Good morning to everybody. Good morning to our Capital Markets Day. Great to see you in person, but also great to see people virtually connected to all of us. That's the new normal after COVID to have hybrid formats. Thank you for joining us today and also for sure thank you for being interested in our company today. The Capital Markets Day at Henkel has a very long tradition. It's about creating transparency, it's about giving you an understanding of our businesses and fostering a dialogue. Before COVID, we always were focusing on 1 of our divisions or 1 of our businesses.
You know, after COVID, we have felt that it makes good sense today to talk about Henkel and focus on our Adhesive Technologies business, on our future Henkel Consumer Brands business, but also on 1 topic which is really at the heart of all of us, what we're doing about sustainability. We want to give you an understanding of where our business is, to understand our future plans and also the prospects for the businesses we have in mind. You may recall that chart from March 2020 when I started as CEO. Since then, a lot of things has changed. The environment has given us a lot of challenges. Therefore, despite the fact that things are changing, I think there are also things that didn't change.
My commitments, transparency and trust, full ownership of the results, but also driving change has not changed. That has led me over the past 2 and a half years, and also I continue to be committed to these things. What are our plans for today? I hope we will give you a great experience on different topics. It is about our Purposeful Growth agenda. We would like to take that as a catalyst for the future and also for change. It's also about the question, how, from a competitive edge point of view, talking about digitalization, innovation and sustainability, we are creating superior customer and consumer value. It's about the distinctive strategies of our businesses, Adhesive Technologies and Henkel Consumer Brands, to drive that, to drive growth, to drive profitability, and by that, reaching our mid to long-term financial ambition.
When we talk about driving progress, it's not only about 1, it's always, I'm convinced about that's a team effort. It's not only Marco and myself which you normally see, but it's really the board which is here, Sylvie, Jan- Dirk, Wolfgang. You're missing 1 person, which is Bruno. You have maybe seen already the press release in the morning. When it comes to our Henkel Consumer Brands business, we are ahead of plan. By that, we have decided that, Bruno will leave the company thirtieth of September in this year. Wolfgang will take over additionally in Laundry & Home Care from first of October.
In that sense, for sure it's not today to make the farewell of Bruno, but really a big thank you to Bruno for his dedication and for his achievements over more than 30 years at Henkel and more than 11 years, leading the Laundry & Home Care business, for our company. As you see, it's not only about the board, but it's also about other members of our leadership teams who are the experts on certain topics and who will guide you during the afternoon through our experience tours, through the three businesses, in future, the two businesses which we are having. Looking at that and the agenda, but before, Thomas, you said it, a great new building. I think it's the biggest single investment we ever did in the history of our company, not only for Adhesive Technologies. It's a EUR 130 million investment.
I think it's the biggest innovation center in the adhesive technology world, also outside Henkel. We're bringing here together 650 research and developers across Europe. We brought them together from over 40 countries. I think here you will see, and you hopefully later will experience really customer feelings in terms of we have also brought customer into that building, into laboratories. I think a great step forward when we talk later also about innovation. Marco and myself will kick it off with winning the 20s through Purposeful Growth. Then Sylvie will take it over.
I talked about it, talking about the topic which is really at the heart of what we are doing, sustainability, which is also anchored, and you will see that later when Jan- Dirk and Wolfgang will present in our businesses, but for sure not only sustainability, but giving you an overview about the whole business. Then we do a Q&A session before we go for lunch. After the lunch, we go and we already announce the experience tours of the three businesses in terms of the Lighthouse, the Global Experience Center and Adhesive Technologies. We will close it with a Q&A, and we will finish around 5 P.M. I said it before, the experience tour will be of, from our point of view, a great point going forward. You will see eight marketplaces, innovative technologies.
We have nine experts which will, within our three best-in-class experience centers, show what we are doing in order to drive growth and profitability of our business. That's what you also know, the disclaimer. Now let me remind that always that the content is subject to this disclaimer, and I will not read it out, but we take it into the records. With that, let's get started. The motto of this Capital Markets Day is Winning the '20s through Purposeful Growth. It is the aspiration which is closely linked to our framework. Going back to March 2020, I think we also defined for ourself what purposeful growth means. To remind you, it is about three topics. It's about creating customer and consumer value, and by that outgrowing the markets in which we are operating.
It is about reinforcing the topic of sustainability, the leadership in sustainability, and with that, three topics we have in mind. It's for sure shaping Henkel's future. It is about contributing to the society and also benefiting the planet. At the end, we can only achieve that with people. Therefore, we want to enable our people to grow individually and also give them a sense of belonging. All of that should lead in driving accelerating growth, accelerating profitability, and by that generating value, creating value to all stakeholders, in that sense. We know that, in some of our businesses, the recent performance was not meeting our expectations, so does the share price do. On the other side, we are convinced that we have strong businesses at hand, which we would like to show you today.
That we have a great team, a great culture, and a great strategy in place in order to capture the potentials for the future. That's about what we would like to show you today. The first part, I would like to concentrate on our strengths, then turning into how we want to shape the future. Marco will then go to the performance and the ambition we're having, and I will wrap it up before we then go into the next steps. Let's start with our key strengths. We have unique businesses which in the future will be combined under two pillars. We are operating in markets, in industry and in consumer, which are big, which are growing, and which are very attractive. In that context, we have a business in Adhesive Technologies, which is the global number 1.
We have great leading positions in our consumer businesses, and behind that are winning brands, are great technologies, and especially technology point of view, we would like to get across during the presentations, but also during the experience tour, and also related to that, innovations. From a Henkel perspective, the businesses which we are driving, they're sharing benefits from shared platforms, but also from a shared infrastructure. Which is state-of-the-art shared services, where we have great efficiency when it comes to transactional services. It is about worldwide functions, HR, finance, IT, purchasing, where we are supporting the businesses. We're having the financing power from Henkel to support the businesses when it comes to external growth, M&A. I think if you look back at the last, at least, the last decades, we have been navigating through turbulent times with this setup in a quite good way.
I hope we can come, bring that across, that there are reasons to invest behind our company. We have a clear strategy to create Purposeful Growth. We have a leadership in sustainability, which is becoming more and more important going forward, and which needs to be embedded in the businesses in which we are doing, not only on a corporate perspective. There is a strong team behind, 52,000 Henkelers with an entrepreneurial spirit. We are all dedicated to reach also our financial ambition, our midterm financial ambition, our long-term financial ambition based on a strong balance sheet. Since a while, we are also using all potential elements of a capital allocation strategy. I think all of that should help us, support us in creating a winning strategy for our company. Taking a look at the business.
If you look into the future, a business on a EUR 20 billion turnover, which is split more or less half in a highly qualitative Adhesive Technologies business, serving a broad range of industry. 800 industries in which we are bringing our products, our solutions to. Our consumer businesses, beauty and laundry, which we are currently merging into 1 strong platform, and by that being active in attractive markets. On the other side, from a regional perspective, I would say well-diversified, being in the mature and in the emerging markets, having a good footprint in that setup. For sure, with the biggest markets we are serving in North America and in Europe. I said it before, Adhesive Technologies, global number 1. Market share of around 14%, significantly bigger in size than the number two.
It's not only that we are the global number , but also in the segments, in the divisions in which we are in. Automotive and metals, packaging and consumer goods, electronics and industrials, we are occupying the number 1 position. You see a number two in consumer, craftsmen and professional. Here we are more regionally focused and in the regions in which we are in, be it Eastern Europe, be it Middle East and Latin America, we're also here occupying number 1 positions. On the one side, you can be proud of that, and we are proud of that. For sure, being a market leader in that, in that context is not something to be taken for granted, but really something which we have to earn, Jan- Dirk and the team, every day. Looking at our consumer businesses, leading category positions.
With the announcement to merge our consumer businesses into 1 multi-category platform, we have clearly described that we have core categories we are focusing on, which is Laundry & Home Care and hair. If you take the active markets in which we are in, we have a number 2 position in Laundry & Home Care. We are number one in hair styling and in colorations. Since the acquisition of the Shiseido business in Asia, since then, we are the core number 2 , also in the professional business. These businesses can only be so strong because we have great brands behind, powerful brands. Around 30% of our turnover is created by three brands, by Loctite, Schwarzkopf, and by Persil.
If you look on the top 10 brands, a quite concentrated portfolio in the range of 70%-85%, depending on which kind of business you're looking at. You then look to the long-term development. I think a resilient business with a profitable long-term performance. Yes, in recent years, by a lot of headwinds, business, also our business, as others have been impacted, be it the COVID situation, be it experiencing material cost increases in 2021, more than EUR 1 billion, so 10 times more than we experienced in the average of the last 10 years before. Also for sure, related to our decision to invest more in digitalization, in our marketing investments, which we announced the beginning of 2020. The more investments should relate to a higher growth profile in terms of top line.
If you see since 2019, we have been growing the company around 5% in terms of OSG, organic net sales growth. Yes, for sure, in the recent quarters, also impact by an inflationary environment and by that, by a pricing component. You should also take into account that when we announced beginning of 2020 portfolio measures, and a part of these portfolio measures are discontinuing businesses which are hurting our OSG. I think what we already see is that the acceleration of growth is happening. Long-standing leadership and sustainability, I mentioned it already twice. I think we have a point which is strong, that sustainability is strongly rooted in our DNA, and I think we have not started to create a sustainability strategy years ago or three years ago.
Our sustainability strategy started really in 2010 already when we were defining clear milestones where we want to go. We are performing on that. We have achieved significant milestones related to that, and we will also see later some clear KPIs which are proving that. It confirms that also sustainability needs to be embedded in our strategies, in our business strategies going forward. Also confirmed by top ratings, for example, by EcoVadis, where we are belonging to the top 1% of best companies when it comes to sustainability. All of that is only possible with a strong team, which are defined and united by a common purpose. Last year, we created this purpose, and I think this purpose really expresses what unites us, pioneers at heart for the good of generations. It is really something.
We were not surprised, but it really resonates more than well within the company with our employees. They're all behind, and I think as I mentioned it before, it really expresses quite well what we believe is important, for our company. With this now, moving to our Purposeful Growth agenda. This is what we defined in March 2020, with six pillars behind that strategy, a winning portfolio, a competitive edge, and the three dimensions of innovation, digitalization, and sustainability to create and continuously work on future operating models. All of that, you know, founded or based on a collaborative culture and really by empowered people. For sure, as a lot of other companies, we have been impacted by the environment, but we have never, you know, given up on that portfolio or on that pillars.
We had a relentless focus on the implementation, and we made also good progress over the last and a half years. I think we have informed you on a regular basis every six months where we are standing on these pillars. Therefore, today I only would like to give you some highlights, some achievements related to that. Since the beginning of 2020, we have executed six acquisitions, supporting the three businesses at that point in which we are in. At the same time, we have exactly executed what we promised to do, taking roughly half a billion EUR of our businesses brands out of the portfolio, either divesting or discontinuing because they are not meeting anymore our expectations in order to accelerate growth or supporting profitability from a gross margin or from a bottom-line perspective.
At the same time, the focus on digitalization has led to the point that we're in the meantime have roughly or more than EUR 4 billion of turnover which are related to digital sales. That means an increase from around 12% at the end of 2019 to a share of above 20% while we are speaking. Sustainability, I talked about the achievements. Roughly 70% of our renewable electricity is the total share of electricity we are using from 11% we have been doing at the end of 2019. We brought sust ainability into our products, into our solutions. You will see that during the afternoon in some examples. We are also part of capital allocation, returning money back to the shareholders. More than EUR 3 billion since then. We have dividends, but also we are the first ever share buyback of Henkel.
Looking more at the businesses. Also, here you will see examples. In Adhesive Technologies, that's only one example. If you think about what is happening in the electric car situation with batteries, you're seeing more than 50% growth rates in that field of Adhesive Technologies. When we look at our consumer businesses, as I said, core categories, Laundry & Home Care. Here we have been increasing market shares by 120 basis points since end of 2019. You see the remark excluding North America. I think it's clear that we need to achieve the turnaround in North America. That's definitely a topic which we continue to focus on. It also shows that the additional investments we are doing, the focus on certain categories is paying off in that sense. I talked about the merger already at the beginning.
We are ahead of plan with the set up of the consumer business. If you look again at the topic of people, top leadership executives, 98% have been engaged in leadership programs in order to bring our culture, to bring our leadership commitments, what we have in mind, to life. Overall, we are taking the company based on the Purposeful Growth agenda to the next level in order to win the twenties. We have advanced in portfolio, we have advanced in the area of competitive edge and also in our operating models. For sure, these comprehensive measures which we initiated will bring us to the next level. We have been able, over the last two and a half years in these turbulent, unprecedented times to navigate through that.
In August, we were updating our outlook on our consumer businesses with a higher growth pattern of roughly 200 basis points from the range, which had an impact of 100 basis points on Henkel overall. As you have read in the morning, we are doing that based on the strong start or a continuously strong development of our Adhesive Technologies business. We have also here updated our outlook for adhesives and in consequence for Henkel and Marco will go into that a little bit more in details in a second. The priorities going forward are related to the point that the successful implementation we have been doing, we will continue by creating sustainable value creation in the Consumer Brands merger, but also related to our portfolio measures. I mentioned it before.
For sure, we are taking care that the sustainability that we will see a sustainable turnaround of our consumer business in North America and also a progressive margin recovery in order to meet our expectation when it comes to our mid to long-term financial ambition. That's for the first part. Let me now go into the part how we want to shape the future going forward. Related to our Purposeful Growth agenda, accelerating growth, having better growth dynamics is one of our focus areas. Driving this organic growth for sure by leveraging innovations which you will see in the afternoon, clear examples where you can touch and feel what is happening in Adhesive Technologies and in our consumer brands business.
Two topics we should support that, which is active portfolio management, and I will come to that, in a minute when I talk about Henkel Consumer Brands. M&A has been but also will be an integral part of our company going forward. We want with that to strengthen both business pillars, Adhesive Technologies and our Henkel Consumer Brands business, and we have the relevant, financial means for that. Marco will also talk about that. The combined business unit of Henkel Consumer Brands. I know that not everybody of you was or is, 100% convinced that this is the right step. We are convinced that this is the right step. As I mentioned before, the integration progress is ahead of plan.
That's also why we made the changes that Wolfgang takes over first of October, also the Laundry & Home Care business. We are also providing the details of what we are doing, providing the synergies of gross savings of EUR 500 million until the end of 2025, are confirmed. The same is for the EUR 250 million of net savings, which we will have a full swing in the P&L of 2024. We are working also on additional portfolio measures. To avoid misunderstandings, we had the first part of our portfolio actions, the EUR 0.5 billion I showed before, which we executed in 2020 and 2021. The additional one billion, now predominantly focused on our consumer businesses, is underway.
We have clear plans how we would like to further drive this part especially related to businesses which are dilutive in growth and also not meeting our gross margins which for us is for sure especially in these times showing how important a good development in gross margin or a size in gross margin is. Which brings me back to the topic of driving growth by impactful innovations, so one part of the competitive edge area. We have a good innovation pipeline related to that. I would like to mention here at this point two topics which you will later see. One, in the field of our Henkel Consumer Brands business, which is Dispersin. It will be launched as a new technology with our flagship brand, Persil, in 2023.
It's a unique enzyme which will bring deep clean to the next level developed in cooperation with Novozymes, which is definitely something which you will see and you can touch and see in the afternoon how the teams have been working on that and what it brings to products in our portfolio. Another example, looking at our Adhesive Technologies business, also here you will experience. I already talked about the battery business overall in the car industry. You will see in our battery lab what we are doing in terms of bringing battery application into the cars, into the electric cars. I mentioned before, more than 50% growth rate related to that, and you will also see that in the afternoon.
Our internal efforts to drive innovations, to drive new products, new solution, is supported on the one side by these kind of innovation centers. I talked already about this one. Jan-Dirk give you more details. We are currently building another innovation center in Shanghai, and for sure we have also great innovation centers, R&D centers in our Henkel Consumer Brands business. Wolfgang will also talk about it. It's also about partnerships, strategic partnerships related to that topic and a collaboration which we are doing. We have also decided, you know that we are also investing, again, in venture capital and a new venture capital fund too, with a size of EUR 150 million, as we have also done it with the first one. Digital strategy, the second component, of the competitive edge.
You have seen that we are growing the business from a digital point of view to more than 20%, in terms of total sales, but it's based also for sure on platforms. One unique platform which we're having is RAQN, developed by our own, which is currently already serving more than 250 websites and more than 30 brands which are on that platform. It's not only about digital initiatives in terms of new projects, but it's also staying efficient when it comes to the cost structures of IT.
We have transformed that over the last one and a half years, brought significantly people out of the businesses, out of IT, but also brought new one in with new skills, which are important in terms of artificial intelligence, data focus, and also here you will see some examples, going forward, in the afternoon. When it comes to production, Industry 4.0, the transformation on that, I think we are doing here also having good progress. We have received from the World Economic Forum related to our Laundry & Home Care plans now three times in a row this award for really Industry 4.0 best-in-class practices. Sustainability, I will be short because Sylvie is taking you through the details. The ambition, the 2030+ ambition of our strategic sustainability framework is out.
It is a 10-year acceleration when it comes to being or becoming climate positive from 2040 accelerated to 2030. Gender parity until 2025. If you think about the circular use of water resource and waste material, we want to do that until 2030. All of that, from a competitive edge perspective, should help us to get to our compelling mid- to long-term financial ambition, which is 3%-4% OSG, which is reaching an adjusted EBIT margin of around 16% and the adjusted EPS development in terms of having a mid-to-high single digit growth, including M&A activities at constant currencies for the midterm. We are convinced that, with that, aspiration, we have the right setup, we have the right, strategy, and the right team in order to deliver on that.
To give you more details on our performance and on our ambition, I will hand over now to Marco. Thank you. Marco, please.
Yeah. Warm welcome also from my side, and, I'm particularly happy to see you now in person after almost three years of digital communication with a lot of you in various formats. Very happy to see you here and also having the chance to interact, then during the breaks and during the day. Taking a closer look now to our financials, and, I wanna also frame that, with the environment we are operating in over the last two years. We all talk about it's a kind of unprecedented environment we are in. Beginning 2020, obviously, the whole COVID pandemic has hit us, and that also, of course, had an impact on the markets and on our business. Markets are still being impacted by the whole development, of the COVID pandemic. Some market segments normalizing still.
For example, in styling, we see that is normalizing versus being quite down after the first phase of the COVID pandemic. Now that has picked up again. We saw in the first part of the COVID pandemic a surge, you know, in home coloration, hygiene-related products that has normalized down. There is a lot of volatility also in the markets that we operate in. Then as a second phase, so to say, beginning 2021, COVID also led to a huge disruption in supply chain. You all read about port congestion and goods cannot be shipped in the normal way. That has led to record high supply disruptions also that we had to deal with.
In normal times, basically, our teams had to deal with maybe 150-200 supply disruption where a supplier cannot ship a critical raw material. That has basically grown up to a level of 1,300 disruptions, quite a new record. That was true for 2021. What we see here in the first half, that hasn't really come down, still quite volatile. The teams have also done a lot to manage more in that environment and manage better, having new tools and adapting to it. The impact on our raw material prices was immense, so input prices, and I think Carsten alluded to that, 2021, roughly EUR 1 billion of higher gross prices. Two billion higher prices in 2022.
That's EUR 3 billion in a 2-year time horizon, quite enormously. The geopolitical environment also, now that is something that of course that concerns us tremendously this year, that has strongly changed also compared to the last year's war in Europe that triggered our decision to exit Russia and further accelerated also energy prices to new record highs, at least in Europe. Overall, inflation has picked up to a level we haven't seen since the 1970s, having an impact to come also on consumer behavior. On the other hand, also, there are opportunities when it comes to digitalization and sustainability that has strongly accelerated also as a result of what we have experienced over the last 2 years, and that also brings opportunities for companies. How did Henkel now perform in that quite volatile environment?
I would like to briefly show you that picture here that compares how we did in top line growth per annum compared to the pre-COVID level, the year 2019, so the CAGR over the last 2.5 to 3 years, where on a Henkel Group level, we managed to grow the top line by 4.7% per year. Adhesive Technologies +6.3%. Beauty Care -1%, but please keep in mind, we started also our portfolio measures this year, which is an impact for the year 2022 of a mid-single digit percentage. If you would adjust for that, also Beauty Care is fairly flat on the level of 2019, so has also recovered from the COVID-related impacts. Laundry & Home Care is +5.4% per annum over that time span.
All critical businesses have recovered from the crisis impacts over the time span, so quite robust. Let's zoom into 2022, just to recap on the first half results, and here basically you see quite a robust performance of the group. Top line, 8.9%, driven by pricing. All businesses have done a great job in getting also prices up to compensate for the high input costs. The compensation of high input costs, you know, was achieved to a very high degree, but still not to the full extent yet. Margin declined to 10.7%, and also EPS went down as a result of that. We update today our outlook for 2022, on the back, and Carsten alluded to that, of a still continuous strong current trading in Adhesive Technologies.
We update here the top line guidance for Adhesive Technologies from an 8%-10% level now to a 10%-12% growth this year. That also brings the group to 5.5%-7.5% organic sales growth this year. The guidance in respect of margin and earnings is unchanged. As I have already alluded to at the half year, we see here for our two consumer businesses a clear potential to also finish in the upper half of the guidance range. With that update here, we also see that on the EPS level that we can finish in the upper half. There is a potential, but still volatility is high. That's why we didn't change the range as such.
Of course, with the update, now that brings us further into the upper half territory. Now back to the strategic framework and looking at the dimension of portfolio management. Here, basically, the strategy has been set. We still see M&A as an integral part of our strategy with clear dimensions. What we are looking for, we need a clear strategic fit, financial attractiveness of the transaction, and then of course, the target has to be available. We also confirm the focus fields that we are looking for in Adhesive Technologies is basically to invest into new technologies that complement the existing businesses we have that can be rolled out to the global markets and to our global customers and become then a part of the Henkel Adhesive Technologies portfolio.
In Consumer it is to strengthen country category positions and closing wide spots in terms of countries or certain areas where we are not present. That has not changed to what we communicated as part of our strategy. We have a strong balance sheet, and that is of course what you are pretty much aware that gives us substantial headroom if there is opportunity, if there is attractive targets out fulfilling these criteria to be able also to go for that. On the divestment discontinuations, we had launched our first initiative of active portfolio management beginning of 2020. Our target was to divest EUR half a billion of sales or discontinue the businesses that where we do not see future fit.
By end of 2021, we've fully delivered on that and closed basically the program, reaching the EUR half a billion divestment discontinuation target. With 2022 and the whole initiative and actions around creating Henkel Consumer Brands, we also see more potential to work on our portfolio. We put another EUR 1 billion under review, and that's what we're working through. Some of that, you are aware with the annual guidance. We have already announced in Beauty Care roughly EUR 200 million of portfolio adjustments, so that's part of the EUR 1 billion. We have more businesses under review where we wanna see what is the best strategic option, how to move forward with these businesses.
Criteria like in the first program, we look at ability to win growth and also like Carsten said, also gross margin focus is important, because also that shows you how strong the businesses are. We also decided to exit from Russia and that is in progress as well. Let's have a look at our mid- to long-term financial ambition. Here we basically laid out our target of reaching a level of 3%-4% top line growth for the group as a whole, 3%-5% in Adhesives, 3%-4% in Consumer. Adjusted EBIT margin to reach a level of roughly 16%. That on an EPS basis brings us to a territory of mid- to high-single-digit % growth at constant rates and a continuous expansion of free cash flow.
How do we do with that? Of course, continuing to invest into our businesses, shaping our portfolio with acquisitions and divestments. The merger of our two consumer businesses will also play a crucial role as an enabler and then following up on our competitive edge strategy. The margin development from the level we see today, the guidance 9%-11% this year, and the midterm to long-term ambition of 16%, that will be driven by a number of drivers that we have basically laid out. Active portfolio management, as I said before, will play a role also to move up our margin. Top line growth and the resulting advantage on the operational leverage will contribute to that.
Further efficiencies and in particular, the net consumer businesses, a net EUR 250 million, that Carsten alluded to in phase two, optimizing also further our supply chain will contribute. Then we are not done on also closing the gap between the input cost rises we had seen and the selling price, that we have to adjust to that. Also here, we need to make more progress next year, and that will also contribute at the end to reach our 16% level. We follow a consistent capital allocation strategy, and, that means we invest into our businesses through acquisitions and, CapEx. We have, over the last years, closed also six acquisitions.
We have a CapEx model that is basically CapEx light, so we're not heavy on CapEx, but here we continue also, of course, to invest to support the businesses. Dividends, stable or increased dividend since beginning or since the IPO of Henkel. We never lowered the dividend over the last decades. We have a clear strategy also as a payout strategy of 30%-40% of adjusted net profit. That is a framework we are operating in. Beginning of this year, we have launched the first share buyback of Henkel. The first ever buyback we had done with a volume of up to EUR 1 billion. We're on the way executing on that as planned, and the goal is to finish that by end of Q1 2023. That brings me now to the conclusion.
We have a balanced portfolio with a robust, proven performance. We have a strong balance sheet with a very clear approach to follow up on our active portfolio management, which we strongly accelerated since beginning of 2020. We think we have a compelling lead to long-term ambition laid out, and we follow up on our capital allocation strategy that we had communicated earlier. Thanks a lot. With that, hand over to Carsten.
Thank you, Marco. Short wrap up of the first part. I hope you see that we have unique businesses at hand with really leading market and category positions in the markets and we are operating. We are supported in this business by really powerful brands with great technologies which are in these attractive markets helping us to succeed. We have defined our Purposeful Growth agenda really as a catalyst for change. We're doing really a lot of things in order to bring and to win the twenties through Purposeful Growth as our motto, not only of this Capital Markets Day is. There is a strong financial foundation behind. Marco explained that. A robust performance in these times in which we are operating.
We have a clear commitment, and I hope you see also that, results are coming in in that respect when it comes to driving growth, profitability based on these unprecedented times still for sure to come in that, sense. At the end, we're doing all of that in order to create more value for all stakeholders, related to that. Our ambition is clear. We will win the twenties through Purposeful Growth. One topic, which will also in these days, of being of utmost importance is the topic of, sustainability. We have a great sustainability strategy at hand, and Sylvie is more than happy to explain that, to you, to give you insights on that, what we are doing in order also to drive that angle of the strategy.
Thank you, and Sylvie, up to you.
Thank you very much, Carsten. Thank you, Marco. Hello, everybody. Also from my side, hello to all of you in the room and also to all of you who cannot be in the room today. Very happy to have the opportunity to lead you today through the topic of sustainability. My name is Sylvie Nicol. I'm responsible at Henkel for human resources, for infrastructure, but as well for what we call corporate sustainability. Today, I'm presenting on behalf, for sure, of the entire management board of Henkel because we shape and drive this agenda all together. I will lead you a bit more into the granularity of this topic, which is, as Carsten mentioned, an important pillar of our Purposeful Growth agenda.
Let me lead you quickly through a very simple agenda and immediately turn into a few messages which I would like you to have as key takeaways of this presentation. Sustainability is at the heart of our purpose but also of our legacy at Henkel. It's how we define ourselves at Henkel since our foundation. We understand stakeholder expectations and future opportunities for our business, and therefore, we have been establishing our new Sustainability 2030+ agenda, according to the expectations, to set the new direction for our transformation at Henkel along environment, social, and governance. We also know how to bring that to life. How to create speed and scale through our people, through our partnerships, and through our products. Let's start by taking a leap back in time. Who is that? Fritz Henkel. Why do I show you Fritz Henkel today, our founder?
Because what I want to convey to you is that since the early beginnings of Henkel, the balance between economic success, ecological aspect, and social responsibility has always been part of our history. It's going right back to our founder, but also to his successors in the nineteenth century. Since then, it's deeply anchored in our business and part of our DNA. We have a lot of early examples of our customer-centric product approach, of new production processes, of innovative environmental testing, and support to employees, be it in the area of healthcare, but as well childcare. This deep rooting has helped us to fulfill our responsibility again and again over the past nearly 150 years. I say responsibility because at that time it was not called sustainability, but responsibility. With this legacy, where do we stand today?
Today, sustainability is at the heart of our purposeful agenda, same as innovation or digitalization. It's also at the heart of a very solid corporate governance. We have a cross-business sustainability council which is steering the agenda in close connection with the management board. We've been an early mover in setting long-term sustainability strategies, Carsten mentioned it before, but as well, short-term targets, because we believe you can only drive progress with the combination of the two. We have also transparently reporting on the progress we have made. In fact, our first sustainability report dates from the early 1990s. This commitment shows in our results and external recognitions, especially through the ESG ratings and rankings. We are proud to receive continuously excellent results, but we also believe that it's not only about results, it's also an important aspect of the transparency we need to have towards the market.
We do not take this success for granted. We recognize the enormous acceleration of sustainability challenges worldwide. We see a lot of factors shaping the continued transformation agenda of global companies like Henkel. On the external side first, we know that customers and consumers want to buy more sustainable products and technologies. We see regulators shaping our future operating environments, and our stakeholders have broader and higher expectations of us. Needless to say, it also comes with a higher complexity. Internally, we have changed as well as a company. Sustainability is now clearly embodied into our purpose. It was always there, but it's today, so it clearly said and stated internally, externally. We have also new ways of working.
We have started a journey of cultural and leadership change, and we have a clear commitment to energize our employees around the topic of sustainability, which is of utmost importance for them as well. This is the backdrop of our decision to fundamentally review our sustainability strategy and to launch the new ambition framework that we have introduced this year in February. This framework reflects our most material issues around environment, social, and governance, the three aspects. Let's take a look at them briefly. E, our regenerative planet. This captures our commitment to a circular and net zero carbon future along the value chain, but as well the protection of nature. S, our thriving communities. Our goal is to continue to help people lead a better life, further focus on building greater equity, education, and well-being for employees, but as well for the communities in which we operate.
G, our trusted partner to our customers, to our stakeholders. We see sustainability as an opportunity to drive business performance to superior quality products, but as well safety and as well transparency to stakeholders and collaboration with our customers and our suppliers. What I would like to do now is to lead you through how we set these new directions, and Carsten has already elaborated on these three highlight targets. They are much more than that, as you can imagine, in terms of targets, but they explain very well the way we've been approaching our new strategy. We asked ourselves if we could go faster. We asked ourselves if we could go further versus the initial strategy that we had published in 2010. These major ambitions reflect this thinking the best, I believe. We had a goal to become carbon positive in our operations in 2014.
We decided that it's not good enough, that we should anticipate this goal by a decade, and we have a clear plan behind. We also decided that we should go further by shaping our net zero pathway on Scope 3 emissions. On circularity, we were and are still extremely committed on packaging and had a clear set of targets. We decided here to go further and to extend circularity in the water and waste material that we use at key manufacturing sites. As you know, Henkel has always been known to be extremely contributive to social progress. For the first time, we have decided to have an explicit ambition to achieve gender parity across all management levels by 2025. These are big ambitions and our focus now is clearly to execute them and to show how we are making progress.
Let me show you now a few examples on the three pillar. I start with regenerative planet. I mentioned climate positive in our operation here, electricity is playing a key role. For us, it's of utmost importance to convert to renewable energy. We have already done that in U.S. and in Europe, covering by that 68% of our energy need with renewable electricity. As a company producing consumer goods and supplying the consumer goods industry, packaging, I mentioned, is key for us. We are constantly working on new solutions to use less packaging, to increase recyclability, and to use more recycled content. We've already achieved that 86% of our packaging is designed for recycling. Our target is 100. When it comes to nature, I would say as a chemical industry, we could be seen as how we move from nature.
We understand very well the impact of nature decline for economic growth and therefore we want to contribute. We are committed to source responsibly, and I believe our diligent approach to palm oil over the past years has shown how far we go on this commitment. Today, we've reached 93% of palm oil certified. Our goal is to get closer to the 100%. Let me now move to the second pillar, thriving communities. We want to help people to lead a better life, and we can act as a global company on these three pillars. We've been always really advanced when it comes to safety standards, and we have reached already very, very high standard among the industry.
during COVID, we've realized that we can and need to do more, that well-being is also about health and mental well-being of our employees, and therefore we've decided to extend the reach of our global health campaign and are already actually to reach 90% of our employees whom we support around the world. I mentioned equity already. For us, it is of utmost importance to reflect the market and societies in which we operate. It starts for sure with the representation of women in the management, but it certainly does not end here. We have achieved 38% share of women in the management, and we have a plan to achieve more. Education. It's key to enable opportunities and improve livelihoods. It's ultimately beneficial to our business if more people can consume.
It's also benefiting to our supply chain, to our employees and communities. We've been, with our association with Solidaridad, helping close to 40,000 smallholders so far over the past year, support them to progress in their life. As you can see, education sometimes is also helping us to drive our agenda related to nature. Last pillar, trusted partner. We want to drive performance at Henkel with integrity. We are working to evolve our definition of performance in tune with customer expectations. High quality and safety is definitely a must, but we believe that ESG performance is the future. In this way, we will ensure validated greenhouse gas reporting along the value chain. I mentioned transparency before. We have a proven track record of disclosure. You see here concrete examples of achievements being A-minus in CDP or platinum in EcoVadis.
For us, as mentioned, transparency is playing today and will continue to play in the future an important role because that is creating trust for our partners. Partners. Finally, collaboration with our customers and our consumers, our suppliers is absolutely essential to build this trust. On one side it helps us to apply new standards. It helps us to innovate as well for the benefit of our customers. The recent collaboration project with the BASF to replace fossil carbon stocks through biomass is an excellent example on how collaboration brings innovation in sustainability to life. You have seen now, I hope with these few examples, how we are trying to achieve and how we are making progress towards the goals we have set to ourselves.
I want to close now on a point which is particularly close to my heart because I believe that it will make us faster and more impactful going forward. It's what we call the key levers for change. To achieve progress along the entire value chain and to drive systemic change. We have three levers, our people, our partnership, and our products and technologies. Our people are really at the heart of delivering our ambitions. We need to engage them and to upskill them. We have 52,000 employees at Henkel. It's as many multipliers as we can dream of. Our partnerships. We need to ensure impact on scale and sustainability is nothing that you do on your own. It's not an isolated program. We need to engage with partners like institutions, like universities, like industry associations, like NGOs, local communities, and social enterprises.
We work with a broad network of partners who are helping us to drive progress. Of course, our products and technologies. They are the heart of everything we do. With our B2C and our B2B touchpoints, we touch every day millions of people. It's also a unique opportunity and a unique responsibility for Henkel to drive innovation along the value chain. I would close by sharing with you very short key examples around these three levers. On people, it's not only about saying that we want to engage them or to upskill them. When we launched our new strategy ambition framework, we launched at the same time a broad engagement program which we offer to all our employees to gain knowledge and also to understand how they can contribute in their day-to-day to sustainability progress.
They can bring their energy into communities, into projects, and they can get upskilled on sustainability which is as we know a complex topic. In a few months already 6,000 employees are engaged behind this program. When it comes to partnerships, I just want to share one example with you which is Plastic Bank, a partner with whom we have been working since 2017, collecting plastic in the ocean with communities to help them to get a living out of it and also allowing us to use more recycled plastic in our products. A win-win partnership which is putting two expertise together, helping us to drive progress but also to drive business performance. Finally, our products and technologies. They really create value for our customers and customers permanently by offering new opportunities to contribute.
With our products, with our technologies we have already since 2016 contributed to save 68 million tons of CO2 because we monitor very closely what our new projects, our new innovations are delivering. You will see later on for the ones who have the chance to be there. A very concrete example with my colleagues from Adhesive Technologies, how our innovation can contribute, how they can drive a difference. Let me close by building the bridge between the past and the future. We are confident that we are ready for the challenges ahead. We have a strong foundation. We have a robust strategy. We have ambitious goals, and we have engaged people inside the company, our employees, but also outside the companies with our partners. Sustainability has never been for Henkel a nice-to-have.
It has never been a marketing operation, and it will never be in the future. It is the way we are doing business. It is the way we are operating. It's an opportunity for us to shape our markets, to build new relationships with our customers, our suppliers, and ultimately also an opportunity to set new standards that will ensure competitiveness in the markets. Hopefully we can lead, or let's say, Henkel can lead for the next 150 years. Thank you very much for your attention.
Okay. Thank you very much to the three presenters. Thanks for your attention. We have now our first coffee break. 20 minutes. We should be back at 10:08 A.M. That would be great. We call you back, I think, also with gong, so you can't miss it. Coffee is in the back, so enjoy and see you later. Thank you very much.
My love for you is hoping you'll stay. The storm is getting closer to me. Feels like I'm drowning for you. Further up than you were. Together we're singing your song. Together us holding the world again. Light up the night. Going up and register. Take your time. There's so much to see. Feel the breeze. Hang on to that feeling. Come to me. Come to me. Light up the night. Going up and register. Take your time. There's so much to see. Feel the breeze. Hang on to that feeling. Come to me. Come to me. Everything is floating away. My love for you is hoping you'll stay. The storm is getting closer to me. Feels like I'm drowning for you. Light up the night. Everything is floating away. Take your time. Feel the breeze. My love for you is hoping you'll stay. Come to me. Come to me.
Light up the night. The storm is getting closer to me. Take your time. Feel the breeze. Feels like I'm drowning for you. Come to me. Come to me. Everything is floating away. My love for you is hoping you'll stay. The storm is getting closer to me. Feels like I'm drowning for you. Oh, yeah, yeah. Oh, yeah, yeah. Oh, yeah, yeah. Oh, yeah, yeah. I think I did it again. I made you believe we're more than just friends. Oh, baby, it might seem like a crush. It doesn't mean that I'm serious. 'Cause I lose all my senses. It's just so typically me. Oh, baby. Ooh, I did it again. I played with your heart. I'm not that innocent. You see my problem is this, I'm dreaming away. Wishing a hero but truly exists. I cry watching my day.
You see I'm a fool in so many ways. 'Cause to lose all my senses. Well, it's just so typically me. Oh, baby. Oops, I did it again. I play with your heart. Got lost in the game. Oh, baby. Oops, you think that I'm noble, and sent from above. I'm not that innocent. Baby, I did it again. Oh, I did it again. Baby, I did it again. Oops, I did it again. Oops, I did it again to your heart. Got lost in this game, oh, baby. Oops, you think that I'm sent from above. I'm not that innocent. Oops, I did it again. I play with your heart. Got lost in the game.
Oh, baby. Oops, you think I'm noble, and sent from above. It is the evening of the day. I sit and watch the children play. Smiling faces I can see, but not for me. My riches can't buy everything. I want to hear the children say. All I hear is the sound of rain falling on the ground. I sit and watch as tears go by. My riches can't buy everything. I want to hear the children say. Doing things I used to do, they think I'm new. I sit and watch the tears go by. It's funny how I find myself in love with you. Blinded by my reasoning, stay too long. How much do you commit yourself? It's my life. Don't you forget. It's my life. It never ends. Funny how I find myself. I never knew. I was sometimes played upon. I played to lose.
I tell myself what good do you do? Convince myself. Oh, it's my life. Don't you forget. It's my life. It never ends. I've been watching you for some time. Can't stop staring at those ocean eyes. Burning cities and napalm skies. 15,000 nights of ocean eyes. Your ocean eyes. No fair. You know you make me cry when you give me those ocean eyes. No fair. I wanna be flying so I can play your ocean eyes. Those ocean eyes. I've been walking through a world gone blind. Can't stop thinking of your diamond mind. Careful creature made friends with time. Let her hold me with her diamond mind. Those ocean eyes. No fair. You know you make me cry when you give me those ocean eyes. No fair. I wanna be flying so I can play your ocean eyes. Those ocean eyes.
Every breath you take. Every move you make. Every bond you break. Every step you take. I'll be watching you. Every single day. Every move you make. Every vow you break. Every smile you fake. Every claim you stake. I'll be watching you. Since you've been gone, I've been lost without a trace. I look around but it's you I can't replace. I feel so cold, and I long for your embrace. I keep crying, baby, please. Every move you make. Every vow you break. Every smile you fake. Every claim you stake. I'll be watching you. I'll be watching you. Every breath you take. Every move you make. Every bond you break. I'll be watching you. Every breath you take. Every move you make. Every bond you break. Every step you take.
Good morning and welcome to our Inspiration Center here in Düsseldorf, Germany. My name is Jan-Dirk Auris. I'm heading our Adhesive Technologies business, and I'm a member of Henkel's management board. Why are we so excited about the Inspiration Center? For sure, it's a great building, and certainly it's a great recruiting tool and creates a modern environment. We are especially excited because it's another platform to drive customer experience, co-create by tapping into all the know-how and generating customer projects with innovative solutions. Today we have 650, usually, colleagues working in this building. Since we had the soft launch end of last year, we had 400 customer visits.
Just to give you a feel, middle of this year, I already saw more customers than in 2019 prior to the pandemic. Each visit usually starts at our infinity room. That's in the back. It's a digital-enabled cinema, if you like, where we display our portfolio, the depth and the breadth of our portfolio of innovative solutions. Each session starts pretty much with the first video, and that is a starting point for co-creation.
Everything new starts with an idea. At Henkel Adhesive Technologies, we know that really is just the start. We understand your challenges in the world that surrounds us. Understand bonding, functional coating, sealing, and beyond. This know-how is our business. We provide you with all the technology expertise and the global capabilities you need to meet your challenges. A trusted partnership connecting know-how across continents and industries. Focused on finding tailor-made solutions for you over and over again. That's how we make it happen. We make new markets for your company from trends that change your business, as a global technology leader. Make groundbreaking ideas become innovative technologies. Make new products that make all our lives easier, more comfortable and safe. It's what we have been doing for over 100 years. We make it happen.
We make it happen, and that is actually what Adhesive Technologies is all about. We do understand our customers' challenges and opportunities, and due to our in-depth knowledge and our customers trust in our capabilities to translate know-how and technology expertise into innovation and customized solutions for bonding, sealing, and functional coating. With that, we enable our customers to design new products with new features. We help our customers to drive performance and make products more comfortable, safe, and more sustainable. That's our mission, and that's exactly what we do every day. For today, we wanna share with you where we stand, what's the foundation, what have we achieved, and how do we measure progress. Then, most important, what is the next phase of value creation?
In the afternoon, we're gonna be very specific along three programs, where we're gonna show you exactly not only examples, where do we stand with the programs and what are our plans moving forward. With our mission in mind, let me take you through our very strong foundation we have built with Adhesive Technologies, the global leader for solutions around bonding, sealing, functional coating, and beyond with such a player who has built a strong portfolio with leading positions across different industries, all industries and technologies. With that, we are able to scale, balance different market dynamics, but even more important, able to leverage insights and know-how to create value for our customers. Our markets and applications are very specialized and fragmented with different profit pools, different growth dynamics, and a very different competitive landscape.
At the same time, regardless of the industry and technology, it's always about in-depth knowledge, know-how, and the ability to translate that into innovation, customized solutions, and scale it worldwide. The overall size of bonding, sealing, and coating solutions is around EUR 65-75 billion. Our strong position and our unique Toolbox come into play when new applications and new materials emerge. Often, we are the first choice for our customers due to our very trustful collaboration and due to our ability to translate new requirements into solutions. Many of these requirements are driven by mega trends, which offer our customers new opportunities but also challenges, and here we come to play to support and help. There are three global trends which are very, very relevant for Adhesive Technologies.
They are relevant for all our customers, existing but also potential, and they are very relevant for what we do and what we have to offer. In case of sustainability, it's relevant for all industries and our entire portfolio. We started early to enhance and over time transform our portfolio to reduce and help our customers to reduce emission, help them to participate in recycling, and contribute to circular economy. Mobility, and especially e-mobility, is probably the largest transformation the industry has seen forever. Cars will be connected, they drive autonomously, they will be shared, and they will be electric. It's already a big driver for our customer value creation, and it's certainly already a big driver to drive growth.
Take connectivity, which has emerged to be relevant far beyond the electronic & industry. The number of connected devices will double within the next five years, and 5G obviously is a big driver, but also storage and processing of data. It all requires solutions to improve durability, better protect different levels of thermal conductivity, and clearly new designs. We constantly steer our portfolio to be well-positioned to capture the growth opportunities which derive from those underlying market trends. During the deep dives this afternoon, we will cover exactly those three topics. Again, far beyond giving an example, showing you clearly how we think about it and how do we drive and translate those trends into growth and value. We have built a very well-balanced portfolio, which is organized along our customers. Craftsman construction professional represents 31% of sales from 2021.
Automotive & Metals, 22% or EUR 2.1 billion. Packaging & Consumer Goods, EUR 3.1 billion or 32%. Electronics & Industrials, 50% or EUR 1.4 billion. We have leading positions across the industries and across the regions. We roughly generate 1/3 for the Americas, 1/3 Asia Pacific, and a little bit more than 1/3 in Europe, Africa, and the Middle East. Therefore, we believe that the portfolio is well-balanced, both from an industry perspective, so the customers we serve, but also from a regional perspective. With that, we can benefit from growth opportunities, but of course, also cope with different market dynamics. Let me share with you who are our customers, what do we do, and what is our position.
In automotive and metals, of course, we serve the OEMs, the tiered suppliers, but also the packaging, beverage packaging industry and the coil industry. Our structural solutions, for example, help to strengthen the car body to protect the battery. Our next generation pretreatment thin film technology drives the advancement of light metal, of multi-metal and lightweight vehicles to help our customers reduce the CO2 emission. With those solutions, we have built a clearly market-leading position so that every minute, 150 cars gets produced, 140 contain a Henkel solution. In packaging and consumer goods, 90 of the top 100 CPG companies are our customers. We also have a very long-lasting and trustful collaboration and relationship with the leading companies, converting companies in the packaging industry. Every third athletic shoes are assembled with a Henkel solution.
In electronic industrials, our advanced materials help to improve the durability of smartphones. We protect wearables, ensure integrity of aircrafts, but also satellites. We enable more memory for the semiconductor industry. Our Craftsman Construction and Professional division works predominantly with professional trade partners and with our unique industrial distribution network. In case of DIY, also through the retail channel. With Loctite, we have a brand for MRO, which is probably the most recognized brand worldwide. We have the number one position for bonding and sealing in the MRO space, and we are the market leader in North America and Europe when it comes to DIY, craftsmen, and home improvement. Also Pritt is in many countries even the name for the category, for the entire category. Fun fact, we sell every year roughly 120 million Pritt Sticks in 45 countries.
When we look at our construction business with our category of tile adhesives, we have a very strong and leading position, but more from a regional perspective. We are leading in Eastern Europe, Middle East, and Latin America, but we do not operate that business on a global scale. Bottom line, we have a strong portfolio for solutions around bonding, sealing, and functional coating with leading positions across the entire portfolio. This is always a great proof point that we create value for our customers. Across the entire portfolio, we drive for our customers' product performance, while always representing a very low share of the cost of the end product. In many cases, less than 1%. We are often involved in the design phase of new products and setting specification. We help our customers to improve productivity, efficiency, quality, and make our products more sustainable.
We customize our application, leveraging our know-how along our customers' requirements when it comes to materials, process, but also standards. With that, we often define the industry standards for certain application. Let me share what we bring to the table and how we measure progress. We have around 2,500 engineers and researchers worldwide. Many of our team members are recognized as industry experts far beyond what we do. Let me give you an example. A few years back, we started to become experts in food safety. We invested, we built skills and capabilities, and today we are the go-to company when it comes to requiring advice or needing expertise. We are spending EUR 300 million in innovation and technology per year.
In the world of bonding, sealing, and functional coatings, it's certainly the highest in absolute, but also in relative terms. With our 80 core technologies, we call it Toolbox. We clearly have the largest toolbox in the industry to innovate and customize solutions, and we do that in our global R&D network with 61 sites. It's always a combination of R&D application center, innovation center, and of course, inspiration center. For sure, our Düsseldorf Inspiration Center is the largest in size and probably the first one of its kind in the industry. We have, of course, innovation center across the globe. We have it, for example, in U.S., couple.
I'm just highlighting the one in Connecticut, but we also have innovation center in Indonesia, in India, and we just recently opened an innovation center in Santa Clara West Coast, but also in Shenzhen, south of China. While Carsten, you mentioned it, while we speak, we're investing EUR 60 million in our new innovation center in Shanghai. All those locations have one thing in common. We wanna demonstrate to our customers our know-how and capabilities, always with the objective to co-create and develop new innovation projects. How do we measure progress? Over the last year, we have established a robust and a gated process to manage our innovation programs, and we make sure that the programs are aligned and consistent with our go-to-market strategies.
When looking at our innovation pipeline for the next 5-year and comparing it with 2019, we increased by 13% our risk-adjusted innovation potential, innovation sales up to EUR 5.4 billion. Please keep in mind that in 2020 and 2021, the engagement with the customers, due to the pandemic, was not easy. Let's also take a look at our first-year sales of innovation. In other words, how much sales our innovation generate during the first fiscal year of its launch. This year we will achieve EUR 370 million, up 16% since we started to measure several years back. I do remember when we introduced the KPI, we were more or less always scratching around EUR 200 million, and since then, we keep increasing the impact.
Even more important, the innovation solution we launch have an average, an almost 8 percentage points higher margin versus the comparable base. That means at the end of the day, the innovations keep increasing, the pipeline keeps increasing, for our business, but most important, the impact of our innovations are increasing for our customers. I mentioned earlier that our innovation pipeline is synchronized with our go-to-market strategy, and exactly the same holds true with our sales pipeline. We keep running a machine, and we have a very robust program to make sure that strategy is consistent and aligned and seamless with what we do at our customers and how do we go to market. We have 6,500 customer-facing experts, and same here, matching our customer base and of course, also our revenues.
1/3 in the Americas, 1/3 in Asia Pacific, and 1/3 in Europe, Africa, and the Middle East. Since 10 years, our entire customer-facing teams are working on one common CRM system. We have established a sound process, and what we do, we put the center of the pipeline discussion into almost every single meeting. With that, we focus the entire organization. How do we help to remove obstacles? How do we create value for our customers to convert a customer project into sales on time? We do that increasing the pipeline, the number of projects at a constant high win rate, 50% across all the different businesses. Of course, converting more and bigger projects into sales also requires a scalable and resilient supply chain.
Today, we have a footprint with 127 sites, which we regularly review and adjust, always in accordance with the market dynamics. We touched on that a couple times through some of our Capital Markets Days, but if you take the last ten years, we consolidated, closed, or sold 49 sites. At the same time, we opened 41 sites, always to cope with expansion and new innovation. With that, we of course continuously drive the optimization in terms of supply chain capabilities and costs. Since 2019, we increased sales by 25% per site, and we achieved productivity gains year by year of greater than 3%. With our strong business and strong position in our portfolio across the different regions, we also make 90%. 90% of our production volume gets produced in the region for the region.
Of course, despite all the challenges we talked about and all the supply chain disruption, Marco, you mentioned 1,300 force majeures. Unfortunately, we faced two-thirds of it. I think it is fair to say that we navigated very well through all those disruptions, and that is the reason why our customers trust us with their lines. We invest roughly EUR 250 million CapEx in maintenance, but more exciting is of course expansion, innovation and, of course, efficiency improvement. Great example for expansion and innovation is pretty much our new site in Incheon, Korea. Just three weeks ago, we opened our new factory in Korea, which serves. It's a clean room factory, and it serves the electronics and automotive industry in the country, but of course also in the region.
With that, we talked about what is our mission, what do we do every day. We shared with you a bit how do we create value for our customers, what we have built, what is our foundation, and how do we measure progress. Now let's take a look how that translates into overall financials since the last time we met in 2019. We achieved a good growth, CAGR, 2019 to 2022 for automotive metals, despite very low build rates. You might know that in 2017, the build rates were almost at the highest point since history and since then went down, of course, hit heavily throughout 2020 with the pandemic outbreak and since then, very much, remains on a fairly low level. Despite all that, our automotive and metal business generated good growth.
Double-digit growth for packaging and consumer goods, and very strong growth for electronics industrials, and again, despite a very low build rate of aerospace, which is part of that division. Very strong growth for craftsmen, construction, and professional, despite the challenges in Eastern Europe, as you know, where we have a strong position, especially in construction. With that, we believe, and it's fair to say, that our portfolio is resilient and balanced, but also very well positioned to navigate through the market dynamics and, with an increasing growth momentum. Obviously, the growth momentum is also driven by the sharply increasing raw material costs, but not only raw materials, also logistics and energy.
I wanna point out over the last year and a half, we talked a lot about the escalation of commodity pricing, and I know that you are very much aware of it. Nevertheless, let me point out that where we stand and what we have achieved. Expected raw material increases for the last year, and this will pile up to roughly EUR 1.5 billion. I'm confident that we will be able to fully offset those increases leading to a robust EBIT development. I guess this is another proof point that our customers trust the value we bring to the table and that we have great collaboration. To ensure that our solutions create value for our customers, our portfolio is always aligned with the strategies.
Years ago, we have established a regular institutionalized portfolio review, active portfolio management process, always to make sure that we allocate the funds and the resources to the most attractive segments and applications. We invest over proportionally in growth segments and complementary technology, and obviously defocus or divest product lines or applications we don't see value or differentiation. We invested, for example, over proportionally in applications for electronics and industrials, e-mobility, of course, and new growth platforms around sustainability. We also invested into our go-to-market model for our leading position in MRO. We do strengthen our leadership position in certain countries or certain regions. A great example is our GE-branded sealant acquisition from 2020. Since then, we have substantially grown the business, significantly increased the collaboration with our trade partner, and we are clearly ahead of targets.
Just two weeks ago, we signed and closed a technology acquisition of Thermexit out of Boston in the US. What did we acquire? We acquired a great technology around thermal conductivity, IP, pilot line, and a team joining the Henkel team. At the same time, of course, we also regularly review. Actually, we do that twice a year and try to identify application and product lines where we are probably not the best owner. We pointed out here a few recent examples. One is the metal matrix substrate business which came to us through Bergquist and didn't match pretty much our core and our value proposition. That was divested in 2021.
The closure business of Darex, another acquisition we had also, is not meeting our expectations or the way how we create value at our customers. That was also divested in 2021. One was around EUR 50 million, the other one around EUR 20 million. With that, our active portfolio management, we do both. On the one hand side, of course, we drive our business organically, always trying to support and fundamentally invest into, or over proportionally invest into businesses which grow. Of course, reallocate resources and we approach also the inorganic strategy in the same way. Where we see opportunities we acquire. Where we don't see that we are the best owner, we divest. Those are usually not businesses by itself, product lines or certain applications.
To state the obvious, the economic environment of course remains challenged and volatile. However, when we look at our ability, how we are able to pass, over time, raw materials cost increases to our customers. Also, when we look at our track record, how do we navigate through headwinds and market challenges? We believe it is really fair to say that we do have a resilient business model, growth business model, which gets actually stronger every day. With that, let's talk about Adhesive Technologies moving forward and what are the important levers to continue the next phase of value creation. We do have a great business. Now the key question comes, how do we take it and accelerate the leverage, the scale and the expansion? Across the entire portfolio, there are three main themes.
It's innovation, it's know-how, and it's sustainability. We have put strategic programs in place which differentiate and add substantial value to what we do already today. Always, of course, with the mission to create amazing customer experience. I'm super excited to get your feedback from the marketplaces because this afternoon we will exactly feature those three themes. Again, it goes beyond an example. It shows you how we go after growth opportunities in our business. At a glance, let me share with you where we stand and what are some of the thinking, but again, didn't wanna steal the thunder of our colleagues in the afternoon. I just, you know, highlight a few.
Innovation, we talked about the pipeline and how do we translate market trends into growth platforms, and how do we increase efficiency and the impact of the innovation for our customers, but also for the business. Of course, how do we collaborate not only with the largest customers, often also with the industry leaders or the innovation leaders for a particular industry. Moving forward, it's all about how do we take those insight and faster and further scale to new innovation platforms and expand into new technologies. I hope by now it came across that we are a know-how business and we translate know-how into solutions. However, also to be super clear, we are really at the beginning to really leverage and scale the data and the know-how we own.
Therefore, we made substantial investments into a tech stack along the entire value chain, not only innovation, across the entire value chain, and are building up skills and capabilities. The next phase is all about how do we rapidly leverage our today's know-how to be more efficient, but even more important, create a higher impact for our customers. How do we scale our new capabilities across the entire portfolio, across all customers, all technologies, all around the world? How do we expand into new value propositions which enhance our today's offering to our customers? Last but certainly not least, sustainability which is very relevant for all of our customers. We have defined our Sustainability Ambition 2030 for Adhesive Technologies around two building blocks, leading by example and leading by technology.
We make four promises and Ulla, I'm gonna be happy to share with you the four promises, which is around sustainable operation, sustainable materials for all products, and enabling sustainability for all customers at 100% transparency. I think it is fair to say already today we are recognized as a thought leader, but I guess what would be super interesting to discuss and share with you, how do we translate that thought leadership? How do we translate our strategic programs to help our customers achieve their ESG targets, and at the end of the day, translate that into value for the customers, but also to growth for Henkel? We are convinced that those levers will make a big difference for our customers, but certainly also will make a big difference for the business.
Last week, we hosted a two-day innovation and sustainability event, showing our ability, capabilities, but then engaging into workshop style, cross-industry discussions, helping our customers to be successful and to define a common agenda. It was super great to see that we had many customers coming from around the world, taking the time, two days, and discussing together with us the future. We got great feedback, and we developed common roadmaps, how do we take it now to the next level. With that, I hope you take away from the last 45 minutes that we do have a great business with leading positions and a strong portfolio.
I hope it came across that we do have long-lasting, very trustful relationship with strong positions across the different industries, that we have a lot of know-how and a unique portfolio of innovative solutions, and I can ensure there is more to come, and as I said, some of it, you will see already this afternoon. I guess with that, I'm confident to commit to our mid to long-term financial ambition, and I thank you very much for the attention, and I'm really looking forward to the discussion following your questions later. Thank you.
Hey, good morning from my side as well. Never easy to go on the stage after Jan- Dirk presenting such a fabulous business. My name is Wolfgang Koenig. I'm the new guy in the management board. I started in Henkel a year ago, taking over the Beauty Care business. Then at the start of the year, as you saw with the announcements, I've been asked to drive the merger and the integration of the Beauty Care and the Laundry & Home Care business for the company. As Carsten announced this morning, as of October first, I will also operationally take over the Laundry & Home Care business, running that part of the business as well under our new roof, Henkel Consumer Brands. You know, I have 45 minutes for that presentation.
I thought, is it not possible to do a presentation in 90 seconds? To give us all a little bit of time, therefore, we did a little bit of a video as well, which actually tells you the whole story. I'm not sure if I even need to do the presentation afterwards, but, let's roll the video, and then we'll see if I still need to do some charts.
We are creating a leading international consumer goods player by merging our two consumer businesses, Beauty Care with Laundry & Home Care, into one, Henkel Consumer Brands. A strong multi-category platform with more than EUR 10 billion sales. Playing in attractive markets with strong brands. As a true pioneer at heart, we are since decades already winning through technology leadership. We will become both better and bigger by achieving healthier margins with a competitive and lean organization, winning portfolio, and an optimized supply chain. Concentrated brand support and pricing will drive reinvestment opportunities in innovation, sustainability, and digitization. Disruptive technology innovations and inorganic opportunities will drive Purposeful Growth even beyond our core. Henkel Consumer Brands, your technology leader.
42 minutes left, so I think I can still go into a couple of slides. I start with who we are as a first section, going that little bit back into kind of where we come from. Really the focus of the presentation that's very important for me is not about talking about Beauty Care and Laundry & Home Care. It's about what we are trying to create with Henkel Consumer Brands going forward. Then the main theme I really need all of you to remember what our way forward is in the next couple of years, and what really the focus is the notion around becoming better before we become bigger. Which does not mean everything is just about better and that it's all sequential.
Really, given our P&L dynamics, and I'm very open and transparently talking about that, we do have to do a very different job than what we had the job we have to do and we need to continue in our Adhesive Technologies business. Where do we come from? I think we really are the founding spirit of the company, pioneers at heart, for the good of generations. We're based on technology innovation. We're based on the first self-activating laundry product that was ever launched in the world. We are the company that launched the first non-alkaline liquid shampoo in the world and the first European hairspray. Also, in the media world, Henkel was actually a real innovator with the first TV commercial ever being aired in German TV with a Persil commercial at its time.
We really go back for a long history of being founded on innovation and innovation spirit, and led by technology development. When you look at the new business, it's going to be a EUR 10.3 billion business split into two main categories that we will operate that business within. That doesn't mean that all other businesses we have as well are not important. We have a very clear portfolio strategy of what we want to grow, what we want to milk, and things we are interested in divesting. The two key pillars for us are our hair business and our Laundry & Home Care business. Again, I said it just a few seconds ago, everything in Henkel Consumer Brands with my team and the new organization I'm building is about building a new business.
It's not about hanging on to what we've been in the past, but sort of building a new company within the company. Whether this is around the culture that we need to combine and all the opportunities I talk about later, going into portfolio, going into supply chain, going into our sales organization and our country setup. It's really about defining a new company that will give us a very different, dynamic from a profitability as well as from a growth perspective. It's definitely a scale play for us becoming EUR 10 billion business. It's two core platforms we operate on. It's really the strong belief that we have as a team, that we have the right to win as a technology leader, and I give you some examples around that. We have 18,000 people in that business around the world.
85% of those are outside Germany, and we have close to 50% females in leadership positions in that business, which is very important for us. It's an attractive market, I think, without any question. The combined hair and laundry and home care market around the world represents around EUR 220 billion opportunity and is forecasted to grow at around 3% around the world. Our business today, and I think that's especially in light of the recent kind of geopolitical environment, it's very likely a good thing that we have a very strong base in Europe as relevant as within North America. While we have some work to do there, I think it's a massive growth opportunity for us, and we have 230 leading positions when you look at country, category, brand positions.
That is the work I'm doing with my team. Everything goes down to a cell level, a cell being a category, a brand in a specific market. We'll also talk a little bit about that maybe later around share and growth and how that is important. It is important, but it is important on a really microscopic level in the FMCG industry and not just global consolidated averages. We start from a really strong base of technology. It's a fundamental belief that I have coming into the company from the outside, looking at how I believe my fourth big company in the FMCG industry is different than some other companies I've worked for. We really start on an extremely strong base of technology. I don't think our business have given themselves enough credit for it in the last couple of years.
We have a significant investment into R&D over generations now. We sit on a wealth of patents. We have very iconic brands, and when you think about the history of our brands, the brands that we have are all built on technology and have been updated by technology, and we need to return to that strength. Also our technology leadership we have gives us the opportunity to basically participate in every relevant trend that we see in our industry, given the technology solutions we can offer to our customers. Just some fun facts here, you know, our brands are really relevant to consumers around the world. Every second, 20 heads get colored, their hair get colored every 20 seconds with products out of our portfolio. Around 25 billion wash loads of clothes gets washed every single year with our products.
We build on really strong brands. I think we've shown that more than ever in the recent situation where you've seen that we all face, everybody in our industry face significant pressures with raw material inflation. We've done a great job, our brands have done a great job to kind of work against those pressures when you look at our P&L dynamics. We've really proven that many of our brands have an extreme element of pricing power. Also, one of the things that is now, again, more than ever relevant is we have a portfolio that covers a broad variety of price points.
We not only are a premium player, which we are in the segments that we play in, but we also offer mid-tier and lower-tier offers from a pricing point of view, which is highly relevant, especially when you look at the inflation and recessionary environment out there. Being able to cover different price points with different consumers. Now my mic is off. Okay, I don't know if you can still hear me. I'm just going to speak up a little bit louder. Okay, the other element for us, which has really helped us to build our brands over time, is digital investment. We have a significant share of digital investment into our business, not only the traditional TV commercials, but we for a long time spent a significant amount behind digital media.
Our brands have, in general, very high penetration and very high awareness rates. That is also driven by, we might not always be in every segment. Carsten mentioned before our number one and number two positions. We often have extremely strong market positions also from a volume leadership or not only value leadership. Often we cover a lot more households and a lot more consumers than our competitors do. Here's what makes me really excited, okay? You're gonna think I'm going crazy saying that this P&L makes me excited. It does get me excited because that's the opportunities that we have.
When you look at what happened to our P&L in both of the business, in Beauty as well as Laundry & Home Care, and you've seen that those numbers, this is what gets me excited, because using the merger of the two business as a catalyst, we have unbelievable opportunities to drive healthier business, to drive a better business in that combined sense. What do I mean by that? One of the things we can do we have not done as much is increase our focus behind our core.
We have simply over the last couple of years played on too many platforms, sometimes with too much diluted investment, and we have a major opportunity to make better choices on a country and category level, where to invest and where we decide to invest, to invest at a certain level of scale, and to do that in the markets where we generate an over proportionally high gross margin. Because our mix of gross margin we generate by platform, by market, and sales level has a massive gap or massive distance from one market to another. We can drive mix very effectively in the business that we operate in, and it's to concentrate on investment choices. Further improvement in North America Laundry is not impossible at all by any means.
I've spent half of my career in that market, leading some of the largest consumer goods business in North America. It's a very exciting market, is a market with huge growth opportunities for us. We're the number two player in laundry, and there is no way why we cannot win in that market with the brands that we have. Be it all, be it Snuggle, or be it Persil. Okay? Supply chain operating optimal cost to value is the key thing. We've operated our supply chains in Beauty Care and Laundry & Home Care like two complete distinct businesses. They are as far away from each other like we would be two complete different companies, with the exception of procurement levers that we pulled via a concentrated kind of procurement purchasing, organization. When it comes to manufacturing, shipping, invoicing, all of those things are two companies.
It's like we're merging two external companies, so we have the same element of the expensive synergies like you would see on an external merger. We also are not in the old world as competitive in SG&A as we can be. Of course, we have doubled everything. We have two sales organization in every market around the world, two general managers, two marketing directors, and so on. You name it, we have it twice in every single market between those two businesses. You will hardly find a company in a consumer goods industry who gives themselves that luxury, and is actually, quite frankly, not needed in any way, shape, or form.
If you're serving the same customers, the same channels, and you have two sales reps driving into one and the same store, whether that be a Walmart in the U.S. or whether that is an EDEKA store in Germany, to send two sales reps into the same store that meet in the aisle, greeting each other, saying, "Hey, I'm for Henkel, from Henkel as well," is unbelievable synergy that you leave out on the street. Those are the opportunities. What do we build on? We build on leading position in attractive markets, strong technology across our core categories, and leading brands that without any question we have in the segments we operate in and we will focus on.
Today's setup, so that's still the setup that we operate in the prior world, is we have two separate business units that have been represented by two different board members to start with. We have two different leadership teams, not only on a global scale, but in every single market we operate within. We have two separate supply chains and two separate sales teams, no matter where you go. Our future ambition is to operate a technology-led growth model, and I'll talk a little bit more about that in a second, and continuous focus on gross margin development. I think that is one of the big differences you will hear from me as long as I'm here, is gross margin. Very different than Jan-Dirk Auris' business. In consumer goods, everything is about the gross margin.
If I am not able to increase my gross margin, I cannot generate the funds to invest behind my brands. A gross margin obsession is the number one thing for myself as well as for my entire organization. How do we lift up our gross margin to then be able to invest? That is what better before bigger really is all about, and running an effective and lean organizational model. Talking about becoming better and bigger, we've communicated that before. We have a mid to long-term ambition to return to an OSG of around 3%-4% top line growth, which is important, but for me, not as important as how we achieve our increased profitability on the bottom line.
To some extent, I would argue I don't even need that OSG in consumer goods to reach the EBIT ambition I have with all the synergy potential I have in the business. Talking about better, three key elements on better. Leaner structures allowing us to focus and become faster. That's the SG&A topic, and I will talk about each of those three points on a chart each in the next couple of minutes. A combined country portfolio in each of the markets, which gives us a multitude of different opportunities to drive mix within our portfolio and take decisions. That in a standalone business, both business could have not taken. One of those elements is pure scale in the market.
In some of our sales, when you look at a market as a sale, we could have not divested certain brands, either in Beauty Care, in Laundry & Home Care, even if they are highly dilutive to our business. Why? Because with divesting them in those business, we would have lost so much scale that we would have become irrelevant for the market.
Now, we build much better sales as countries, in many cases, doubling the sales or increasing at least by 30%, which now gives us a completely different opportunity than separate business before to screen our portfolio and take a completely different set of decisions on which portfolio parts we want to focus on, because I can actually lose some of the top line, some of the net sales that are completely empty net sales, that do not generate the gross margin I need in a consumer goods business to actually spend behind that business. The number one, and that's the biggest opportunity we sit on, is a revamp of our supply chain, I'll talk about that in a second, with significant improvement opportunities on cost structures, agility, and resilience.
Talking about the organization, you heard a lot about that already, also in our last meetings, for example, in the beginning of May, so I'm not gonna belabor that to death. It's we're planning to deliver, as Carsten said before, EUR 250 million of net savings by basically being in full swing in 2024, so realizing the savings over the course of 2023. As Carsten said before, and that's the good news, we are well ahead of our plan from an integration point of view. We're at this point, basically live in all of the markets outside Europe.
In Europe, together with Sylvie Nicol and the central HR team, we're working very, very closely with our partners in the different markets on co-determination bodies to basically close those negotiations as well and be ready to implement extremely soon in the next couple weeks and months, once we've closed that, and then be well ahead of our integration timing that we communicated originally, which was Q1 next year. When you look at portfolio, when I've worked with my team and we look at each and every single sale of a category in a market, there are very, very clear benchmarks and very clear KPIs how we look at our portfolio. The number one thing is the question around healthy gross margin. Is the business worthy to invest?
Does it deliver an overproportional gross margin for me compared to the rest of my portfolio, my mix within the region, and even within the single country? It's always the question, is it investment-worthy? That's the number one question is on gross margin. Yes, then there is a long-term growth question. Is it a segment, is it a brand that we believe that can, in the long run, grow our business as well? Otherwise, why would I invest even if the margins are healthy? The ability to win is key.
I invest in the brands that have a strength, that have a strong brand power index, that I know are resilient against some of the conversations we continuously have with our customers, to ensure that they're not taking the money out of our pocket, but we are able to drive those brands in a very healthy way within healthy gross margins over time. Last but not least, and it is something that for us as well is a little bit of change going back to our roots, we know we are strong in the technology that we can deliver. We believe technology has another advantage, which is creating higher entry hurdles or competitive hurdles against our competitors that we already play with and against, and actually new competitors coming in the marketplace. You see that in many of our categories that we operate in.
You will see some examples this afternoon how technology is really critical and important for us. One of the categories that is a prime example of that is hair coloration. Hair coloration is the most interesting from a margin perspective within hair overall. We have an extremely strong position, and it's a category that has extremely high entry hurdles. It's not a category everybody can easily go into because some of the technology is not easy to mimic. There's also a model from a commercialization point of view, which essentially requires you to work with stylists as well, which is not an easy go-to-market model either, which takes a lot of efforts and dedication and know-how. You look at streamlined portfolio. This is of significant importance in the combination with the question around what do I do with the supply chain in Henkel Consumer Brands
We have some projects on our way already in some of the segments where we've already taken out highly dilutive net sales. We've taken out some net sales that were close to zero margin. I really do not care at all about losing the net sales on that because it does not matter for my business in any way, shape, or form if I take out those net sales. My margin improves, and that's what's important. My opportunity to focus on the remaining part of the portfolio is significantly increased. Supply chain. We have not only, you know, a rather low complexity from a plant point of view. If you, for example, compare that to our adhesive technology business. We only have around 45 plants, but we do not have any combined plants.
In many cases, we produce products that are not that different between our Laundry & Home Care business and our Beauty Care business, with the exception of just a few ingredients. We have significant opportunities to combine sites, and we have even more opportunities to really screen to our large network of co-manufacturers that we have, which are around 470 around the world, where we have an opportunity to utilize our own assets much better. Of course, this drives a lot of R&D work because we need to really rework the formulas that we have to bring them to our own manufacturing sites, but that's all sheer money and opportunity. We have 139 warehouses in logistics locations, out of which usually a truck leaves that only has Beauty Care, and in the other one, only Laundry & Home Care products.
Then two different trucks arrive at the same warehouse of our customer. I cannot think of anything less efficient than that. This is a hard exercise for us. This is hard. This is gonna be hard work, and it's gonna take time. What we call one, one, which is simple logic of what do you want? You want to take one order from your customer, you want to send them one shipment, and you want to get one invoice. I think this is what you would call the base fundamental of running an operation. That is the work we need to do because we're combining two companies that have not done that in the past. What we had is two orders, two shipments, two invoices. Think about the synergies in SG&A and in our supply chain that combination drives.
It's not gonna fall from the sky. I'll give you one example, and some might argue, "Hey, that's a very bad chart because you've not been able to offset all input increases in your Beauty Care business this year in the first half just by pricing." We can take that offline and discuss if anybody in FMCG has been able to do that, and I would argue, show me one. What we've been able to do is in the first half, we've been able, in Beauty Care, following a better before bigger strategy, to actually increase our external gross margin. We've actually seen an increase in gross margin on Beauty Care for the first time in a long period, despite a significant increase in input costs that we had on the business as well by two measures, not one.
One measure is pricing in the sales, where we know we have the right to price and we can win, and we've done that very effectively. Another key measure, which is a combination of all the measures I mentioned before that I will call the better measures, okay? This includes portfolio measures with a large element of mix, driving some of the sales in our markets where we have higher margins versus giving up on others. Which is, if you deep dive into the market shares, you will see that the consolidated market shares you see, they're irrelevant. You can stop looking at them. As long as I'm here, stop looking at them. They don't tell you anything about our business. You would need to dive down much deeper and look in which markets are we growing in, within what category and where are we losing?
Because I have absolutely no problem to lose share in some markets. We took a very clear decision, to give you one example, at the end of last year, to not win any more on the OSG line and market share line in Turkey because it was a business that was highly dilutive. We took the investment out and put it into other portfolio sales where we've seen a strong growth, which three times the euro gross margin per one product sold than we had in Turkey. Those are mix factors that pay out for us big time already this year, and there is more to come. This is moving investment, and we already also see some first significant improvements in supply chain because we've taken some decisions last year to consolidate certain elements, drive in-housing in a significant way.
For example, in the United States, in our body cleansing business, where we moved a lot more volume in-house after a great job done by the R&D team to consolidate our formulas. It's just an example. You've seen that we have two phases for that program running until the end of 2025. The first phase is mainly SG&A and setting up the organization in the right way, being full swing, delivering at the minimum EUR 250 million net savings. We have a phase two, which is about supply chain, which runs until the end of 2025, and we'll come back likely early next year, letting you know what our aspired net savings for those are as well. We need a little bit of time. I just have my team now up and running and officially taking over October 1.
I'll need a little bit of time to really quantify those savings and costs that come with the supply chain. Becoming bigger. It's not only about technology, but technology is a main anchor for us because technology and the technology power we have drives a lot of the elements that we need to drive as a consumer goods business. You could go very stereotypical and say, "Hey, it's actually to some extent about really being proud of our German engineering power as well." That is also relevant in the space that we operate within, and not only in the Adhesive Technologies. Technology helps us to solve consumer issues because this is what it's all about. If you look at the changing environment out there, consumer behaviors have changed so much. Your own behaviors have changed so much.
When you look at where they have really changed, they have changed because suddenly somebody is able to give you a new technology of doing something in a very different way. That is no different in consumer goods. This is what matters, is technology. Technology also matters to actually be able to make, in a time where we see increases in cost hammering at us like never before in our history, to find ways to make the same product with the same output for less costs. This is where technology matters as well, finding ways. It helps us in sustainability questions, and I come to that in a second. It helps us to drive competitive edge and create barriers to entry and support our leading brands. I give you one example, and it's very pedestrian, but it's actually true. In the past, we had two different R&D teams.
Now we combined those two R&D teams under one R&D leader. Dr. Miersch sits in the back there. What we found out when we looked at the basic research we have done in our haircare business and in our laundry business, we realized that we had two different teams in the same company, sometimes working on the same basic technology, looking at how you clean a fiber, how you clean a hair, how you protect a hair, how you ensure that color is not fading out, whether it is on a bed sheet or whether it is on colored hair. There is massive synergies for us. Massive. Because those two categories we even call out as our two platforms are actually very similar platforms.
Because hair and cotton or other natural fibers are not that different, because at the end, you know, some of them are actually human hair and actually animal hair, and it's not that different from a behavior. We have a lot of learning potential in that area as well in combining. We have around 1,000 researchers around the world in 16 different innovation centers that work in R&D. We spend around EUR 170 million. On top of that, we have around 200 open projects for open innovation projects. We generate 300 patents a year, and that's just in the two business that we call our core in the future. The last fact, in an ever-changing environment linked to also what Sylvie Nicol presented around sustainability is not unimportant.
When you look at the total mass of product we sell, and you look at all of our formulas and all the raw materials that go into all of our formulas that we sell, over 90% of all ingredients going into our products are already today biodegradable. That was significantly different a couple of years ago. This is due to massive R&D efforts, for example, working with partners like BASF, moving into biomass on a much faster speed than anybody in our industry. This is also an advantage of technology and having a strong R&D organization. In the next couple of minutes, let me talk to you about two different elements that, of course, are always really important when you talk about growth, organic and non-organic. Two different elements on organic growth.
One is really scaling key technologies we already have in the market today that we did not give enough credit, and we did not invest as much money behind it we should have, and we have significant opportunities. Again, just examples, okay? I show you 2. I could show you 50. I show you 2. The same thing is true for launching disruptive innovation, which I make very short because in disruptive innovation with the 3 technologies I'm gonna show on a chart, you're gonna see later today when you see the experience center in the lighthouse, people talk you through all of that, how that technologically works, and you will see things that I think you've likely not seen or heard yet in the consumer goods industry, and just giving you a first idea of the technology we have.
Of course, we're not showing you the things that we still have sitting in the vault that we haven't launched yet. We show you the things that are already out in the market or about to come very soon. I'll talk about M&A in the core is what matters most for me at this point in time, and also talk to you a little bit about what we mean by beyond the core, and while that is actually enabled by the new setup that we have. Giving you two examples for scaling up technologies that we have. Nobody in our industry has better technology and renewing fiber on cloth. This is highly relevant and becomes ever more relevant that you can wear cloth for a longer period of time and that your clothes, even when you wear them the twentieth time, still look like new.
This is a key benefit consumers, people are craving. We've traded that segment like a niche. It's not a niche. It's a mass consumer need, and nobody has any better technology than we have in that. So there's a huge opportunity for us to drive that and think about how we can drive a penetration of benefits like that. In hair, no matter what you hear, nobody has even close to the hair bonding technology that we have. What's hair bonding? When you color your hair, you need to open up the hair to penetrate color into the hair, and then the hair closes again. So with that, you break a hair, and it never gets 100% repaired again. So now you see bonding solutions out in the market, bonding solutions close the hair on the outside again. There's multiple companies who do that.
Nobody has technology that's even close to what we have in terms of superiority over what we can achieve using that. We've not been screaming that from the rooftops loud enough. There is massive opportunities for us around those two spaces, and those are just two examples, one of laundry and home care, and one out of the space in hair. There is plenty more where that comes from. Three things you're gonna see later today we are super proud of, and we'll see they're all technology-driven, and they come out of completely different spaces. One is SalonLab. SalonLab is the first of its kind and really bringing to life when we talk about digitalization and e-commerce and everything in one space, also understanding the consumer's hair better than anybody is in the industry. The team will explain it to you later.
It's a tool that scans the consumer's hair. Analyzes the hair and is able, using algorithms, to then formulate what's the ideal product solution to treat the hair in a better way, to use the right coloring mixes, and so on and so on, and then able to translate that into a truly individualized product which can be sent home directly to the end consumer's house. That's a tool that we're using to engage with the professional. That will be done in the hair salon. That's a very interesting business concept for the store owners, for the stylists as well, because they can make money with that while they're usually not great salespeople. You've all experienced that.
There's hardly a hairdresser ever who tells you, please, after you do the service, and a woman spends EUR 200 on average coloring her hair, then to tell her as well, "Please spend another EUR 50, EUR 60, EUR 80 on buying a product." They find that very embarrassing because hairdressers are artists and not salespeople. There's a completely different thing, because you scan it, and basically tool makes the recommendation on what the consumer should use. The hairdresser doesn't need to carry that product in the store. It gets sent home to the end consumer from us, and basically at the end, we pay the hairdresser a licensing fee for the service that they have done, and we gather all the data on the consumer. We think about first-party data. This is first-party data in excellence.
You're gonna see another thing which is extremely interesting, which is called The Unseen. One of the biggest opportunities in hair is the ability to color dark hair without breaking the hair. If you think about the majority of the population around the world is dark hair. You cannot color dark hair or see any of the benefit of coloring dark hair without really breaking the hair, which is why the penetration for hair coloration is super low in markets like Asia or in Latin America, and it could be much higher. Those consumers have absolutely no interest to destroy their hair, likely forever, especially when you think about consumers who have dark hair and on top of that curly hair, which is also very frizzy and breaks and potentially gets destroyed for life if you make a wrong move.
You have a massive hurdle in hair coloration, which is, I don't wanna damage my hair. I have beautiful hair. I don't wanna damage it. Finding a way to color dark hair without damaging it is the biggest opportunity in the hair market that exists. We're not gonna show you all of technologies we have coming on that over the next couple of years for obvious reasons, but we'll show you one. We show you one first step, which we call hair cosmetics, and it's gonna be. It's very exciting. Then on our detergent business, Carsten already mentioned it, we have a new technology going in the market next year, which has significant benefits above and beyond just cleaning your clothes much deeper.
The team is gonna take you through that, and it's really based on technology that nobody in the world has or will have in the next couple of years. Let me talk about M&A for a second. M&A is a core and will remain a core of what we do. It has always been and will always be. For the time being, as I'm starting up that new consumer business, it's M&A in the core. Why? Because I cannot have my organization to be massively distracted. That M&A in the core is super important for us. When you look at acquisitions like Maison Verte in France, it's a market leader in sustainable cleaning, so that builds perfect to our portfolio strategy, M&A in the core. Shiseido Professional and that acquisition in Asia is absolutely spot on.
Not an easy acquisition to pull off with our partners in the Far East. It's not only a great brand and access to a lot of salons that we get with that. What we get with that in one step is a unbelievable amount of knowledge of Asian hair from a company who's very well renowned in the region because we got also all of that knowledge, patents, and understanding. By bringing hundreds of people from Shiseido over into the Henkel family, we acquired a massive amount of great talent in Japan, helping us to build a strategy that in Asia is all built around three markets, which is China, Japan, and Korea. Shiseido is huge leverage for us for the next couple of years on that. Then there is M&A beyond the core. All right? Thinking about we now have core platforms we defined.
How can we actually now start to think about what other businesses in the FMCG industry would be interesting for us as platforms to bring into Henkel Consumer Brands? I just wanna talk, and it's I only have one more slide to go, but I wanna talk about that in a second because some people might say, "But you could have done that in the past. You could have acquired other categories easily as Henkel and integrated." The answer is no, we could have not. Because what it would have meant for us is, would we ever screen for a company that is outside Beauty Care or outside Laundry & Home Care? No. Because we limited our screening to those two areas because this is what we did. Going into a completely new segment would have meant, hey, what does that mean?
I have a new GM in the market in every market around the world, and I need to have one sales lead and a complete sales organization. I have a third person who runs into every EDEKA and Walmart store. The real platform for us is to have teams in every market around the world who learn something that is common sense in our industry, which is salespeople need to be able to sell multiple categories and not only focused on one. If you look at our competitors, many of our competitors sell a lot more than two different platforms. Sales reps have the obligation to be able to be educated on multiple platforms. Of course, one key account manager still goes to a buyer, but if you're a sales director, you really need to understand the whole breadth of the portfolio.
Basically generating that platform on having one GM in the market, one sales team in the market, managing multi-categories to start with, it becomes so much easier for us to integrate a completely new category that still should, of course, be as close as possible to the core. I have no interest to start selling frozen foods tomorrow, okay? That's a completely different supply chain that is not within our core, that is not within the department of health and beauty within our customers. That is a huge opportunity for us which we did not have before. Enabling easy integration of M-Cat, new FMCG categories once we are ready for it, and we take that decision once we are ready, and once there's the right prospect out there that fits the portfolio and fits the margin and growth criteria, we'll for sure go after them.
My last slide, I leave you with that. I really believe we have a plan, and we will without any question, deliver on it. That plan is driven by being a technology-led innovation leader, strengthening our core categories that we decide to play in, investing at scale. Have a very stringent margin improvement measure program all the time to be able to fund the growth. Because the money is not gonna fall from the sky, it needs to be within our own P&L. We need to drive up our gross margin, and our gross margin will enable us to drive that investment. Driving synergies in SG&A, as I mentioned before.
I really hold my team to a very high standard here of being best in class in the industry when it comes to managing SG&A and running supply chain at optimal cost to value. That's what's represented in the program, and that is what ultimately will get us to our ambition of the mid-teens EBIT margin, and then a very sustainable OSG growth. I do not want anything in OSG that is not driving my margin up in a gross margin level, not being able to help me to reinvest. I'd rather have a little bit less OSG, but more profitable. We will achieve what we have out there in the midterm. With that, I'm done on time, and I ask Thomas on the stage. Thank you so much.
Very good. Thank you very much for your attention. Thanks for the 5 presenters for this morning. We now enter into a 45-minute Q&A session. Please be so kind to raise your hand, and the mic will be brought to you. Please be so kind to state your name and your firm, and also be so kind to limit your questions at 2 at a time. You may always come back afterwards for another round of 2 questions, but so that we can take it step by step. If you kindly come up to the stage, board members, then I'll hand it over to you, Carsten, to run us through the Q&A. As I said, please raise your hand, name and firm, and we bring the mics. Carsten?
Good.
The floor is yours.
Oh, we're still waiting for Jan- Dirk, so before we start.
Good. David, you go first.
All right, David Hayes from SocGen. Two questions if I can. Wolfgang, you come from Colgate. I'm trying to get an aspect or a sense of this integration plan. If Colgate's a 10, let's argue, in terms of how it's integrated, where was Henkel when you arrived, and where does this plan get you to relative to your Colgate experience? And the second question, again to you, Wolfgang, sorry, not picking on you. Just in terms of the beauty, first half gross margin flat, but the margin was down, I think 80 basis points for the division. Is that additional A&P coming through which, so below that line that you're trying to put back in the business, part of the strategy, or what drives the 80 basis points? Thank you.
Okay. Yeah, good questions. Thanks, David. Of course, I don't want to talk about my prior companies. Yeah, I think you'll understand that and appreciate that. I think you asked the question in a very eloquent way. If I go on a scale and I talk about integration, and you would put that prior company that I worked for at a 10, I would say we had a 5 from an integration point of view. A significant way to go. The difference in gross margin to EBIT margin you talk about in the first half on Beauty Care is exactly what you said. There are 2 elements. Our gross margin is indeed slightly up. What you see on the EBIT margin has 2 factors.
Number one factor, despite the inflation cost pressure, we decided to not cut back on A&P investment behind our brands. We did not do that, which I think is the right decision for the long run for our business to strengthen our equities. The other element is, of course, at this point in time, you're not yet seeing the SG&A savings come through that will partially come out of course, the merger, but also other initiatives we've already put into place. We've not been able to pull that off yet because of timing. You should expect that is exactly part of the plan as we go forward. Gross margin up, yeah.
Solid investment into line 17 as needed in the sales that we want to win within and managing our SG&A in a completely different way to then get to that mid-teens ambition that we've communicated on the EBIT margin.
Maybe to build on that, David, you know, you also, what I said before, the EUR 350 million more investments in marketing and digital, which we decided in 2020. We always said also during the years now with COVID and all that part that we want to be flexible on that, and for sure we reacted on different categories, you know. If you had the styling category, where nobody could go out, for sure that was impacted, and we adjusted our spending. I think the same is, when Wolfgang was talking about emphasizing the core of the businesses, and he made the example, for example, on Turkey. I think also in that part, we changing the investment strategy in terms of being then on categories where there's either growth pattern or margin pattern. Bruno.
Okay, now it's Christian. Okay.
Yeah. Thanks.
Bruno, you will also come. Yeah.
Christian Faitz, Kepler Cheuvreux. Two questions, please. First of all, for the group, can you talk about current supply chain challenges? You yourself might be fine on the energy side, for example, but what if one of your key suppliers has to curtail their production? I mean, have you run any scenario analyses on that? Would be helpful to know your thinking around that. Second, on your Consumer Brands, Wolfgang, you mentioned combining the operations and production and logistics, but also sales will take time, and I saw your two phases on the slides. Phase two is gonna be completed 2025, but that phase doesn't look like it's gonna be the completely new setup of the organization in terms of production.
What is kind of the end game in terms of having the full Consumer Care set up as you want it to look like?
Good. Christian, maybe we start with the first one. From an overall company perspective, I think we highlighted that we talked also yesterday evening about that overall, looking to the business, we are having, be it in Consumer, be it in Adhesive Technologies, I think we are not energy intense, no? Roughly, if you take the overall company situation, roughly 2% of our cost of goods are related to energy. Therefore, from a direct energy perspective, we are not so much impacted. For sure, you're raising with your question, and therefore, I would like to hand it over to Marco. For sure we're getting raw materials, intermediate materials from other companies, suppliers in that sense, and for sure that has an impact.
Maybe Marco, you can give maybe a little bit more glance on that.
Yeah. Sure. I mean, as I said, we have been fighting through that new environment.
Mm.
Of supply disruptions for the last two years. We have a very clear and stringent process around managing disruptions. We have tools in place where we get on-time information around the world, what we have available, where, and how we can mitigate disruptions. Now, to the specific situation, if there is a gas shortage, I think that is also the direction of your question. Of course, we reviewed that intensively. It's of course very difficult to say what exactly will not be available anymore. Also here, of course, we have some ideas where our gas-intensive raw materials that could be endangered, so we made a lot of analysis around that. We had very close interaction with our suppliers to understand all the also the situation also how they prepare.
That is a very important instrument. We keep doing that. We have basically looked into how would we decide on our sales portfolio? What do we sell at the end? Where do we give priority in case there is a shortage of specific raw materials? There are plans around that, and that's the best we can prepare for that situation.
Wolfgang, supply chain?
Yeah. I think the overall question, the way I understood you, Chris, was about integration overall, right? Where is maybe an end date towards that, and when will we be done? I think we'll never be done. Because I believe there's always opportunities that you can go after, and some of them take longer, and some of them are much quicker. But just go back because you started with sales, and I think the commercial integration, we see the full swing of that really in 2024 because we believe that we're gonna be completely done by the end of 2023. A lot of that just has to do with exit timings of employees, as usual with big restructurings. We're really on that, but it really is a question of when people exit.
That is gonna be the majority is 2023. Your other part of the question, which is much, much harder to answer, is about the supply chain question and the really kind of definitive timing on when is it over. I would say that we're gonna have lifted maybe 80% of the opportunity in the timeframe that we've given by the end of 2025, being in full swing towards, like, 2026. There will still be things where we need to have consideration on potentially even greenfield sites or elements that will take even longer time. As I said, we just brought a team together. We kind of kicked that off. We're looking into that. We already have very good ideas on first phasing elements. It's not all just, hey, we're gonna get savings in 2025 and then 2026.
You will see savings coming and materializing in our P&L next year on a smaller level, 2024, 2025, and ongoing. I see that as a real value stream over time for us. Honestly, hopefully, it's a value stream that never ends, because to the question David had before, we have a lot of consolidation potential in that area.
Yeah. Wolfgang, maybe to add on that, I think it was also clearly linked to the EUR 500 million of gross savings we have said. I think therefore, the plan or at this time, it will not be everything ready and executed until 2025, independent of additional ideas or opportunities we will see while we are going. Now Bruno. Bruno's in the first one, row.
Thank you. Both of my questions are for Wolfgang, I think. You said frozen food isn't part of your core business, and you described your core business as health and beauty. Are you including health within your core business, or was that an accidental slip of the tongue? The second question was, should we refer to experience in the other consumer goods companies? When I look at the challenge you set yourself, you're planning to outgrow the market by 50 to 100 basis points despite being the number one in many of your sales. For leaders to outgrow their own market by that much is mathematically even harder.
At the same time, doing enormous kind of restructuring and cost savings, and again, some competitors are extremely good, whether it's a P&G or L'Oréal in the other categories. What precedent is there of anybody being able to do all two or three at the same time? If push comes to shove, which one will you prioritize, profits or growth?
Great question. I understand your question on what could be part of the portfolio and could be health part of it, yes or no. I think that's something we'll see over time, because I'm not gonna talk about the categories that we are screening for.
You know, I first wanted to step in, but you know, Wolfgang is already on the path, so you know that we are not commenting on the categories. I understand your question, but we're not commenting on that.
That's why I took a very obvious
Yeah.
one with frozen food out of my prior world. Of course, you know, there's so many opportunities, and at the end, it's also a question of availability. And you know, if things become available that meet the criteria for us and that still play within a similar customer framework and a go-to-market model, then I think we'll consider it. Given the question around, is it affordable? Does it offer growth? Does it offer margin potential? Does it fit to the business model? Yeah, that would be my first answer. The second one you had, I think there's a lot of elements behind the second question you had, but if you nail it down to your last ultimate part of the question, saying what would you prioritize, the growth or the profit?
One thing I would say is it's very important within that better before bigger strategy to understand that given where we stand right now within Henkel Consumer Brands and our starting point, it's the better element first before it is the bigger element, yeah? That does not mean that all of the businesses cannot grow. What needs to grow to become better is the high-margin businesses that we have. They need to grow. In the mix, we're giving up business that are least profitable. I'm okay to see them decline or vanish over time. To your question, I would, at this point in time, prioritize KPIs in my P&L that are gross margin or EBIT margin, making my P&L healthier, definitely over going for artificial growth just to be able to say I'm outgrowing the market.
That said, it is super important that once I have a healthier P&L and I build that healthier P&L, it will give us opportunities to over-invest into the business and with that ultimately drive the growth wheel as well. Because no company, and also not the business that I'm operating, can ultimately live without some growth in the top line that is done in a healthy way. I hope that is clear enough as an answer to you, Bruno.
Thank you.
Thank you.
Céline?
Yes. Thank you very much. Céline Panozzo , J.P. Morgan. Since one of my question was answered, maybe, sorry, I continue with Wolfgang, but then I have another question.
That's good.
Um-
Yeah. Because otherwise I would have said.
Yeah, yeah, no.
You know, we have also sustainability initiatives.
No, no, no.
Yeah.
The first one, since we are on that, was about the U.S. Since you came from the U.S. and you think that with all and Snuggle you have the ability to win, can you tell us what you think went wrong and why you think you can win in the U.S. as a combined entity? My second question is on the guidance for this year. You raised the top line twice now, but you didn't change the EPS. I understand that you said you're moving upward. Are you having higher costs, and that's why you've not changed your bottom line? What's happening with Russia? Because I think Russia is still included in the guide, as a dilutive high single digit in terms of EPS impact, but I think you're still operating Russia.
If you could explain that.
Marco, I think you start with the guidance, and then we come back to the US.
Yeah. I mean, you refer to the guidance change indeed, 2 times, this year also raised the top line guidance. What you also have to see, between beginning of the year and when we then basically changed the guidance early May, a lot has happened in the markets or for input costs. You know, we have seen a tremendous high cost coming up that we needed also to act on, and that was also, you know, requiring more pricing to be done. Clearly also we needed to upgrade the guidance. We have seen throughout the year now, still strong current trading, and that was a background also now of again looking into adhesives, but also, middle of the year, of course, we looked at the top line.
Why didn't we now change the band for the margin or the EPS? Because we think we are still within that band, but what I also alluded to also in August and now again within that band that we basically laid out, I mean, we are moving more up, and we have said that we see the clear potential for our consumer businesses to finish in the upper half of that guidance range. That gives a direction, but still uncertainties are out. That's why formally we don't change the band now, but from what we see, assuming that trend continues, that's a potential that we clearly see much clearer than we have seen maybe beginning of the year. On the EPS, that's very similar.
I mean, with that upgrade of the top-line guidance now, we move very clearly more right to that to the better side of the band, and that's. The band still applies, but we are better positioned in that band.
Comment on Russia?
On Russia, we are in the process of exiting that business. We wanna make sure we also get value for it, you know? So I mean, you see a lot of companies who have just given over the key of the company to somebody else, not really getting anything for it. We wanna do that differently, and we need to see that we also get value for what we basically exit and divest. We wanna divest a major part of our operations, and that takes a bit of time. But we are on track, and the goal is to get that done by end of the year. Then basically we'll see also the impact on the P&L then, basically coming next year as a divestment.
Maybe, Céline, you had an indirect question, do we have higher costs? We have not, neither from a structural cost point of view nor from a material cost point of view. I think we gave with the last update in the mid-20s in terms of increase, and nothing of that has changed also while we're speaking. For sure, there is quite high volatility on that. Costs are, as we have stated, either under control or are stable in comparison to what we have disclosed, you know, for last time for mid-
Mid-August
Mid-year or mid-August in that sense. Regarding your U.S. questions, let me start with that, because I think, as we have just said it, Wolfgang will take over, as first of October, the Laundry business. I think he was concentrating on Beauty and the integration and not on U.S. Laundry. In that sense, maybe to recap, where we have left it, I think we have, when we identified that we have issues and things to be changed, we have made a couple of initiatives, be it from an innovation perspective, be it from a portfolio perspective, be it from supply chain, be it from a people management perspective.
If you look at the recent weeks or months, there are some signs that the things are getting step-by-step a little bit better. I think last time I avoided to talk about a turnaround because I think it's not fair after such a short period of time. I think Wolfgang will take the time when he's taken over now also to make an analysis, like for all the other businesses in Laundry, how he sees the situation. Maybe, Wolfgang, you can comment in general because you alluded to that. I think you have not only with your last company and experience in the U.S., I think you were serving for three companies, significantly part of your time in FMCG in the U.S. I think in general, I think you can comment on that.
Yes. Céline, I understand the question, and I think I will go back what I said before. The U.S. is a super exciting market. Of course not everything that we've done was perfect, otherwise we would have a different outcome. I look at the business that I had the opportunity to run in the last year, which is or still is the Beauty business, and I look at the Beauty business combined between professional and our consumer goods business, and we have actually a highly profitable business that delivers growth. That's what we want, yeah? Still, in that business, we had to make a lot of sacrifices looking at parts of the portfolio that were not delivering on the gross margin that we want it to be. That also explains when you, for example, do a deep dive in our share in the U.S.
On the combined soap business between kind of liquid hand soap, bar soaps and so on and so on. We decided to completely stop business at some customers because it was impossible with bar soap to still generate money. While in other parts of the business, in other segments, we enjoy significant double-digit growth rates with customers like Walmart, with, for example, in certain liquid hand soap segments. For us, it's really playing the portfolio in a very effective and efficient way from a segment, sub-segment to a customer level, and having that clear is the first starting point for us in the U.S. The brands that we have are phenomenal. There's no reason why you should not be able to win in a world where people have more and more allergies, to win with a hypoallergenic brand like all in the U.S.
market or to win with a brand like Snuggle, it was such a beloved equity around the world. There's no reasons why we should not be able to win those brands. There's always a need for another brand in the premium price, the detergent segment, next to the competition who has a very high share, as we all know. Customers want another brand. They want another alternative. They don't wanna depend on one supplier being the only option on the shelf. We need it, and the U.S. is a super exciting market for us, and I would really turn the story completely away from the question. Should we have that business or not?
I would say that business has the potential to be a massive growth engine for us if we get some of the fundamentals right and we're able to grow the business in a profitable way. Then you go back to my better story, which is also the truth in the U.S., is we have massive opportunities for a combined network in the supply chain, which is not combined today, which is super complex, and the opportunities are there as well in a similar way like they are in other markets, if not even more so true for the U.S. than it is for other markets. It's a starting point of profitability, enhancing margins, making calls on customers and parts of our portfolio, and with that, driving profitable growth also in the U.S.
I think in that context, I think we have been in the past confronted with questions, "Why are you not selling big parts of your consumer business, be it in Beauty, be it in the U.S.?" I think that's exactly the analysis we did in the second half of last year, where we came to the conclusion and we are convinced that combining the businesses makes sense and will deliver value to our shareholders, to all of our shareholders. That's for sure the proof point we need to bring in the next couple of quarters and years that this is the right decision. Yes.
Good morning, Fulvio Cazzol from Berenberg. Thank you for taking my questions. I've got two. One on adhesives, and one on the consumer. On the adhesives, I saw some interesting slides that you put up that you win more than 50% of the contracts that you go for, yet when you look at the total business, EUR 10 billion on a market size of EUR 65-70 billion, that's only 15% market share. Can I ask why? There must be a lot of areas where you choose not to play in. Could you explain to me why that is, and if anything is changing on that front, whether you have ambition to go for more, subcategories or perhaps geographies where you're not really present in today?
My second question on the consumer, just trying to understand the operating model at the local market level, i.e., how decentralized your operating model is. If you were to, say, launch the cosmetics hair care product in, say, Spain, who makes the ultimate decision on how the launch is structured, how much investment is made behind that launch in that local market? Is it done at general manager level? Is it done at divisional level? Regional? Just a little bit of color on that. Thank you.
Thank you. Jan-Dirk Auris, you start, huh?
Yeah, it's a perfect question. Thank you very much. We talked a bit about active portfolio management and when we launched our active portfolio management, we realized and we understand that there is not one adhesive market or one bonding, sealing or coating market. There are many sub-segments. It's highly fragmented, it's highly specialized. You're right. We focus obviously on those applications. We like to talk about application/technology combination where we differentiate and where we bring substantial value, and of course, that is translate then also into gross margin. Gross margin, Wolfgang, is also important for Adhesive Technologies, and that's pretty much where we play. There are segments where we don't play because we don't see us basically generating any value because some of the markets are commoditized.
Good. Wolfgang, you take the-
Yeah, I go to the question.
Yeah.
It's actually super interesting question, and we've spent a lot of time over the last couple of months since the announcement that we'll bring together Henkel Consumer Brands into one entity with exactly that question. With the question, who has the ultimate decision right on something? Because that's the sign of a very effective and efficient organization if you're clear on who is the ultimate decision maker. I'll start a little bit from the top, and then I end with your question on the example in Spain. First of all, we have two global categories. The two global categories do not run the P&Ls, okay? The two global categories for us are essentially the innovation engine for the long run, working together with our technology organization to really find ways of really revolutionizing the categories and bringing breakthrough innovation into the marketplace.
I do not block those resources with short-term line extensions or kind of minor tactical maneuver. They are really focused on the category per se and how do you change the overall face of the category, in the longer or mid-run. Okay? That's their main role, okay, that they play in a real end-to-end way, together in strong collaboration with our R&D community and our supply chain community. We roll up the P&L via the regions in an oversimplified way. I have regional heads that actually run the business. They have the markets. For example, you have the European region, including Central Eastern Europe as well. I have one head who runs those markets, who is essentially the head of all the general managers that operate in that market.
We also have a marketing VP and a marketing organization, as well as the supply chain and R&D organization who works very closely with that region. Europe is basically, when you look at it, an independent region, which of course gets targets set by me and my leadership team as well. They're not as independent in the target setting. When it comes to deploying funds and taking decision, do we want to overinvest in a launch into Spain versus a launch into, take the neighbor country, Italy, then that is the decision of the regional head. We've set a very clear business model for us to say we work on a growth wheel, where the first question always asked is the question on what are you deciding for and what are you deciding against?
With one thing in mind, which is how do you wanna enhance profitability of your choices? If you take a choice for one market over the other, it better comes with a choice being behind in driving gross margin and gross margin as a percentage, as well as overall gross margin growth. Of course, decisions that go down to a general manager is they need to have their customer mix under control and make sure that they can exactly answer to those questions of the regional head to say, "How do you drive your in-market profitability within the budget guidance you have received?" We basically are very, very clear. We've just deployed that out to the organization already by the beginning of September.
Globally, as I met with my top 150 leaders in Lisbon and explained very, very clearly what are the decision rights and who has what accountability, to be crystal clear on that, was one of the key drivers for us and a huge opportunity for us to get that clear using the merger as an enabler to do that or a catalyst.
Tom is on the
Thank you. Thank you very much. Tom Sykes from Deutsche Bank. Just to follow up on the question before on Russia and maybe rolling in the other sort of businesses under review, the billion. What are you doing on the cost side there? 'Cause my impression was you were reducing the A&P, and that's probably inflating the profitability in Russia and possibly inflating the profitability in some of the to-be discontinued businesses. Would those be more dilutive now than when you gave the guidance before because of what's happening on the cost structure in those businesses, please? Then just on the consumer business, your R&D is a little under 2% to sales. Do you think that's the right level given that you said you're a technology-led business, please? Thank you.
Marco, you take the follow-up on Russia.
Yeah. I mean, we have a couple of drivers in, indeed, the Russian operations. One is the decision we have taken to also not continue with the level of advertising. That for sure is one driver that also increased profitability. On the other hand, we have also a lot of volatility on the input side. We also have to face that in some product categories, we will not be on the same top-line level for the whole or the remainder of the year. There are a couple of topics where then that net out each other. From a profitability standpoint, more or less we are on prior year level, and that's the assumption for the guidance for the year.
R&D.
Yeah, 2%. Of course, that's a fair observation. Just to be very straight on that answer, and then give you a couple of additional bullet points. No, it's not enough, and I'm not sure if my R&D lead sitting behind you gave you money for that question. It's, I think that we definitely have a potential over time to shuffle SG&A funding and other investment into R&D out of other areas as we work more effectively and efficiently. At the starting point, I think we had a lot of opportunities right now to concentrate more with the investment we have. With the work that we've done from an organization layout, first of all, you know, while we deliver the EUR 250 million net savings, basically R&D is completely under proportional on net savings end.
We basically decided to almost ring-fence the R&D organization to not cut down R&D investment, and we go more for cuts in the commercial area where we think we have duplication. The other element is with the real concentration behind the businesses that we decided are our core. We moved a lot of researchers into the areas that are really our core to kind of be able to drive more long-term innovation. Also decoupling a little bit the decision rights there, on into like region versus global and what gets done where.
We could lift a lot of what we believe are very positive synergies for us, but straightforward answer is, I think over time, as we put the business onto healthier feet, the first line in SG&A that you will very likely see going up, and I would reinvest into, is the R&D community.
Maybe Tom on that, maybe you remind also the reinvestment or the EUR 500 million of savings until 2025, where we said this is gross, where we also said a part of that is reinvestments, but too early to define what reinvestments. It's not only meant A&P, it's also meant structures. Wolfgang just alluded to.
Thank you.
Yeah. Jeremy? This one in the middle.
No, Frank, you're not getting more money next year.
Jeremy Fialko, HSBC. One question on adhesives, one on consumer. Starting on adhesives, there's been so much volatility in the end markets, the different segments. Are there any metrics you can give us in terms of, you know, to show that you've actually been outperforming your end markets over the last few years? Maybe some sort of kind of refresh on what you think your outperformance versus the end markets and the segments that you compete in can be.
The question on consumer is when you look at the execution of this merger of the two divisions, what do you think the biggest challenge or what do you think the biggest kind of hurdle to get over will be until you think, "Okay, I've kind of got this execution out the way without any major kind of operational missteps, supply chain interruptions," that sort of thing? Thanks.
Same procedure. We start with you, Jan.
Yeah. No, Jeremy, also excellent question. Ties a bit into the previous question. We talked a bit about how do we run the business. We talked a bit about how do we make sure that our 6,500 customer-facing experts are laser-focused on what we try to achieve. We slice and dice the overarching EUR 65-70 billion market into segments where we clearly wanna gain share and really wanna go after because the value creation is significant bigger versus some of the other markets. This afternoon, George will talk about e-mobility, and you will clearly get proof points in how do we over proportionally gain shares. I can give you a couple other examples. During the introduction of our four divisions, I talked about automotive and metals.
Metals sometimes falls a little bit through the crack because everybody always talks about automotive. When I look at our beverage can business, which is a substantial business, and when you look pretty much how many lines are commissioned year by year. We talk across the entire business of a 50% win rate. In that particular case, we talk about 75% win rate. I can go on division by division. The segments where we focus. We are obsessed in making sure that we measure gains, we measure attrition, and we compare that delta with the market, because that is clearly our ambition.
Can you, Jan- Dirk, also allude on the topic of IPX? Because you was talking also about outperformance in terms of IPX and what we see in terms of organic growth, if you see the +6% what we have seen over the last two and a half years.
Yeah. IPX, Jeremy, as you know, is not the adhesive market, but it helps us across the entire portfolio to give us some sort of a direction. I think we showed it, I mean, I took 2019, 2020, 2021, and then first half 2022. You saw that on average the CAGR was 6.3% or something. If you compare that to IPX, it's certainly above.
Good. Consumer?
Yeah. I'll take the first part of your question, Jeremy, around challenges with the merger. I think they are like the same like on any merger. The second part, I give you more like business things from like IT and also questions around customers. I could talk about that in a second, and then I hand it over to Sylvie Nicol, because one of the third elements that is super important for us is around how we drive entire change management in such a big organization, kind of bringing people together with kind of very different category backgrounds. Sylvie will talk about that in a second.
My two biggest worries, like they are on any merger, whether it is an internal or an external, and I have done plenty of those before in my prior life in the companies I've worked for, is IT integration is always one of the biggest worries you have. That for us with an internal merger is a little bit easier because we already at least operate on the same IT platform from an SAP point of view, but still need to do significant amount of work on that to ensure that we bring everybody onto exactly the same way of working within IT, and making sure that we get to the kind of one order, one invoice element I mentioned before. That's a big IT thing to lift.
That is not giving me sleepless nights, but it's just for our organization, that's a lot of work, and we're completely up for it and on time. The other question is always with every merger that you have or any major acquisition that you do is about customer contracts. You have different kind of rebate system, different terms in your different businesses, and how you align that over time without being the one that is on the losing end versus your trade partner. I think we're very aware of that. We're aware of the challenges. We're up for it. Actually, now over time that we're going much deeper into that, I was very worried about that with the announcement in the end of January and as we started in early February.
I think we are very well equipped to overcome those hurdles and are pretty clear on what our way forward is, whether it's IT or on the customer contracts. Really the third, and that's the most important element for us bringing the organization together, is around holistic change management. With that, you know, I will hand that over to Sylvie because HR has done a tremendous job in supporting the business around that.
Thanks, Wolfgang. As I was commenting to you at the break, we don't really see that as a challenge, but rather as probably the biggest opportunity that we have. There is a huge understanding for the rationales of this merge by the organization from the MPs. There is a huge appetite to drive this journey together, the 18,000 colleagues which are coming together. For sure, there is also a significant responsibility from us to support in the change, and we have a massive change program in place, which has three major components. The first one is what we've been doing so far. It's preparation, supporting the team on resilience, trade management, change management. The second part is what we are starting now, putting the teams, the leadership teams together, working on team journey with the top 60 leadership teams in the world, bringing them into the project, helping them to come and lead together according to the expectations which have been designed, the charter of working together in Henkel Consumer Brands
Mm-hmm. Good point. Yes, go ahead.
It's Rogerio Fujimori from Stifel. Thanks for taking my question. I have a follow-up on the theme of digitalization. If you could just share with us your thoughts about the penetration of e-commerce in the medium term for both divisions and the penetration of digital marketing as a percentage of total and opportunities for optimization in terms of marketing efficiency with the shift to digital. Thanks.
Maybe I start on that. I think you have seen that we were driving the digital sales quite significantly over the past 2.5 years from around 12%, which we had until the end of 2019, and to over 20%. I think we need to differentiate and therefore the question is good. If I look to Jan- Dirk, it's more about digital platforms, which we are also doing, and, in the area of consumer brands, for sure the topic of e-commerce and, also direct-to-consumer business, etc. Maybe Jan- Dirk and Wolfgang, you step in.
Yeah. No, happy to do so. A few years back, we communicated that we have a digital order platform, which we call eShop, and that we continuously drive. The end game is touchless order, of course. That is at the end of the day, the vast majority of the EUR 3 billion contributing to adhesives. It's a digital-enabled, but at the end of the day, it's a digital order platform where we significantly increased customers on that platform. As I said, we started with, I think it was EUR 1.5 billion, and right now we are above EUR 3 billion. In general, when we talk about e-commerce and marketplaces, you know that we do have a consumer and craftsman business where we do see some nice potential down the road.
We do generate double-digit EUR millions already, but we do see that this could be a great enabler for the business, for that particular business down the road. Of course, we also see through our overarching strategy that with direct account marketing, we see great opportunities also for our industrial businesses, where we target exactly decision-makers at some of our larger key accounts to actually drive certain programs, when it comes to technology and application. We do see some great potential, and throughout the afternoon you will see how do we apply, in that particular case, technology, IT technology, artificial intelligence for our innovation process, but that goes along the entire value chain. That is just one area where we focus on.
I start with the second part of your question, which is the question around, you know, how do we operate within digital media, so to speak, right? Versus the classical forms. That answer is not as easy as what is our overall percentage, because it's very, very different by region around the world. I could give you one number, but it wouldn't tell you anything. What's much more important is that we have regions like our Asian business, for example. We almost spend 100% of our investment in digital because it's also very directly connected to our growth model that we have in Asia, especially in China. In Beauty Care, as an example, it's all about, you know, yes, growing the brick-and-mortar customers, like A.S.
Watson, but also a very digital-enabled growth model which we have, which is working extremely well for us over the last 2 to 3 years. The entire spend that we have is within digital. We don't run classical TV commercials or kind of old world kind of media there anymore. In the rest of the world, and that's true for Asia as well, we follow an extremely strong approach on ROI. It depends. You would sometimes think, "Hey, shouldn't you already spend 50 or 60% of your media all just in digital because that's the new world?" At the end, you know, I have a very stringent approach to say, I don't care what media it is, the media needs to deliver an upside, and it needs to deliver a return on investment.
In some markets like the US, we have a much higher spend in digital already because usually the digital spend returns much faster. We also there investing very much on our customer platforms when you look at Walmart or others. Our share is already not even 50-50 anymore, but leaning towards digital. When you look at Europe, we still more around like one-third, two-thirds. That would very much depend on a market-by-market question and kind of even which segment you look into. Of course, younger consumers, and we are leaders with younger consumers in many of our platforms. For example, trend hair colors, so not gray coverage, but trend hair colors, predominantly younger consumers.
You will see an over proportional spend in digital with kind of brands like göt2b versus classical hair coloration, covering gray hair, which is a completely different behavior, and you need more traditional media in order to reach that audience. E-commerce plays, that's the first part of your question. E-commerce, of course, plays an increasing role. Good for us. We in general have a higher market share in, on, across our e-commerce platforms than we have in our brick-and-mortar business, which is also a sign that we are actually able to reach younger consumers and consumers with changing buying habits.
That is not only true for Asia, where that is true a big part of our model, but it's also true for big parts of our US business, for example, which also gives us a signal that we might sometimes need to be better in, you know, how we operate in our brick-and-mortar stores, driving the distribution in the right way. Super important and over proportional share in e-commerce. Thank you for your question.
Good. Before we go into a break, last question. Okay, if you have two shorts, then Bruno and Céline.
Thank you. Sylvie, you talked about the design for recyclability and the targets, but obviously design for recyclability is different from actually recycling or on the input. Could you comment on what percentage of your inputs are of plastic versus recycled plastics? And do you have any actual visibility on what your consumers are actually doing? Do you have any view on the actual recycling? And one for-
1. Bruno, 1.
Thank you.
The other one goes to Céline.
Shall I ask now?
Go. Great, yeah.
My bigger question is coming back, Carsten, on what you said at the beginning about value creation and your willingness to appeal to investors, increasing the DPS, share buyback. At the same time, there is probably you are looking at merger, but probably a demerger is what the market would consider in terms of value creation. I understand that balance sheet scale you see as a benefit. Does it mean that a demerger is off the table unless we have done a big M&A and then first we need to look at dilution of return on invested capital before we can look at getting the benefit or sort of the part?
That's a good last question. Before I give Sylvie the floor for the topic of sustainability.
I start with plastic in that. Very, very good question because that recycling for plastic does not mean that in the end you can always recycle. I said 86% designed for recyclability, but that's not enough, and that's why we are also working on initiatives to improve the opportunity to recycle. We are working, I mentioned, with Plastic Bank. In emerging countries, we are working with Alliance to End Plastic Waste to also support the progress. That's something that we also need to do together with, let's say, other companies, but also with governments, obviously, because we are not alone here. To your question on recycled plastic, we have 18%, 1/8 of recycled plastic for a target of 30%.
For us it's also a very core target on top of reducing as well the quantity of plastic that we are using. The challenge here is, as you probably know, the quality and the price. We are working on that in order to increase the target, but that's also depending here on the quality of the sourcing that we will find out on the market. Clearly a very important goal for us.
To the last question, when we look on the way forward, what we would like to do, and as I said, we are convinced that what we are doing is creating value for all stakeholders, for all shareholders. I think, taking the value creation into account, we believe that with the setup now, the two business pillars under Henkel is the right strategy going forward. Taking what Henkel delivers to the party in terms of infrastructure, in terms of benefits, is, you know, a state-of-the-art shared service setup, which is supporting both businesses and bringing efficiency, cost efficiency when it comes from a point of transactional cost into that.
I alluded to that, the central functions we are having, be it finance, be it HR, be it purchasing, IT, doing the same in terms of serving, enabling the businesses to do so. Yes, there is also the financing power I talked about. I think it's also about in these times, if you think about navigating through these times, I think we have shown over the last, if I go back now, last 15 years, that the setup has helped us always to navigate through these times. That's the situation, how we see it, and that's also the reason why we believe executing on what we have on our table and in front of us is the right thing to create the value for all of the shareholders and stakeholders in that sense.
Maybe we stop here the first session when it comes to the Q&A. Before I would say closing the first part of, I would like to give a short summary on that while, because we are also now disconnecting in a couple of minutes from the webcast. Let's have maybe a short summary on that. First of all, thanks for your questions and I think. Oh, let's give it a try.
First of all, I hope we could give you some insights, not only with a, you know, overall presentation on the group, but also the insights in sustainability, in Adhesive Technologies, and in the future Henkel Consumer Brands that we are taking perspectives in order to capturing opportunities for growth and for profitability going forward. I started with saying that we have unique businesses at hand with strong two pillars operating in attractive markets, being with great positions, occupying in Adhesive Technologies the number one worldwide, and having also strong positions in the consumer businesses and especially the topic of brands. Tech innovations, yes, but also it hopefully came across the topic of technologies.
How we are dealing with that in both businesses is, you know, the start for really creating superior customer and consumer value and by that creating value and creating benefits from the platform we at Henkel are using. With this, we are convinced that there are reasons to invest behind our company because we believe we have a winning strategy which is related to our Purposeful Growth strategy because of our people, which really driving with an entrepreneurial spirit every day what we want to do, also related to our sustainability strength. By that, having a compelling long-term financial ambition, which is helping us, based on a strong foundation, to drive the company forward.
By that, using all elements of the capital allocation strategy going forward and by that, really creating value to all of our stakeholders in that sense. That's where I would like to leave it. For sure, we are now stopping the webcast and all of us are also going into to have a lunch all together. You also will see what we have done during COVID times in order to make also the working place for our people more attractive. Therefore, thanks for joining, everyone online. Have a good day. Stay safe and stay healthy. The rest, let's follow us and go into the lunch break. Thank you.