Reckitt posts highest quarterly profits ever

Reckitt posts highest quarterly profits ever

	Published : Wed, 26 Oct 2005 11:15 By : Andrew Stead Print this Story

Reckitt Benckiser, the household and healthcare products company, posted its strongest ever quarterly sales growth. The company, whose flagship products include Vanish, Dettol, Finish dishwasher tablet and Cillit Bang cleaner, is confident of achieving its projected full-year profits.

The profits grew on sales of its newer high-margin products.Pretax profits tax increased by 20.5% to £217 million up from £204million recorded in the same period last year. Revenues went up by 8% to £1.06 billion.

"Reckitt Benckiser sustained its robust growth ahead of the market resulting in our highest-ever quarter for net revenues. Our operating profits improved in line with expectations despite continuing pressure on input costs, "said Bart Becht, the chief executive of Reckitt Benckiser.

However, shares in Reckitt fell by 3.7 per cent to close at 1,724 pence following the news that gross margins reached a plateau during the period. Reckitt also announced that it would increase prices in its North American and Europe to offset the rising input costs. Surging oil prices have pushed up the price of the plastics that are used in the packaging of Reckitt products. They have also impacted the distribution and transportation costs.

However, analysts were disappointed with Reckitt's results as it did not meet their expectations.

Reckitt can take heart from the fact that it increased sales in all the regions it operates from. European market, which accounts for 53 per cent of Reckitt’s total sales, grew by 3 per cent, while in North America and Australia its business registered a growth of 5 per cent. Highest growth was, however, seen in the emerging markets with sales increasing by 10%. Drivers in these markets were healthcare products including the Veet range of hair removal products, Dettol antiseptics and Vanish fabric treatments.

When Reckitt acquires Boots Healthcare International for an estimated £1.9 billion, three popular brands, such as Clearasil, Nurofen and Strepsils will be added to its stable.

Reckitt is planning to cut the costs at its new healthcare subsidiary by £75 million. It also plans to buy back 300 million pounds in shares next year.