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(A stealth team of traders is huddled in a dark corner of the London Stock Exchange.)
“Men, we’re going to synchronize our watches to 11:59. On my mark. 3 – 2 – 1 – mark!”
KABOOM!! It was the sound of the RB ‘stock rocket’ engines igniting as the company released it’s 3rd Quarter results.
“If our calculations are correct, the share price of Reckitt Benckiser (LSE:RB.) should be on the way to a record altitude within 4 minutes.”
The seconds flew by in a flash as the share price lifted off from it’s platform of 3,633 where it had sat overnight from yesterday’s close. At precisely 12:03 the RB share price had ascended to 3,750. It had traveled an astonishing 117.00 pence to 3,750 in just 3 minutes! Amid the cheers, one chap looked up and shouted, “Look at that, she’s still climbing!” By 12:14 she had achieved an altitude of 3,811. After some adjusting, the boosters were fired and she rose to 3,846, a gain of 213.00 in less than 2 hours, a 20% increase for the year, beating the previous record high of 3,655 set back on 26 April 2010.
The household, health, and personal care products manufacturer has seen its sales double and its market cap quadruple over the last decade, building on a corporate philosophy of “If it ain’t broke, make it better.”
CEO Rakesh Kapoor commented on the company’s revenues growing by 4% to £2,422 million, saying, “I am very pleased that our new strategy and our renewed commitment to managing the business for the long term are showing encouraging results. Our results give us the confidence to reiterate our FY 2012 target of like-for-like net revenue growth of £200 above our market growth rate. We now expect market growth to be at the top end of the 1-2% range. We continue to expect to maintain full year operating margins.”
While competitors have been complaining of flagging sales in some markets, RB has been seeing improvements. With RB’s peers blaming a downturn in business in emerging markets on economic conditions and market slump, how is it that RB can pull of such stellar results in the same field? Here’s a clue: How many times have you seen a report where a company blames its failure to meet expectations on the success of its competitors? There are some sectors where that is a MAJOR factor. This is one of them. There are only so many consumers that make up the pie. If there is a pie of air freshener customers, that means that theGavisony are buying product somewhere. If a company starts taking a bigger slice of that pie, then someone’s slice is going to be smaller.
As Reckitt Benckiser expands its reach it needs to snap up more shelf space. The shelf was already there. It already had product on it. The company that increases its shelf space wins because its product receives much more exposure. Consumers equate more shelf space with better or more popular product. That’s not correct reasoning, but it works out great for the supplier of the product. Of course, it doesn’t hurt to have some really good products, as RB does with the likes of Air Wick, Calgon, Clearasil, Easy-Off, French’s, Gaviscon, Mucinex, Lysol, Strepsils, Vanish, Woolite, and Veet.
RB has a vision, not of reaching goals and objectives, but exceeding them. They have found the right formulae to continue to outperform. That is why their revenues and share price continue to soar.
