CEO Change From Henkel to Adidas

Kasper Rorsted is leaving Henkel after turning around the consumer goods group over the past eight years – and joining sportswear maker Adidas as its new chief executive. Investors are clearly hoping the Danish CEO has another turnaround up his sleeve.
Kasper Rorsted is a CEO in demand.

If the share price developments Monday are anything to go by, Kasper Rorsted is the kind of man who can really impact a company’s fortunes.

In a surprise announcement, German consumer goods maker Henkel on Monday said its Danish chief executive will step down by the end of April. But there was another German retail company that seemed to be eagerly awaiting the news. Less than two hours later, Adidas announced Mr. Rorsted will take over the leadership of the sportswear maker in October.

The news sent Henkel’s preference shares tumbling, down nearly 5 percent in morning trading in Frankfurt, and making them the biggest decliner in Germany's blue-chip DAX index. Adidas shares surged nearly 10 percent by 12:30 local time, making it the DAX's biggest winner.

There is hope that Mr. Rorsted, a popular leader who by most accounts has revived Henkel’s fortunes over his last eight years in charge, will now work his magic at the struggling sportswear manufacturer.

"It is a very good decision, because Mr. Rorsted can do at Adidas what he has done at Henkel: increase profitability," Ingo Speich, a fund manager from Germany's Union Investment, which owns 1.2 percent of Adidas shares, told Handelsblatt Global Edition.

Mr. Rorsted is credited with stabilizing one of Germany’s biggest consumer groups in the aftermath of the global economic crisis. Henkel's share price has more than tripled since he took charge.

To make room, Adidas' current chief executive, Herbert Hainer, will step aside at the end of September. Mr. Rorsted will already join the sportswear maker in August, easing into the job with a two-month transition phase as an "ordinary member" of the company's executive board, Adidas said.

"Kasper Rorsted is the perfect candidate to succeed Herbert Hainer as CEO of Adidas," Igor Landau, chairman of Adidas' non-executive supervisory board, said in a statement announcing the appointment.

Henkel, which sells popular global products including Schwarzkopf shampoo and Persil laundry detergent, in a statement said it had already found a replacement for Mr. Rorsted, naming Hans van Bylen as his successor starting in May. Mr. van Bylen currently heads the group’s cosmetics division, Beauty Care, and has been with Henkel since 1984.

The long-time Danish chief executive has nothing left to offer Henkel, it would seem. Mr. Rorsted joined the company at a difficult time, tasked with lowering a mountain of debt and improving profit margins that were tighter than at the global competition.

Mr. Rorsted accomplished both goals and is credited with stabilizing one of Germany’s biggest consumer groups in the aftermath of the global economic crisis. Its share price has more than tripled since he took charge.

“Kasper Rorsted has achieved a lot for Henkel. Under his leadership since 2008, the company has delivered a successful performance in a challenging market environment,” Simone Bagel-Trah, who heads the company’s non-executive supervisory board, said in a statement.

But his larger ambitions for the group – expansion – seem to have been one step too far.

Mr. Rorsted would have liked to acquired Wella, a unit of U.S. consumer giant Procter & Gamble, but the move was reportedly rejected by the risk-averse Henkel family, which still owns a majority of the publicly-traded company’s shares.



Instead, Mr. Rorsted is moving on to a new challenge. Investors are clearly hoping Mr. Rorsted might be just the kind of man that Adidas needs to engineer its own turnaround.

Adidas has struggled to maintain an edge over the past few years amid stiff competition from global leader Nike and up-and-coming rivals like Under Armour. It has also been dogged by an ongoing corruption scandal surrounding German soccer and the country's hosting of the World Cup in 2006, not to mention the scandals involving soccer's world governing body FIFA. Adidas, which sponsors both FIFA and the German soccer federation, has denied any involvement.

“Adidas has a profit margin which is only half that of Nike. There is quite some work to do. Mr. Rorsted has the chance to correct the past mistakes,” Mr. Speich of Union Investment said. “He is the appropriate person: He has led a consumer goods company and he is international but at the same time speaks German, which is important for a company like Adidas,” Mr. Speich added.

Even before Monday’s announcement, Mr. Rorsted had been linked to succeed current Adidas chief executive Herbert Hainer.

The Danish executive had deflected the speculation, saying there was no time pressure given that his contract with Henkel didn’t run out until 2017. Nor was there pressure to replace Mr. Hainer, whose contract had been set to expire only in the spring of next year.

Having led Adidas since 2001, Mr. Hainer was the longest-serving chief executive of any of Germany's 30 DAX-listed companies. Mr. Speich said Union Investment was among the shareholders arguing it was time for for Mr. Hainer to be replaced. While he credits the long-time Adidas boss with improving the company's share price "on an absolute level...compared with rivals they have trailed and lost ground.”

Mr. Hainer's time was clearly running out. About two years ago, he announced he would extend his contract only to the spring of next year.

“Herbert Hainer has done a tremendous job for the Adidas Group," Mr. Landau, the supervisory board chairman, said in Monday's statement.

He does leave the company to Mr. Rorsted with some momentum. Adidas' fortunes had already started to look up toward the end of last year. Despite ongoing problems with its North American business, and in Russia, Mr. Hainer in December insisted that order books were as full as at any time in the last 15 years, thanks to a solid core business of selling soccer equipment.



The fact that Mr. Hainer gets to stay on until September means he will have a chance to go out on a high note, with Adidas sponsoring the soccer European Championships in June and a lead sponsor of the Olympics in Brazil in August.

Even if Mr. Rorsted succeeds in his new role, closing the gap with Nike won't be easy. Adidas under Mr. Hainer set a goal last year of posting revenues of €22 billion, or $24 billion, by the year 2020, up from €14.5 billion in 2014. Nike is aiming for more than double that, growing revenues by two thirds to €46 billion by the same year.

For Henkel, the leadership change also comes at a turning point. The company has said it plans to settle on a new strategy for its medium-term future – 2017-2020 – by the end of this year. Henkel’s share price drop on Monday could reflect uncertainty with investors over which direction Henkel would take now, Mr. Speich said.

While Mr. Rorsted was clearly not the kind of man to be happy with the status quo, the Henkel family seems content with the company's position at the moment.

Mr. van Bylen knows Henkel well and has proven himself in the beauty care division, where Henkel has managed to maintain a healthy profit margin in the face of larger global competition including L’Oreal, P&G and Unilever. The division generated about one quarter of Henkel’s profits last year.

It marks the second time Henkel has named a non-German to lead the company. Mr. van Bylen was born in Berchem, Belgium.

In an interview with Handelsblatt following Monday's announcement, Ms. Bagel-Trah, Henkel's supervisory board chair, denied that Mr. van Bylen was an interim solution. She also rejected the notion that Henkel would be less aggressive in the strategy it is planning for the coming years.

"This will certainly not simply be a 'carry on'" strategy, she said. "Things are not going to get boring at Henkel. The challenges in these uncertain times are and remain high."


Hans van Bylen, a long-time Henkel manager, will take over as Henkel's CEO.


Joachim Hofer is a correspondent for Handelsblatt in Munich, covering primarily tech and outdoors companies. Christoph Kapalschinski covers consumer goods, textiles and food for Handelsblatt. Christopher Cermak is an editor with Handelsblatt Global Edition in Berlin. Gilbert Kreijger of Handelsblatt Global Edition contributed to this story. To contact the authors:  [email protected], [email protected] and [email protected] 

This story was updated at 18:40 Central Europeam Time Monday with additional comments from Simone Bagel-Trah, Henkel's supervisory board chair.