Reckitt ready for another bumper year of earnings

Second-quarter earnings rose 10 per cent, also helped by its purchase of condom maker and Scholl sandals firm SSL last year, and strong sales in emerging markets.

Reckitt’s heroin substitute, Suboxone, lost patent protection in October 2009, but the company hopes a new “film” version now on the market will extend the life of the product.

The film version dissolves on the tongue and is easier for recovering heroin addicts to take than traditional tablets.

This boosted the company’s pharmaceuticals business, Reckitt Benckiser Pharmaceuticals, which makes a fifth of group profits.

Some analysts believe Reckitt will spin-off or sell Reckitt Benckiser Pharmaceuticals next year. Outgoing chief executive Bart Becht declined to comment on this.

Reckitt, also the maker of Cillit Bang cleaners and Nurofen painkillers, said it is well positioned to achieve its 2011 targets of a 12 per cent rise in net revenue and a 10 per cent rise in net income growth, both at constant exchange rates.

Reckitt has a personal care manufacturing site in Hull, where it makes Gaviscon heartburn medicine, Nurofen pain-relief tablets for children, Lemsip cold remedy and Dettol cleaner.

Together with its research and development site in the city, it employs about 500 staff in Hull.

The company, which also makes Air Wick air fresheners, Vanish fabric cleaners and Finish dishwash products, aims to offset increased costs for inputs such as crude oil, plastics, palm oil and rubber, with price rises and cost savings.

It is also looking for growth in emerging markets as it faces tough markets in Europe and North America.

“We have seen in Europe a challenging market environment for pretty much over a year with market growth rates relatively anaemic and continued heavy competition,” said Mr Becht.

Analysts noted that sales growth excluding Reckitt Benckiser Pharmaceuticals was only three per cent, with the biggest division Europe, seeing a fall of two per cent.

Suboxone Film had also made less progress in the second quarter than some had expected.

Panmure Gordon analyst Graham Jones said: “The twin market concerns about low growth in developed markets and generic risk at RBP are likely to remain,”

Mr Becht will be replaced in September by 25-year company veteran Rakesh Kapoor.

His exit after more than 11 years at the top, comes as his group is facing input cost rises, tough mature markets, uncertainty about the future of Suboxone, two acquisitions – SSL and Para Pharmaceuticals – to integrate, and stiffer competition from rivals Procter & Gamble and Unilever.