Reckitt sees early boost from new strategy
LONDON (Reuters) - British consumer goods group Reckitt Benckiser (RB.L) reported a slightly better than expected 4 percent rise in underlying first-quarter sales on Tuesday as a new focus on its top brands and fastest growing markets started to pay off.
New chief executive Rakesh Kapoor, who took over last September after Bart Becht's shock decision to retire, said the group's results were driven by strong emerging market growth and success with a string of new products.
"These results give us the confidence to reiterate our 2012 target of like-for-like net revenue growth of 200 basis points above our market growth rate of 1-2 percent. We also expect to maintain full-year operating margins," he said in a statement.
The maker of Nurofen painkillers and Cillit Bang cleaners reported the 4 percent rise in like-for-like first-quarter sales when stripping out its Suboxone pharmaceuticals unit, slightly ahead of a company-compiled forecast for a 3.8 percent rise.
Kapoor said strong emerging market growth was tempered by a "satisfactory" performance in Europe and North America with sales there down 2 percent, while growth was helped by new products like Veet easy wax roll-on hair remover and Lysol no-touch kitchen system disinfectant.
Reckitt shares were 0.9 percent higher at 3,618 pence by 01:10 p.m. in a slightly firmer UK market. They have slowly recovered since Becht's sudden announcement of his departure in April 2011 and now trade nearly ten percent higher.
Kapoor launched his new strategy in February with a focus on fast-growing health and hygiene brands like Dettol/Lysol disinfectant and Durex condoms, and a big push into emerging markets, while increasing marketing spend behind key brands.
He set his 5-year target to grow the business 2 percent above market growth rates and raise margins steadily over time as he planned to lift its emerging market business to 50 percent of sales when stripping out non-core pharma and food units.
The pharma unit earns the vast majority of profit from its Suboxone heroin treatment and while Reckitt is extending its life with a film version which dissolves on the tongue the group realises the unit will be hit hard once generic rivals appear.
The group said its Suboxone sublingual film now has a 53 market share, up from 48 percent at the end of 2011.
Reckitt's rivals have seen contrasting fortunes with Unilever (ULVR.L) seeing strong sales growth helped by price rises and emerging market growth, while Procter & Gamble (PG.N) cut its full-year outlook citing developing market weakness and added it would have to roll-back on some price rises.
Reckitt's overall first-quarter sales rose 3 percent to 2.36 billion pounds.
(Reporting by David Jones; Editing by Mark Potter)
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