Spice war burns into Reckitt earnings

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The Independent Online
THE HEAVY costs of pulling out of a spice war in the US led to a sharp fall in profits at Reckitt & Colman, the Robinsons drinks to Dettol disinfectants group.

The company yesterday reported a 22 per cent drop in taxable income to pounds 182m for 1992 on turnover 4 per cent down at pounds 1.9bn. The results, prepared in the new FRS3 accounting format, were in line with estimates prepared by stockbrokers.

Despite the profits slide, the company is boosting its total dividend for the year by more than 7 per cent to 16.2p from earnings down by a third to 25.1p.

Reckitt blamed the decline on a two-year price war in the American spices and seasonings market, which eventually forced it to withdraw. The business was sold in the first half at a pounds 47m loss, after incurring a pounds 9.6m trading loss. prior to disposal. The company was also hit by a further pounds 10m of reorganisation costs relating to acquisitions made during the year.

Despite difficult trading conditions, operating profits from ongoing activities were virtually unchanged at pounds 282m. The company managed to hold on to market shares in most product areas.

Profits from household and toiletries eased back from pounds 186.5m to pounds 185.6m. But the figures masked strong growth at the US air fresheners business, which raised market share by five points to 18 per cent because of new products.

The foods division's contribution slipped marginally to pounds 45m although the Colman's mustards and sauce mixes had another 'excellent year' in Britain thanks to a higher advertising and marketing spend. In addition, a new range of sugar-free Robinsons drinks achieved 30 per cent sales growth in the year.

Operating profits from pharmaceuticals rose by pounds 1.6m to pounds 41.6m, reflecting the relaunch of several products including Lemsip, the cold remedy, and the extension of the Dettol brand to new items.

The group's interest charges were cut from pounds 40.3m to pounds 33.5m, with net debts down from pounds 338m to pounds 315m.

Sir Michael Colman, chairman, said there were signs of a sustained economic recovery in the US although conditions in Europe remained depressed.

Reckitt shares closed 3p lower at 602p.