THE INVESTMENT COLUMN: Reckitt's sparkling run to continue

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The Independent Online
RECKITT BENCKISER'S results are as sparkling as a glass cleaned with its Finish PowerBall dishwashing tablets. The reputation of Bart Becht, the chief executive, is as fragrant as a room freshened with its Airwick click spray. And the investors who have repeatedly called the top of its extraordinary share price rise are left reaching for the Disprin.

The company was created just over five years ago by the merger of Reckitt Coleman with Benckiser of the Netherlands, and last year it made as much money in the final three months as it did in the whole of 1999.

Sales in 2004 were up 10 per cent and profits rose 17 per cent. It puts the FTSE 100's other Anglo-Dutch consumer goods group, Unilever, firmly in the shade.

Mr Becht has a tight control on costs, always searching for efficiencies across the organisation, but it is the top-line growth that sets Reckitt apart. It has pushed its main brands upmarket and into more homes by coming up with innovative and enticing new products - and advertising them heavily. Lemsip is a good example, having been transformed from a boring powder for snivellers to a max-strength flu tablet for wannabe executives.

So - one more time - surely this is as good as it gets? The shares were down on yesterday's results in part because of the temptation to take profits, but also because of Mr Becht's cautious comments on profit margins, which were a little shy of some forecasts. Raw materials costs are rising almost across the board.

Asked about the mega-merger of Procter & Gamble and Gillette, Mr Becht steered a difficult course yesterday, refusing to agree that the industry must consolidate but also pointing out that Reckitt's strong cash flows (even after more share buy-backs and the long-overdue increase in the dividend) allowed it to make acquisitions of its own worth up to pounds 2bn.

Investors who hop aboard now are paying a full price, for sure, but this is a vibrant company with bid potential. Hold.

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