CEO brings own brand of change to Reckitt Benckiser

LONDON Sun Sep 15, 2013 4:07pm BST

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LONDON (Reuters) - Rakesh Kapoor, head of British consumer goods company Reckitt Benckiser Group (RB.L), used to frown on people using his company's most famous brands illegally to boost their own sales.

Now, as he holds aloft his iPhone in a bootleg cover emblazoned with RB's Durex condom packaging, he says he embraces the practice - evidence of an executive who is open to change and willing to speak frankly about it.

"In the past ...as CEOs and managers of brands, we talked and you had to listen," Kapoor said at the Reuters Consumer and Retail Summit in London this week. "But that's very stifling in our world today."

Part of that change has been to steer Reckitt Benckiser beyond core products like Lysol disinfectant and Finish dish detergent.

Two years into the CEO job, he has reorganized the company around emerging markets and is leading a push into higher-margin healthcare products such as Durex condoms and Nurofen tablets.

"My view is that the RB of 2010-2013 looks very different to the company I was part of in 2000, and I believe in 2020, it will look even more different," said the 55-year-old, who grew from humble beginnings in the north Indian city of Bareilly to be head of the world's fifth-biggest household goods maker.

"The year I was born, the literacy in my town was 1 in 6. So I had a 15 percent chance of being educated, mathematically. And here I am." He now lives in London and sports Hermes ties.

Still, he says he is less measured, more intuitive and more natural than other CEOs, including his predecessor.

"I've not lost my earthiness. I am a son of the soil," he said. But that doesn't make him soft: "This is exactly who I am, I would tell you how it is."

HARD ACT TO FOLLOW

With a degree in chemical engineering, an MBA and 24 years at the company, Kapoor still had his work cut out for him.

He succeeded Dutch superstar Bart Becht, who was revered for drawing big profits from prosaic goods and overseeing a more than four-fold rise in the stock over a decade.

One analyst called Becht, who is now building a coffee empire through German investment group Joh A Benckiser, "the Steve Jobs of consumer goods".

Investors wondered whether the little-known Kapoor could keep the party going. The shares tumbled the day he was announced, but are now up 35 percent since he took over.

Kapoor praised Becht as one of the great CEOs of the industry, but stressed the need to do things his own way.

"If I was too shackled about what my predecessor was doing and how he ran the company, I don't believe we would have gone through the changes we have made," said Kapoor, who oversees nearly 10 billion pounds ($16 billion) in revenue and 32 billion pounds in market capitalization.

"The perception externally was that he had a tough act to follow in Bart Becht. Against which he has impressed, to our eyes," said Investec analyst Martin Deboo. "A clear path has been mapped and performance has started to tick up."

Still, challenges remain. The company has non-core businesses, in food and pharmaceuticals, and the pharmaceuticals business is facing steep generic competition. Also, the need to build up business in emerging markets is diluting returns.

But under his watch, RB bought U.S. vitamin maker Schiff Nutrition for $1.4 billion, licensed some Bristol-Myers Squibb brands in Latin America, declared a focus on a number of "power brands," and moved more managers to emerging markets, where Kapoor knows the challenges firsthand.

He described last year's departure of Chief Financial Officer Liz Doherty as resulting from a difference of style, saying the speed at which RB operates is not for everyone.

That reinforced a view many in the industry had of RB under Becht - that it had a "Marmite" culture, which, like the quintessentially British yeast spread made by rival Unilever (ULVR.L), people either love or hate.

Kapoor, incidentally, has never tasted it.

"In my world, we need to be absolutely transparent."

That need, he said, led to the late disclosure that he had, before becoming CEO, got a bank loan by pledging millions of pounds worth of his shares in Reckitt Benckiser.

He told the company about it at the time, but the company did not tell shareholders. Years later, as CEO, he asked again and it was disclosed. He has since paid back the loan.

When it was announced, it led to criticism of the company's disclosure practices, which have now been improved, Kapoor said.

Communicating well, trusting his partners and staying ahead of rivals are skills he honed early by playing bridge at night when he was in engineering school in Pilani, India.

"It was fascinating for me to beat competition by outguessing and outsmarting them all the time."

(Editing by Mike Collett-White)