Reckitt & Colman cleans up: Currency gains and strong demand in North America lift profits 17%

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The Independent Online
STRONG performances in North America and Asia combined with exchange benefits helped to boost pre-tax profits at Reckitt & Colman, the household products group, to pounds 260.1m in 1993.

This compares with pounds 165.2m in 1992 when the results were depressed by a pounds 56.9m charge for restructuring and losses on the sale of its US spice business. Excluding that, profits were 17 per cent ahead on sales up 11.2 per cent at pounds 2.1bn.

Vernon Sankey, chief executive, said sales were about 3 per cent higher, not counting exchange benefits. He estimated that currency fluctuations added about pounds 17m to pre-tax profits.

The best performance came from North America - which includes Canada and Mexico, as well as the US - where operating profits, excluding exchange benefits, rose 18.5 per cent to pounds 65.4m.

Mr Sankey said the group had achieved its objective of increasing operating margins, which climbed from 9.3 to 11.8 per cent, through investing in strong brands, such as Woolite detergent, and increasing efficiency.

In Australasia and Asia, operating profits rose 26.8 per cent to pounds 54.9m, helped by small acquisitions in Malaysia, Singapore and Thailand.

Mr Sankey said the fastest- growing economies in Latin America and South-east Asia accounted for 20 per cent of business, up from 16 per cent the previous year. These areas would remain a focus for expansion.

'We did not have a significant presence in South-east Asia three years ago, but we have developed through acquisitions, which are then used to develop other group products.'

In Europe, the performance was more disappointing, with profits up just pounds 1.4m to pounds 142.4m, despite the benefit of exchange rates.

That was partly due to the British soft drink market, where fierce competition has sparked a price war. Robinsons is the main soft drink brand, but Mr Sankey said the group was continuing to introduce new products.

The European result was helped by the acquisition of Mantovani body care range, which has now been integrated, and a good performance in France, although the market there is deteriorating.

In Latin America, margins were reduced by hyper-inflation in Brazil, which accounts for about a third of its business there, but profits still rose 10 per cent to pounds 27.7m.

Earnings per share were 45.02p, up from 25.16p, and the dividend is increased to 17.55p from 16.2p, with an 11.1p (10.25p) final.

The shares closed down 9.5p at 605p.