No, such a retreat is not easy, especially since it was early at the time. As early as late summer 1990, when Germany was still in the midst of reunification, the Henkel company acquired shares in a detergent plant in Engels on the Volga. Further acquisitions and new buildings were to follow: factories for cleaning agents, cosmetics and adhesives. Most recently, Henkel generated around five percent of group sales in Russia.
But after Putin’s attack on Ukraine, this chapter in the company’s history is to end: Henkel will give up its business in Russia. The board does now decided, after a comparatively long hesitation. According to the company, which includes brands such as Persil, Schwarzkopf and Pritt, the decision was taken “against the background of the current developments in the war in Ukraine”. Henkel condemns “the violence against innocent civilians,” explains CEO Carsten Knobel.
The Düsseldorf-based company is still following the example of corporations such as Siemens and Volkswagen, which announced their withdrawal much earlier. In the end, a “summary of different considerations” led to the decision, explains a Henkel spokesman.
The virtual general meeting, to which the company invited a good two weeks ago, left a lasting impression. Jella Benner-Heinacher, for example, from the German Association for the Protection of Securities (DSW) warned that Henkel would be exposed to “increasing public criticism” if it remained in Russia. The question arises as to whether Henkel is not suffering considerable damage to its image.
Henkel wants to sell parts of the Russian business – possibly to its own people
The economic advisor to the Ukrainian President, Alexander Rodnyansky, had previously called on companies like Henkel to stop doing business in Russia. Otherwise, they could help finance aggressive war, Rodnyansky argued. The Henkel spokesman now also refers to feedback received from customers or employees. The war in Ukraine had also progressed.
At the Annual General Meeting, the head of the Supervisory Board, Simone Bagel-Trah, admitted that Henkel’s remaining in Russia was “sometimes viewed very critically by the public”. The great-great-granddaughter of company founder Fritz Henkel spoke of a “real dilemma” and a difficult decision. In Russia, Henkel primarily manufactures everyday products such as cleaning agents.
“Stopping our Russian business can have far-reaching consequences,” warned CEO Knobel at the shareholders’ meeting, “also for our local employees.” For example, the Russian government could expropriate foreign companies that go out of business in Russia. It’s about “considerable” assets, according to Knobel. Local executives could also be held liable after a withdrawal. Henkel therefore does not want to “make frivolous decisions,” Knobel said.
Henkel operates eleven factory locations in Russia and employs around 2,500 people there. The group has announced that these will continue to be paid for the time being. Henkel says they want to “work on the details” with the workforce, “to ensure an orderly process.” For example, the company is examining whether it could sell individual business areas in Russia. This is generally considered to be difficult, since hardly any Western company is currently investing in Russia. Alternatively, Henkel is considering whether local executives could take over individual parts of the Russian business.
Since the outcome of the relevant negotiations is open, Henkel “cannot yet quantify more precisely” how expensive the withdrawal will be for the group. Henkel temporarily lost three percent in value on Tuesday, making it one of the weaker stocks in Germany’s leading stock index, the Dax.