Henkel's New North America Boss Could Be the Catalyst for Growth and Sustainability

The chemical giant Henkel is betting big on its North America division under the leadership of Rajat Agarwal, a 28-year veteran with a PhD in polymer science and a track record of turning technical expertise into market dominance. As the new President of Henkel's North America region, Agarwal brings not just a deep understanding of adhesive technologies but also a proven ability to navigate complex markets—critical in a region that accounts for nearly 28% of Henkel's global sales. Let's dissect how his appointment could unlock value for investors.

The Leader: Agarwal's Technical and Regional Credentials

Agarwal's career began in 1997 as a research scientist at Henkel's Michigan-based automotive adhesives division. Over decades, he moved into executive roles, including leading Henkel's Greater China division, where he grew sales by double digits annually. Now, as President of North America, he combines technical mastery (think advanced adhesives for electronics and packaging) with regional know-how, having spent years in the U.S. and Asia. His dual role as Corporate Vice President for Packaging ensures he can drive innovation in a segment that's 30% of Henkel's Adhesive Technologies revenue.

Why North America Matters—and the Challenges Ahead

North America is Henkel's largest market, home to brands like Loctite (industrial adhesives), Persil (laundry), and Schwarzkopf (haircare). But the region faces headwinds:
- Consumer Brands' slump: Q1 2025 sales fell -5.6% in North America due to weak demand and supply chain bottlenecks.
- Adhesive Tech's mixed results: While electronics and industrials grew, automotive adhesives struggled in a slowing market.

Agarwal's task? Reinforce innovation to capture high-margin opportunities while boosting sustainability—a key trend in chemical markets.

Sustainability as a Growth Lever

Agarwal's leadership aligns perfectly with Henkel's 2045 net-zero target. Under his watch, North American plants have achieved notable milestones:
- Greenville, SC: Cut water use by 30,000 gallons annually via LED lighting and process changes.
- Mentor, OH: Became carbon neutral in 2024 using Renewable Gas Certificates—the first in Henkel's North American portfolio.
- Bay Point, CA: Reduced water waste by upgrading heaters and adopting drought-resistant landscaping.

These efforts aren't just “greenwashing.” They reduce costs (recycled materials cut virgin plastic use) and boost brand equity, as consumers increasingly favor eco-conscious companies. Regulatory tailwinds, like the EU's Corporate Sustainability Reporting Directive (CSRD), also favor firms like Henkel that lead in circularity.

Financials: Undervalued Stock, Strong Catalysts

Henkel's Q1 2025 results were mixed:
- Adhesive Tech: +1.1% organic growth, driven by electronics and industrials.
- Consumer Brands: -3.5% organic sales globally, with North America hit hardest.

But the stock is undervalued at 16x EV/EBITDA, below its five-year average of 18x and peers like 3M (MMM) and Avery Dennison (AVY).

Catalysts to watch:
1. Margin resilience: Henkel maintained EBIT margins despite inflation, unlike peers facing margin compression.
2. Share buyback: A €1 billion repurchase program could boost EPS by ~5%.
3. Sustainability-driven demand: As regulations and consumer preferences shift, Henkel's eco-friendly packaging and adhesives could carve out a premium.

Risks to Consider

• Economic volatility: A recession could further depress consumer spending, hurting laundry and haircare sales.
• Competitive pressures: Players like Dow Chemical or Bostik (Arkema) may undercut pricing in adhesives.
• Supply chain: Persistent bottlenecks could delay new product launches.

The Investment Case: Buy Now for Long-Term Gains

Despite near-term headwinds, Agarwal's leadership positions Henkel to capitalize on two megatrends:
1. Industrial innovation: Electronics and automotive sectors demand advanced adhesives, and Agarwal's expertise in polymers is unmatched.
2. Sustainability-driven demand: Regulations and consumer preferences are favoring firms like Henkel that embed circularity into their DNA.

At current valuations, Henkel offers a 20–25% upside to a €85 price target (from ~€68 today). Investors should buy dips here, especially with the buyback and sustainability tailwinds in place.

Final Takeaway: Agarwal's blend of technical know-how and regional experience makes him the right leader to turn North America into a growth engine again. For patient investors, Henkel's stock is a buy for the next decade.