Feb 27, 2008
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German chemical group Henkel to cut 3,000 jobs

Feb 27, 2008

FRANKFURT, Feb 27, 2008 (AFP) - German chemicals group Henkel said Wednesday February 21th it planned to cut 3,000 jobs and sell a stake in a US affiliate to cope with soaring raw material costs and stiff competition and to finance an acquisition.

The restructuring programme, launched in response to "changing market conditions, especially with regard to ever stronger competition and increasing cost pressure," will cost 500 million euros (750 million dollars), Henkel said.

Details of the cuts, aimed at saving around 150 million euros per year from 2011, will be announced once they have been worked out in detail and discussed with unions, a statement said.

The maker of Persil washing powder, Fa shower gel and Duck Tape currently employs around 50,000 people, four-fifths of whom are outside Germany.

"With this step, we are responding early and responsibly to the ever faster changes in our markets," Henkel chief Ulrich Lehner said. "This way, we prepare for oncoming developments and ensure the future viability of our company from a position of strength."

It also said it plans to sell all or part of its 29.4 percent stake in Ecolab, a US provider of cleaning products and services in hospitals and restaurants.

The stake currently has a market value of 3.7 billion dollars, it said. No decision on the timing, size or method of the sale has been taken yet.

Proceeds will be used to finance Henkel's 2.7-billion-pound acquisition of the adhesives and electronic materials businesses of US-based National Starch and Chemical Company announced last year.

National Starch is a subsidiary of Britain's ICI which in turn was recently snapped up by Dutch-Swedish chemicals giant Akzo Nobel.

The announcements came as Henkel announced a better-than-expected eight percent rise in 2007 net profits to 941 million euros (1.4 billion dollars).

Henkel's sales exceeded 13 billion euros, a rise of 2.6 percent, thanks to across the board growth. Organic sales growth -- adjusted for acquisitions, divestments and foreign currency fluctations -- came in at 5.8 percent.

Henkel shareholders stand to receive a six percent increase in the dividend, to 0.51 euros per ordinary share and 0.53 euros per preferred share.

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