19 Dec 2022 18:31

Henkel spins off Russian business into independent Lab Industries

MOSCOW. Dec 19 (Interfax) - Germany's Henkel AG has spun off its business in Russia, which it will operate independently under the Lab Industries name beginning from January 1, 2023, Dow Jones said in a statement.

Transferring ownership is only possible if the local business can operate independently of Henkel's global business processes and systems, a company representative told Dow Jones.

The German manufacturer of cosmetics and household chemicals in mid-April announced its decision to shutter its business in Russia, saying that it would cooperate with the Russian team in order to prepare the details of the process that could include selling or transferring the Russian business to a new owner. A total of 2,500 local employees continued to work and receive salaries, the company said at the time.

Henkel in early March announced that it was stopping new investments in Russia, as well as ending advertising campaigns in state media and all sponsorship activities. The company's Russian press service later clarified that production and operational activities would continue in the country.

Spinning off the Russian division from Henkel's global business is not an alternative to the previously announced sale of the Russian business, Henkel's press service told Interfax.

The press service said that this was only the first step and a necessary condition to exit the country and to transfer ownership in order to ensure the independence of the local company from Henkel's global business processes. Therefore, the Russian division will operate as an independent organization under a new name as of January 1, 2023.

Henkel combines adhesive technologies; laundry & home care, cleaners and detergents; and beauty care, cosmetics. The brand portfolio includes Persil, Bref, Pril, Laska, Schwarzkopf, Syoss, Fa, Ceresit, Moment adhesives, Loctite, and others.

Henkel has been operating in Russia for over 30 years. The company has around 2,500 local employees, as well as 11 factories and 12 offices in different regions.

According to data in the SPARK-Interfax analytical system, Henkel Rus LLC increased revenue 13.1% to 95.14 billion rubles to Russian Accounting Standards (RAS) in 2021. Net profit totaled 7.48 billion rubles against 7.84 billion rubles the previous year. The company allocated 5.6 billion rubles for dividends last year, and other profit distribution payments in favor of owners, compared to 6.65 billion rubles in 2020.