New Henkel CEO to invest more to promote top brands

FRANKFURT (Reuters) - The new chief executive of German consumer goods group Henkel said he will step up spending and focus on the group's top brands, such as Persil and Schwarzkopf to try to grow in emerging markets and boost profits.

Hans van Bylen, who took over in May, said the group would invest as much as 3 billion euros ($3.2 billion) in the next four years, up from around 2 billion for the 2013 to 2016 period.

Henkel, whose products range from detergents and shampoos to industrial adhesives, plans to use the money to develop new products, get them on to store shelves more quickly, enter new markets and invest in digital platforms, van Bylen said.

However, he provided few details on initiatives that will be a part of his new strategy.

Van Bylen also backed away from his predecessor Kasper Rorsted's move to provide an absolute sales target after volatile markets and weaker emerging market currencies scuppered Henkel's goal of boosting revenues to 20 billion euros this year. Analysts on average see 2016 sales at 18.7 billion euros.

Initial market reaction to Henkel's 2020 targets, which also included a pledge to double "digitally-driven" sales to more than 4 billion euros by 2020, was cool and the shares dipped.

Henkel said acquisitions would remain part of its strategy. It spent $3.6 billion to buy North American laundry detergent maker Sun Products, known for its Snuggle brand, in a deal announced in June.

"As the world is changing very fast we also want to be sure that we allocate our costs, be it investments, to where we have the most value created," van Bylen told analysts during a conference call.

In digital, Henkel said it was keen to offer services such as booking platforms for hairdressing appointments, subscription models or automatic reordering to drive sales at its consumer business.

The share of sales generated by Henkel's top 10 brands, which include Persil laundry detergent and Schwarzkopf beauty line products, is to grow to 75 percent by 2020 from 61 percent in 2015, Henkel said.

The group aims for average organic sales growth of 2 to 4 percent per year through 2020, with most of growth coming from emerging markets.

Consumer goods groups such as Henkel, L'Oreal and Beiersdorf have increasingly been relying on growth outside of established Western European markets, as sluggish demand at home weighs on sales growth.

Shares in Henkel were 1.6 percent lower at a four-month low of 107.55 euros by 0954 GMT, underperforming a 0.4 percent decline by Germany's blue-chip index.

The underlying operating profit (EBIT) margin is to improve from last year's 16.2 percent, Henkel said, but it declined to provide a specific target due to market uncertainties and the impact of future acquisitions.

($1 = 0.9351 euros)

(Reporting by Tina Bellon and Maria Sheahan; Editing by Edward Taylor)