Henkel separates chemical business

Chemicals and consumer goods maker Henkel will create a separate chemical unit, Cognis, with annual sales of about 5 billion deutsche marks ($3 billion). This is part of the reorganisation Henkel is doing in response to the economic slowdown that has hit the profits of the $100 billion global specialty-chemicals industry.

Cognis, a wholly-owned subsidiary will be one of the world's top 10 specialty chemicals makers. Herald Wulff, Henkel's head of chemicals, will lead Cognis, which will employ about 10,000 people.

Henkel's consumer goods, such as detergents, are less affected by the economic slowdown than chemicals are. Separating its chemicals business from the rest of the company gives Henkel the option to spin the unit off or sell it. But Henkel CEO Hans-Dietrich Winkhaus has said the group will always own a stake in Cognis.

Cognis may establish its head office in the Netherlands, where companies enjoy lower taxes and can work under less restrictive labour laws than in Germany.

(Henkel has a subsidiary in India -- Henkel Spic India Ltd)