Reckitt & Coleman cuts 1,500 jobs

Lucy Baker
Wednesday 04 August 1999 23:02

RECKITT & COLMAN, the UK household products group which last week made public its intention to merge with Benckiser of Holland, has announced it will shed 1,500 jobs as part of a cost-cutting plan.

Reckitt, the firm that makes Dettol and Lemsip, said yesterday it would consolidate, close or sell 15 plants to restore earnings growth following turmoil in emerging markets and major destocking in North America.

The company's acting chief executive, Mike Turrell, would not specify where the job losses would come, but at last week's merger announcement, Benckiser's Bart Becht, the proposed chief executive of the expanded group Reckitt Benckiser, said redundancies would be concentrated in Europe and the US, and especially in the companies' headquarters. Reckitt's non-executive chairman Alan Dalby is set to chair the new group.

Mr Turrell said: `We are not in a position to give a headcount by region as there are legal issues with the closure of facilities and we want to let employees know first.'

Reckitt's restructuring plans were unveiled as the company announced its interim results, which confirmed the outline figures released last week in conjunction with the merger proposal. The company's interim profits halved to pounds 78.3m in the six months to 3 July and turnover fell 6.1 per cent to pounds 1.04bn.

A spokesman for Reckitt's said: "There are no surprises for the market here. We made it abundantly clear in March that we would go through this cost-cutting exercise and we have done exactly what we said."

He added that this strategy would continue alongside a substantial uplift in marketing expenditure. The company hopes to save pounds 45m by the end of 2000 and will incur an exceptional restructuring charge of pounds 75m, which will be spread over 1999 and 2000.

Meanwhile, Benckiser's profit for the second quarter ended 30 June rose 18 per cent to 73.7m guilders (pounds 22.2m). Revenues were up at 1.04bn guilders (pounds 313m), compared with 1bn guilders (pounds 300.96) last year. A spokesman at Benckiser said: "It would be inappropriate for us to comment on Reckitt's results." He also brushed off the possibility of a rival bid for Reckitt: "If it happens, it happens," he said.

Reckitt also refused to comment on the speculation that it could become a takeover target for rival companies such as the Anglo-Dutch group Unilever. But a spokesman said: "If we were seriously considering another bid, we would announce it to the stock market."

If the pounds 5bn merger between Reckitt and Benckiser goes ahead, it will create the world's largest household cleaning products company with expected annual revenues of pounds 3.12bn.

The transaction will be effected through a share swap, with Benckiser shareholders receiving five Reckitt shares for each Benckiser share they hold. Reckitt shareholders will have a 59 per cent stake in the new company. Documents outlining the merger proposals will be posted to shareholders early next week.

Reckitt's shares closed down 6p at 852.5p yesterday, having soared last week on hopes of a bid battle.

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