Henkel eyes growing revenue with regional expansion

Kenya: Consumer goods giant Henkel plans to grow its adhesive division in Eastern Africa. This is in a bid to grow revenues and cut a heavy reliance on the Kenyan market. The firm is angling to tap into the rising middle class and rapid urbanisation in the region that has led to real estate boom and rise in demand for furniture. This has in turn upped demand for adhesives used in constructing houses and making furniture.

The firm sells its range of adhesives across East Africa, but Kenya accounts for most of its revenue. The country accounts for more than 80 per cent of the revenue earned by its consumer adhesives division. Growing sales in the other East African markets is expected to cushion the Germany headquartered firm in instances of reduced consumer spending in one market as well as grow its bottom line.

The company said revenues for its adhesive division for the half year to June grew to Sh268 million, from Sh238 million last year. It targets Sh554 million in the 2014 full year results. "There is need to grow other markets such that they can contribute 50 per cent of our revenues," said Henkel's Consumer Adhesives Division in East Africa Manager Rosemary Ndinda.

"Currently, Kenya contributes about 84 per cent, which shows we are over reliant on one country and we need to grow in other markets and spread our risk so that we are not affected when there are challenges like reduction of purchasing power in any one market." She spoke Friday in Nairobi, when the company met its channel partners from across East Africa.

The company manufactures popular adhesives with brands like Pritt, Ponal and Tangit - an adhesive for water pipes. The adhesives division is in addition to other product lines that include detergent, personal care and chemicals products and is behind brands like Persil detergent and Fa range of products.

Henkel Kenya Managing Director Philippe Huenermann said there is huge growth potential outside Nairobi as well as in other regional markets. "There is so much more growth outside Nairobi, mostly because of a growth being experienced in the other urban areas and there is a rise in demand for furniture and other items that use adhesives," he said.