Reckitt Benckiser bucks the downturn

30 July 2009

SLOUGH, UK: Reckitt Benckiser, the household goods giant, posted a double-digit improvement in its revenue and profit levels over the first half of this year, and also boosted its marketing expenditure during this period.

The company registered a 23% increase in revenues, to £3.78 billion ($6.19bn; €4.41bn), from January to June – although this figure fell to 8% when exchange rate fluctuations were stripped out – while pre-tax earnings were up by 40%, to £816m.

Europe, its biggest market, delivered 2% more sales than the same period a year ago, with North America and Australia also expanding by 7%, and its operations in developing markets by 19%.

By category, fabric care improved by 1%, with further upticks of 3% for surface care, 5% for dishwashing and homecare, 7% for food, 14% for health and personal care, and 43% for pharma.

Reckitt has now raised its targets for 2009 as a whole, and is aiming for net revenue growth in the 5% to 6% range, compared with 4% previously, with profits forecast to rise by between 10% and 11%, up from the prior level of 8% to 10%.

Its distinctive approach has been based around a focus on a number of "power brands", including Finish, Vanish, Dettol and Veet, as well as "local hero brands" operating in different markets.

Bart Becht, Reckitt's ceo, said it had enjoyed a "very good first half despite challenging market conditions ... All regions and our 17 power brands contributed to this growth, supported by continued investment and successful product initiatives."

"We are well ahead of the market growth rate," Becht continued, adding that "there are pockets where private label is gaining share, but not at our expense."

In a statement, the company also reported that its total marketing spend increased in H1, with its "pure media" outlay rising by 10%, to 12.1% of net revenue.

Furthermore, it used savings gained from "more favourable media rates" to engage in a broad range of further "brand-building projects".

Data sourced from Reckitt Benckiser/Financial Times; additional content by WARC staff