Consumer goods group Reckitt Benckiser reported higher-than-expected sales growth on Monday, helped by improvements in both its health and home and hygiene businesses and lifting its shares to a two-month high.
The results boosted investor confidence that Reckitt, once seen as a pacemaker for growth in the packaged goods industry, is on a better path following three tough years marked by a safety scandal in South Korea, a failed product launch, a cyberattack and factory manufacturing glitches.
They come as chief executive Rakesh Kapoor (60) prepares to retire. In eight years as CEO, Mr Kapoor sought to turn Reckitt from a British cleaning products company to a global consumer health group through a series of acquisitions.
A signature achievement will be the still-unfinished separation of the business into two units, one focused on health and one on home and hygiene, under the same roof. The new structure is on track for completion in mid-2020.
Reckitt which is home to a basketful of household names – Dettol, Durex, Nurofen, Gaviscon, Scholl, Harpic, Finish and Strepsils among others – ended 2018 on a positive note, achieving a 4 per cent rise in like-for-like sales in the fourth quarter, topping analysts’ average estimate of 3.3 per cent in a company-supplied consensus.
The stronger sales overshadowed a forecast for flat operating margins in 2019, which was anyway better than some investors had feared.
Reckitt shares were up 4.6 percent at £63.96 in Monday trading but still well below their 52-week high of £71.74 set in October. They had fallen amid concerns about the company’s performance and a potential pull-back of margins under whoever takes over from Mr Kapoor later this year.
Reckitt faces a far more competitive environment as rivals GlaxoSmithKline and Pfizer are merging their consumer healthcare units.
Like other consumer goods makers, Reckitt said it was increasing levels of inventory of finished goods and raw materials to protect against supply disruptions in the event of a no-deal Brexit. – Reuters