Henkel is laundered from Russia – Newspaper Kommersant No. 234 (7435) of 12/16/2022

The German concern Henkel, which produces cosmetics and household chemicals under the brands Schwafzkopf, Syoss, Fa, Persil, will operate on the Russian market from next year as an independent company under a different name – Lab Industries. Previously, the manufacturer expected to leave the Russian Federation, losing its business in the country to other businessmen. But experts suggest that the isolation of the Russian part of the business may be an alternative to the sale of assets.

At the disposal of Kommersant was a letter from the CEO of the Henkel representative office in the Russian Federation, Sergey Bykovskikh, to suppliers, which states that from January 1, 2023, the company will operate in Russia as an independent organization under the new Lab Industries brand. In October of this year, the manufacturer filed an application with Rospatent for the registration of the trademark “L.A.B. Industries, ”found Kommersant in the database of the department.

In the letter, Mr. Bykovskikh points out that in April 2022, the German Henkel announced its withdrawal from the Russian market and since then “has been working on the implementation of this decision, which involves the transfer of ownership.” A prerequisite for this is the independence of the local company from Henkel’s global business processes, he clarifies. The letter adds that until the beginning of 2023, the company’s corporate name will remain Henkel Rus LLC. The company did not respond to Kommersant’s request.

The German concern indicated in its financial report for the first half of 2022 that it plans to sell its business in Russia and Belarus. Leaving these markets will cost €184 million, the document said.

According to a Kommersant source in investment circles, Henkel has not yet been able to agree on the sale of the business, which may be due, probably, to a high valuation of more than €500 million. sanctions. The fair value of the Russian part of the German concern’s business is at least €600 million, but in the current situation, such transactions take place at a significant discount, says Mikhail Burmistrov, CEO of Infoline-Analytics.

Separation of the Russian part of Henkel’s business may be due to the desire to reduce political pressure from the EU on the company and gain time for pre-sale preparation, the expert believes. He assumes that the sale of the business is possible in parts, this will minimize the level of discount. But even in this case, according to Mr. Burmistrov, the company is unlikely to be able to earn more than €250–300 million for its assets in Russia.

Dmitry Gabyshev, managing director of Peregrine Capital, believes that after the separation of the Russian division of Henkel and the change of name, the local management of the company can take control. This will become an alternative to the sale of Russian business, he believes. According to Mr. Gabyshev, the transfer of management to local management may include the possibility of repurchase in the future by the German side of the ownership of business in the Russian Federation.

After the outbreak of military operations of the Russian Federation in Ukraine, a number of major manufacturers of cosmetics and personal care products announced the reduction of their presence in Russia. The American Procter & Gamble (brands Pampers, Lenor, Head & Shoulders) announced the termination of capital investments in the Russian market and the reduction of the product range. Colgate-Palmolive has kept only everyday health and hygiene products on sale. Johnson & Johnson (brands Listerine, Clean & Clear, Carefree) stopped importing its personal care products into the Russian Federation.

Alina Savitskaya, Anatoly Kostyrev