrich Lehner. The plan is a response to the ever stronger competition and increasing costs, particularly those of raw materials, stated the company. The initiative is designed to bring annual savings of approximately €150m from 2011. Henkel to sell Ecolab to finance National Starch acquisition ​ Henkel plans to sell its 29.4 per cent stake in Ecolab, a commercial cleaning and sanitizing company, which the company estimates will raise approximately €2.5bn. The funds may go some way to help the company purchase the adhesives and electronics materials sector of ICI-owned National Starch, which is postulated to cost the company €4bn.