Reckitt forecasts year of 'good growth'
Cillit Bang-to-Dettol firm Reckitt Benckiser stuck by growth targets today despite pressure on its Vanish fabric care division in Europe.
The Slough-based company, which last week announced the acquisition of Durex and Scholl owner SSL International, reported a 19% rise in half-year profits to £971m (€1.1bn) and said it was confident of another year of “good growth”.
It is targeting a 5% rise in full-year revenues, helped by new products such as Airwick Aqua Mist and its no-touch hand soap system under the Dettol brand.
Revenues grew by 6% at constant exchange rates in the half-year, with growth of 26% in developing markets offsetting a 2% drop in Europe.
The region, which accounts for 43% of total sales, has stuttered due to increased competitive activity for Vanish stain removal, as well as weak demand for laundry detergent, fabric conditioner and water softeners.
The weakness in fabric care more than offset European growth in dishwashing under its Finish brand and in home care through products such as Airwick.
Reckitt shares were slightly lower today, despite the strong results and forecast that it expected 10% growth in operating profits this year.
Panmure Gordon analyst Graham Jones said: “The market’s concerns about weak performance in Europe and fabric care – largely the same issue – are not going to be alleviated by these results, but Reckitt is clearly set to deliver, in our view, another year of double-digit growth.”
Reckitt, which also owns Strepsils and Nurofen, said margins improved as a result of savings in raw material costs, exchange rate benefits and general cost savings. It has also benefited from a favourable trend in marketing rates.
