UPDATE: Reckitt Benckiser 4Q Strong, Sets Targets For 2009
February 11 2009 - 3:53AM
Dow Jones News
Reckitt Benckiser PLC's (RB.LN) posted another strong set of
results for its fourth quarter Wednesday and unlike rival Unilever
PLC (UN UL), forecast another year of robust growth in 2009.
The household cleaning and personal care products maker said net
profit in the three months to Dec. 31 was GBP393 million, up from
GBP289 million a year earlier. Sales were GBP1.83 billion, up 33%.
Stripping out the effect of acquisitions and currency movements,
fourth-quarter sales were up 8%, lower than the 10% rise seen in
the previous quarter but ahead of expectations.
The maker of a products such as Lysol, Clearasil, Cillit Bang
and Senokot also set growth targets for 2009. Stripping out
currency fluctuations, it is targeting sales growth of 4% and a
rise in post-tax profit before exceptional items of between 8% and
10%. The comparable figures for 2008 are growth of 13% and 12%,
respectively.
The results were ahead of expectations and the 2009 targets were
higher than many in the market had expected. By 0850 GMT, the
company's shares were up 118 pence, or 4.5%, on the day at 2740
pence, and up 3.7% from year-ago levels.
While the company is forecasting a slowdown in its growth rates,
it is at least providing forecasts. Anglo-Dutch rival Unilever PLC
(UN UL) last week scrapped its sales and margin targets and refused
to provide any outlook for 2009 in the face of the economic
uncertainty.
Reckitt has a habit in recent years of setting sales growth
targets at the start of the year only to beat them once the year is
complete. Last year's underlying sales growth of 10% compares with
an original target of 6%-to-7%. "We typically have achieved our
targets in the past," said Becht, adding: "if we weren't confident
we wouldn't have come out with targets."
While Unilever's sales growth was not far short of Reckitt's for
2008, it came entirely from price increases, with volumes actually
falling. These sharp price rises have led to tensions with
retailers, with Belgian grocer Delhaize SA (DEG) Tuesday removing
300 Unilever products from its shelves saying they are priced too
high.
Reckitt's prices increased by no more than 2% to 3% in 2009 and
there are no plans to raise them further, said Becht.
The company's marketing spend fell to 10.6% of net revenue in
the fourth quarter, compared with 12.4% for the year. Becht said
this was a result of lower prices for advertising space.
Reckitt Benckiser raised its final dividend by 60% to 48 pence,
moving the company on to a full-year dividend payout ratio of 50%
from 40%.
The company has also decided not to buy back any shares in 2009,
intending instead to pay down debt - a move described by analysts
as sensible in the current environment.
Company Web site: www.reckittbenckiser.com
-By Michael Carolan, Dow Jones Newswires; 44-20-7842-9278;
michael.carolan@dowjones.com