Henkel battles rising costs as Middle East tensions disrupt supply chains
Henkel, the Düsseldorf-based consumer goods giant, is facing growing financial pressure due to rising oil prices and supply chain disruptions. The company, which owns brands like Persil and Schwarzkopf, has warned that delays in raising prices could worsen the strain on its operations.
The CEO has signalled that the ongoing geopolitical crisis, particularly tensions in the Middle East, is pushing up costs across materials, logistics, and energy. The conflict in the Middle East has disrupted global supply chains by threatening the Strait of Hormuz, a critical route for 20% of the world's oil and gas. With longer transport times and higher shipping costs, Henkel's expenses have climbed. The company relies on oil-derived materials, and energy prices have surged as markets anticipate shortages.
Suppliers and logistics firms are now passing these increased costs on to Henkel. The CEO has stressed that waiting too long to adjust prices could make the situation harder to manage. Despite this, the company remains hopeful that the crisis will ease before the end of the year.
Henkel, which employs around 47,000 people globally, is focusing on the strengths of its well-known brands to justify higher prices. Persil and Schwarzkopf, in particular, retain strong customer loyalty, which may help offset resistance to price increases. Last year, the company reported sales of approximately €20.5 billion, though less than a fifth of its workforce is based in Germany. Henkel's next steps will depend on how quickly it can adjust prices without losing customer trust. The company's ability to maintain loyalty for its key brands will be crucial as costs continue to rise. For now, the focus remains on navigating the crisis while protecting its market position.
