Dettol sees Reckitt Benckiser clean up in Covid pandemic

Challenge is now to build on sales surge and sort out mixed bag portfolio of products

Reckitt Benckiser on Wednesday reported the highest full-year sales growth in its history as the Covid-19 hygiene boom led to surging sales for its Dettol and Lysol disinfectants.

The company, which also makes Nurofen painkillers and Durex condoms, said sales last year rose 11.8 per cent on a like-for-like net basis to £14 billion (€16.3 billion), the strongest figure since it was formed through a merger in 1999.

Hygiene sales grew by a fifth as the company introduced Dettol and Lysol to 41 new markets to capitalise on pandemic demand for branded cleaning products. Immunity supplement brand Airborne more than doubled sales.

Growth, however, is not likely to continue at the same levels. Reckitt said it expected sales growth of 0 to 2 per cent in 2021 as it strains to improve on the bumper numbers reported for last year and reach its target of a mid single-digit figure.


Last year was a "turning point" for the company, said chief executive Laxman Narasimhan. "We expect 2021 to be a year of further strategic progress and we remain confident that we will meet our medium-term targets."

Pandemic windfall

The company is keen to demonstrate that it is using the pandemic windfall to overhaul its broader operations, as Mr Narasimhan seeks to move beyond a period of slow growth and execution mishaps that marred the final years of his predecessor Rakesh Kapoor.

The company’s share price has returned to pre-Covid levels after a peak in July as investors worried about longer-term growth prospects beyond the immediate hygiene boom, and questioned whether consumers’ changed cleaning habits would last.

Reckitt argues greater appetite for hygiene products will persist, but it also said it was taking “decisive action to manage our portfolio” more broadly.

On Wednesday it announced a strategic review of its Chinese baby formula business, acquired with the purchase of Mead Johnson Nutrition four years ago, which has struggled to compete with local brands and faced a blow from the closure of cross-border trade to Hong Kong in the pandemic. The company took a £985 million impairment charge on that business in 2020.

"We are pleased to see new management move swiftly on the issue, which has been a problem for some years," said Alicia Forry, analyst at Investec.

Footcare brand

The company also announced the sale of footcare brand Scholl to private equity group Yellow Wood Partners for an undisclosed sum. It said it had bought pain relief brand Biofreeze, a topical cold therapy product, following the acquisition last month of female sexual wellness brand Queen V.

Research and development spending rose 35 per cent in 2020, while Reckitt invested £745 million in growth initiatives.

Reckitt is betting on a continued focus on cleanliness with its business-to-business hygiene division, which on Wednesday announced a partnership between Dettol and the Football Association to provide hygiene advice and disinfect venues such as Wembley Stadium.

The company plans to pay out a full-year dividend of 174.6p for 2020, unchanged from a year earlier. – Copyright The Financial Times Limited 2021