Reckitt Benckiser, the Anglo-Dutch maker of cleaning products, signalled its appetite for more deals yesterday despite losing out in the recent auction of Pfizer's consumer healthcare business.
Colin Day, the finance director, said the group could take on up to £2bn more debt without sacrificing its credit rating. The group remains keen to add to its over-the-counter (OTC) medicine arm but was outbid in the Pfizer auction by Johnson & Johnson.
Bart Becht, the chief executive, said the OTC industry remained "extremely fragmented", adding that the J&J deal "had not drastically changed the landscape". Reckitt paid £1.9bn for Boots' OTC medicine arm in February, adding Nurofen painkillers and Strepsil throat lozenges to its core brands, which include Vanish stain remover.
One product area off Reckitt's shopping list is ecological detergents, which Mr Becht admitted yesterday he viewed as little more than a fad.
Although Reckitt owns the French eco-friendly Maison Verte brand, Mr Becht said the company saw more value in trying to eliminate the side-effects of its products than building a stable of green brands. It prefers to sponsor recycling schemes, encourage consumers to use less energy and plant trees to offset its carbon emissions, he said.
His comments came as the Anglo-Dutch group raised its profit growth target for this year on the back of stronger interim profit margins. This was not enough to lift shares in the company, which dropped 20p to 2,056p on disappointment that the company's interim figures had not beaten expectations.
Reckitt is targeting 14 per cent growth in net profit for 2006 at actual exchange rates, up slightly from its previous target of low double-digit growth at constant currencies. It repeated its aim of raising net revenues by 15 per cent at constant exchange rates for the full year.
Mr Day said cost cuts had offset more expensive raw materials but warned that unless the oil price eased back from recent highs, "we could be looking at another round of cost input pressure [in 2007/08]. Something has to give."
Excluding the cost of restructuring the old Boots' business, Reckitt reported an 11 per cent rise in interim net profit to £303m at constant exchange rates. This was on a 15 per cent rise in net revenues to £2.39bn.Reuse content