Reckitt benefits from new line of products

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DETTOL to Nurofen maker Reckitt Benckiser reported a better than expected rise in sales, thanks to a new focus on its top brands and fast growing emerging markets.

Reckitt, which was originally founded in Hull and has research and development and healthcare manufacturing operations in the city, reported a four per cent rise in underlying first-quarter sales.

New chief executive Rakesh Kapoor, who took over last September after Bart Becht’s shock decision to retire, said the group’s results were driven by strong emerging market growth and success with a string of new products.

The maker of Cillit Bang cleaner reported the rise in like-for-like first-quarter sales after stripping out its Suboxone pharmaceuticals unit, slightly ahead of a company-compiled forecast for a 3.8 per cent rise.

Mr Kapoor said strong emerging market growth was tempered by a “satisfactory” performance in Europe and North America, where sales fell by two per cent.

Growth was helped by new products such as Veet easy wax roll-on hair remover and Lysol no-touch kitchen system disinfectant.

Mr Kapoor launched his new strategy in February with a focus on fast-growing health and hygiene brands like Dettol/Lysol disinfectant and Durex condoms, and a big push into emerging markets, while increasing marketing spend behind key brands.

He set a five-year target to grow the business two per cent above market growth rates and raise margins steadily over time as he planned to lift the emerging market business to 50 per cent of sales when stripping out non-core pharma and food units.

The pharma unit earns the vast majority of profit from its Suboxone heroin treatment and while Reckitt is extending its life with a film version which dissolves on the tongue the group realises the unit will be hit hard once generic rivals appear.

Reckitt’s overall first-quarter sales rose three per cent to £2.36bn.

Analysts at Liberum Capital said: “The numbers are encouraging and imply a good start to the year as despite a bad flu season the company managed to come in slightly ahead of full year guidance.

“However, nothing was said about the Leap Year and earlier Easter effect, which other companies have quantified as a 1.5 per cent benefit.”