Hot Features
Premium
Level up your trading with our powerful tools and real-time insights all in one place.
Household care products company Reckitt Benckiser (LSE:RB.) pleased investors today with its 2012 results and its plans for 2013 and beyond. Its share price on the London exchange had risen by 91.0 pence (2.09%) to 4454.0 by 1:30 this afternoon.
The company reported 2012 results in line with expectations with a 5% growth in operating profit at £2,435 million and net income of £1,829 million on £9,567 million in revenue. Total revenue was up 1.0% year on year. In this case RB is a perfect example of excellent operational and financial forecasting. Returning results that are right on the mark, IMHO, is the mark of a management team that is not playing games with a little fudge factor here and a little slush there.
Underscoring the success of the implementation of the company’s strategy to date is the strong performance of a strong performance of its Health and Hygiene divisions, a venture into a relatively new realm for RB, but one that is a key component of its overall plan. During Q4 alone Health and Hygiene contributed 69% of the company’s core revenue.
The company’s expansion into new markets has paid off handsomely as well. The Latin America, North Asia, and Southeast Asia (LAPAC), generating 11% revenue growth with £2,327 million. The Russian, Middle Eastern and African market (RUMEA) revenue also performed well with an 8% increase to £1,404 million.
It is apparent that RB’s plan is coming together and that the foundation has been laid upon which to build an even stronger company. Plans for 2013 include the product launches of Mucinex Sinus-Max, Nurofen next-gen heat patches, Strepsils children’s lozenges, Gaviscon Instant Granules, Vanish gel treatment, and Air Wick EverFresh gels.
Even stronger evidence of RB’s ability to build on the foundation that has been laid is the announcement that it is advancing some of its medium-term KPIs by one year. For instance, RB now expects that Health and Hygiene revenues will become 72% of the company’s core net revenues by 2015 and the LAPAC and RUMEA channel to be 50% of the company core net revenues within the same period.
In a separate announcement, RB announced that it has “struck a deal” with Bristol-Myers Squibb by which it will pay an up-front fee of $438 million “for exclusive rights to sell certain over-the-counter medicines across Latin America for three years.” This seems like a perfect fit for Reckitt Benckiser’s strategy in Latin America. RB will also pay $44 million for the option to purchase the branded products trademarks and remaining inventories at the end of the initial period, creating a win-win situation for each company to achieve its particular goals.
CEO Rakesh Kapoor said that “A year ago we set a new purpose driven strategy to deliver growth and outperformance over the next decade. We are laying the foundations for RB to succeed in a world where health and hygiene play an increasingly important role in terms of both economic and social development. I am very pleased that our 2012 achievements demonstrate the strength of this strategy and its ability to create sustainable value for all of our stakeholders.”
