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Henkel

How can European companies boost sales and profits when consumer spending at home is stagnant? Henkel, a detergent and adhesives maker based in Düsseldorf, Germany, is doing it by making big investments outside Europe.

Henkel's 12% sales increase last year was driven largely by its €2.4 billion acquisition of U.S. soapmaker Dial Corp. That helped U.S. sales soar 77% last year, while European revenue crept up 2.1%. Expect Henkel CEO Ulrich Lehner to continue focusing on faster-growth markets, which means developed countries like the U.S., plus Latin America and Asia, where rising incomes mean more people can afford brand-name soaps and cosmetics. "Dial especially addresses the value-for-money segment," says Lehner.

In core Europe, Henkel has a solid stable of brands, such as laundry detergent Persil and Schwarzkopf cosmetics. Analysts say, however, that even if consumer spending picks up, growth will be difficult, since products such as Henkel's ubiquitous Fa body soaps face tough price competition. So continued cost cuts are crucial. Henkel has made progress, but, says Merrill Lynch & Co. analyst Joanna E. Speed in a recent note, "the environment for Henkel will remain tough." But then the soap business was never for softies.