Loctite is owned by Henkel and adhesives is the largest unit of the company. The company has been struggling with declining sales and has several opportunities to reverse that. Although sales have been in decline, there was little reporting available on the reason for that, and therefore, information on weaknesses of the company are limited.
- Loctite is the only consumer brand of its parent company, Henkel, which was founded in 1876. Henkel is headquartered in Düsseldorf, North Rhine-Westphalia, Germany. Loctite manufactures products for both industrial and consumer use. The consumer products include adhesives, foams, sealants, and epoxies.
- Henkel Loctite is the 3rd leading global manufacturer of adhesives and sealants in the world.
- Henkel, the parent company of Loctite, has an extensive global presence and distribution network.
- In September 2018, Henkel broke ground on an Innovation Center for Adhesive Technologies in Germany. This shows a commitment to advancing the adhesives industry and a commitment to Loctite, its consumer facing adhesives company.
- Henkel continued to grow its adhesives business in 2018 through two acquisitions: Aislantes Nacionales in December 2018 and Union Tecnico Comercial S.R.L. in January 2018.
- Loctite has a store on Amazon and the product reviews are overwhelmingly positive, with the majority of products being rated 4 stars or more out of 5.
- During the first quarter of 2018, delivery difficulties in North America caused a slow start to the year. The supply disruptions were caused by "changes in transportation and logistics."
- Sales in the adhesives unit for Henkel decreased to 1,781 million euros in 2018 from 1,832 million euros in 2017, a 2.8% decline. A thorough reading of the annual report did not explain any reason for a decline in this particular unit. However, a 2019 story in the NY Times indicated that sales in the adhesives unit were declining in 2019 due to a slow down in the auto industry
- The company can continue its digital transformation to help increase digital sales, which increased at the Group level by double digits in 2018.
- With Henkel's extensive investment in R&D, one of the opportunities listed in the annual report is the ability to innovate at an unexpected level which could have a large impact on the company's bottom line.
- According to a recent market report, the biggest growth drivers in the adhesives market are an increased demand for packaging, a move toward composite adhesives, and an increased demand for bio-based adhesives. These all present opportunities for Henkel.
- Also, Asia-Pacific is the fastest growing region in the sector, and in 2018 Henkel's sales in this region declined. This shows they have opportunity for growth in that region. In the third quarter of 2019, organic sales in Asia-Pacific were down 5.7%.
- The CEO of Henkel, Hans Van Bylen, is stepping down as of January 1, 2020, and Carsten Knobel will take over. This provides an opportunity for the company to move in a different direction and reverse the sales decline that has been occurring.
- According to the 2018 Henkel Annual Report, there are several risks the company is facing. The two risks with the highest probability are macroeconomic and sector-specific risks, and risks from pension obligations.
- The major macroeconomic and sector specific risks facing the company are increased global conflicts, the UK leaving the European Union, increased global trade conflict, increased competition that could lead to downward price pressure, and increased private labels taking market share.
- The major risks related to pension obligations are market risks. Henkel has reduced risk in this area by converting traditional pensions to new options. However, uncertainty with interest rates, inflation, and life expectancy can all impact pension benefits and there is a risk that the money needed will not be available at any given time. However, even though this was identified as a high probability risk, no extraordinary risks were identified.
We utilized several strategies to uncover data on the strengths, weaknesses, opportunities and threats for Loctite and its parent company, Henkel. Initially, we focused on company websites, press releases, and annual reports. Company reporting is a good starting point to determine what the company is focusing on, how their growth is looking, and any positive announcements the company wants to highlight.
Next, we utilized a press search to supplement and validate the data we had found in the company resources. This included searches of general news sites such as The New York Times and Irish Times, as well as industry specific publications such as Adhesives.org and ASI. While we were able to supplement our data with information on the company's sales decline in 2019, and the company being ranked as the 3rd largest adhesives company in the world, there was very little recent reporting specific to Henkel and Loctite.
Our final strategy was to examine the adhesives market overall to uncover any trends or industry changes that would impact Loctite. This allowed us to find details on market drivers, regions that are leading the growth, and then tie that back to Loctite.