Reckitt Benckiser ups profits target
Friday 30 August 2002
Reckitt Benckiser, the Anglo-Dutch maker of Mr Sheen polish, Vanish stain remover and Dettol antiseptic, raised its full-year targets yesterday after a host of new products buoyed sales in the first half.
The group said growth in Western Europe and North America on the back of product launches such as flushable Harpic loo wipes and Woolite Black for dark coloured clothes had "more than" offset difficult trading conditions in certain developing markets.
In line with analysts' expectations, it raised its target for annual net income growth to 18 per cent against earlier forecasts of 12 to 15 per cent growth. It added that revenues would also grow at the upper end of the 4 to 6 per cent range previously announced.
Bart Becht, the chief executive, said the group, which was formed in 1999 by Reckitt & Colman's takeover of the Dutch company Benckiser, was on the hunt for acquisitions. Eradicating the group's debt by the end of 2002 would leave it free to spend up to £1bn, he said, adding that if no deals materialised the cash would go back to shareholders.
The group's bullish outlook helped send its shares to the top of the FTSE 100 risers. They gained 7 per cent to close up 72p at 1180p.
"The new targets are clearly based on results to date, with a 21 per cent rise in second-quarter profits indicating that for the remaining part of the year an 18 per cent rise is justified," Mr Becht said.
The group beat market forecasts to report a 4 per cent rise in pre-tax profits for the six months to end-June to £237m. Sales increased 3.5 per cent to £1.76bn.
Analysts said Reckitt may enter the auction for the Germany conglomerate Bayer's household insecticide arm, which could fetch £750m. Pfizer's Schick-Wilkinson Sword shaving business could also be a target, they added.
Reckitt said operating margins had edged closer to its aim of catching those at its US rivals. A 130 basis points rise in its operating margin to 16.5 per cent already puts it ahead of European peers such as Unilever and Henkel.
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