By Simon Zekaria
LONDON--Reckitt Benckiser Group PLC (RB.LN) Wednesday said it
will grow its health and hygiene businesses faster than expected as
it posted a modest rise in profit, a day after announcing a $482
million drug distribution deal with Bristol-Myers Squibb Co.
(BMY).
The U.K.-based maker of Cillit Bang cleaning spray and Nurofen
pain-relief tablets is a year into its strategy to move away from
home care goods such as detergents in favour of medicines and
vitamins which generate higher margins. Global demand for health
and hygiene products is increasing as standards of living improve
whereas detergent sales in Western markets, particularly Southern
Europe, are suffering, forcing manufacturers to compete on price to
attract cost-conscious consumers.
Reckitt's full year net profit increased 4.8% to GBP1.83 billion
($2.87 billion). Revenue in the fourth quarter rose 2.5% to GBP2.48
billion, with like-for-like growth of 7% at constant exchange
rates. The company didn't provide a quarterly net profit
figure.
"We approach 2013 with the confidence that we have the right
strategic focus," said Chief Executive Rakesh Kapoor, adding that
health and hygiene are playing "an increasingly important role in
terms of both economic and social development."
The company aims for health & hygiene categories to account
for 72% of its revenue, excluding food and pharmaceuticals, with
emerging markets at 50%, by 2015, which is a year earlier than
planned.
Reckitt is hoping its latest deal to distribute some of
Bristol-Myers Squibbs' best-selling products in Latin America, with
an option to buy the brands after three years, combined with its
$1.4 billion acquisition of Schiff Nutrition International Inc. in
November last year will give the company a strong foothold in the
fast-growing consumer health market which was worth $198 billion
globally in 2011, according to Euromonitor data.
But despite Reckitt Benckiser's move towards a narrower range of
products, its sales growth remains slower than rivals such as
Unilever PLC (ULVR.LN), which has a more diverse range of goods as
well as a larger footprint in emerging markets, and posted
fourth-quarter growth of 8.6% last month.
Reckitt Benckiser's shares closed Tuesday at 4363 pence, valuing
the company at 31. 38 billion pounds. The stock has risen 12.5% in
the year to date.
Write to Simon Zekaria at simon.zekaria@dowjones.com
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