Bottom Line: Reckitt doubts

INVESTORS could be forgiven for wondering exactly how Reckitt & Colman plans to spend the pounds 56m set aside for integrating its European operations, given that it charged almost as much four years ago and has been claiming cost benefits ever since.

The company's claim that further restructuring is needed following the acquisition of Boyle Midway is odd, given that the deal was completed in 1990 when restructuring had hardly started.

The answer may lie in the rather disappointing sales line. Flat sales, and an underlying fall in both the US and Europe, are hardly encouraging news. The City suspects that Reckitt is hoping to use the provision to flatter future profits in the hope that this will keep its mind off sluggish sales.

It is likely to be disappointed. The 25p fall in its share price leaves it on a multiple of about 14, based on forecasts of pounds 270m before exceptionals. That still looks expensive relative to 13.8 times for Unilever, whose recent results show that it is possible for mature businesses to grow sales. Selling of Reckitt is likely to continue until the ratings are reversed.