ibusinesslines.com
ibusinesslines.com June 28, 2017


Reckitt Benckiser cites macroeconomic conditions amid flat first quarter sales

21 April 2017, 05:00 | Erica Roy

Products produced by Reckitt Benckiser Vanish Finish Dettol and Harpic

Products produced by Reckitt Benckiser Vanish Finish Dettol and Harpic

The announcement came as the company, whose brands include Dettol, Durex, and French's ketchup and mustard, reported flat first quarter sales. This included a 15% rise for its Health unit, 18% for the Hygiene unit, and 11% for the Home unit.

However, revenues benefited strongly from a positive currency effect, which had double-digit positive effects across every segment of the business.

Total revenue in the quarter matched estimates at 2.64 billion pounds ($3.4 billion) due to a benefit from exchange rates.

Reckitt Benckiser is at a crossroads, with the British conglomerate looking to pivot its portfolio towards consumer healthcare.


Reckitt said it would explore options for its food business before reaching any decision. However, flatter like-for-like performance in Reckitt's main markets has given investors pause for thought.

Reckitt however said sales would improve as the year goes on and stood by its target for annual growth of 3 percent. Reckitt Benckiser's business in South Korea has collapsed over its handling of a safety scandal in which it is said that 92 people were believed to have died from lung injuries related to humidifier sterilizers it once sold there. Strategic review of the Food business commenced.

"Perhaps we should have spaced out these launches to give them enough breathing time and recovery time", Chief Executive Officer Rakesh Kapoor said on a conference call with analysts, referring to disappointing sales figures for new products such as Scholl's Wet and Dry Velvet Smooth electric hard-skin remover. "We delivered continued outperformance in consumer health and good growth in (developing markets), offset by previously flagged headwinds, which will persist during the first half".

"We remain very confident that the strategic direction we are pursuing will continue to drive shareholder value", Kapoor added. The $16.6 billion acquisition of baby formula maker Mead Johnson, announced in February, is progressing well, the company said, and should be completed by the end of the third quarter.



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