The divorce should only be successful by December last. Later it was said until March. Now it was mid-April: the Düsseldorf-based consumer goods group Henkel separated from its Russian subsidiary. On Thursday evening, the supplier of Pril and Persil, Pattex and Schwarzkopf cosmetics announced that it had sealed the sale to Russian financial investors – for 54 billion rubles, which corresponds to 600 million euros. “The relevant Russian authorities have already approved the transaction,” the statement reads. That’s important, because complicated and often changing administrative requirements were one of the reasons why Henkel’s withdrawal took so long.
After all, CEO Carsten Knobel promised the sale last April, two months after the start of the war in Ukraine. He was responding to public criticism and calls for a retreat. The manager initially wanted to close the deal by December, then by the end of the first quarter. Knobel points out that many of Henkel’s international rivals remained in Russia, despite the invasion of Ukraine. Henkel is among the consumer goods manufacturers “one of the few or the only one who has taken this step,” he said last month at the balance sheet presentation.
And this step is more expensive for Henkel: The company has been active in Russia for more than 30 years; the local subsidiary called Lab Industries recently achieved sales of one billion euros with 19 locations, including eleven factories, and 2,500 employees. The most recent annual report only shows the value of the division at 526 million euros, but the real sales value that Henkel could have achieved before the outbreak of war is significantly higher. The future owners are now paying the equivalent of 600 million euros. After all, that exceeds the 526 million euros from the balance sheet, but the Dax company still expects that it will ultimately have to report a loss for the sale. According to a spokesman, the amount also depends on the exchange rate; Henkel will probably provide details when the half-year figures are presented in August.
The consortium of buyers includes the companies Augment Investments, Kismet Capital Group and Elbrus Services. In the announcement, Henkel emphasized that all of the buyers have been doing business with Western partners for a long time and are not subject to any sanctions from the EU or the USA.
Uniper needs Putin’s approval
Henkel is not the only company having trouble and problems leaving Russia. Michael Harms, managing director of the Committee on Eastern European Economic Relations, complains that the government in Moscow is obstructing the withdrawal of Western companies and has “continuously tightened” the rules for this. Another Düsseldorf company is also suffering from this: the nationalized gas importer Uniper. He wants to sell his Russian power plant subsidiary, but apparently President Vladimir Putin himself has to give permission. So far, that hasn’t happened – at the same time, the crisis group has de facto no longer had access to Russian society. Uniper therefore had to set the value of the transaction to zero on the balance sheet.
For Henkel, on the other hand, the agreement with the Russian buyers is good news, which appropriately comes shortly before the annual general meeting this Monday. CEO Knobel will have to listen to some criticism there. In its speech for the shareholders’ meeting, the fund company Union Investment complained that Henkel could be more profitable. According to the manuscript, the company is “currently a long way from the medium-term goal of a profit margin of 16 percent,” said Union Investment representative Vanda Rothacker. Rothacker also wants to address the Russian business. But Knobel can now report completion here.