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Reckitt Benckiser Hit Hard By Currency Moves, But On Track To Hit Targets

Wed, 16th Apr 2014 06:58

LONDON (Alliance News) - Consumer goods and healthcare company Reckitt Benckiser Group PLC Wednesday reported lower first-quarter revenue as it was hit hard by currency fluctuations, but it reiterated its revenue target at constant exchange rates for 2014 as it hit the top end of the target range.

In a statement, the maker of products including Cillit Bank cleaning fluids, Dettol disinfectants, Durex condoms and Nurofen and Strepsils cold and flu remedies said total net revenue fell 6% to GBP2.37 billion in the first quarter of 2014, as exchange rate moves wiped 9% off the figure. The revenue decline was 5% excluding the pharmaceuticals business it is reviewing options for.

At constant exchange rates, its revenue grew 3%, or 5% excluding the pharmaceuticals business.

That was slower than the 5% and 7% growth rates, respectively, it reported for the whole of 2013 at constant exchange rates, but was at the top end of its forecast for net revenue growth in 2014 of between 4% and 5% at constant exchange rates and excluding the pharmaceuticals business.

"We have made a robust start to the year and net revenue growth is on track for our full year targets, which we reiterate," Chief Executive Rakesh Kapoor said in a statement.

The company is also predicting flat to moderate operating margin expansion, excluding exceptional items, for the whole of 2014.

On a like-for-like basis, which excludes exchange rate moves and acquisitions and disposals, its first-quarter revenue growth was 2%, or 4% excluding the pharmaceuticals business.

At constant exchange rates, it grew in every region in which it operates, but growth was strongest in the region including Latin America, North Asia, South and South East Asia and Australia and New Zealand at 12%.

Growth was driven by its health business, which posted like-for-like growth of 11% at constant currencies, and a 4% boost from acquisitions. It cited product rollouts, like Megared in 20 European countries and Mucinex Allergy in the US, and product innovation in products like Scholl foot products and Durex sexual gels.

I'm particularly pleased with how our focus on consumer health is driving growth and outperformance, supported by larger innovation roll-outs. Additionally, our recent agreement on the acquisition of KY will give us a stronger position in the sexual wellbeing category in key markets of the US and Brazil. The deal is of course subject to regulatory approval," Kapoor said in the statement.

Reckitt last month bought the K-Y brand from Johnson & Johnson unit McNeil-PPC Inc, a deal that added the sexual lubricant to its stable of Durex sexual health products. It didn't give any financial details of the deal.

Revenue of its hygiene brands grew 2% on a like-for-like basis, while home brands grew 1%. Its so-called portfolio brands saw like-for-like revenue decline 3%, as laundry detergents and fabric softeners continued to post weak sales in southern Europe.

It said its strategic review of its pharmaceuticals business is progressing well, and it is still considering all options for the business. It said a "capital markets solution" is emerging as a strong option.

"We expect to provide a fuller update on our strategic review at the time of the interim results presentation," it said.

The unit posted revenue of GBP170 million in the first quarter, down 11% at constant currencies.

"On Suboxone, our patient-preferred sublingual film in the US delivered an excellent result in keeping up a 64% market share given the competitive backdrop. Our strategic review of RBP continues and we expect to provide a fuller update at our interim results," Kapoor said.

Reckitt Benckiser investors have been calling for the company to look at options for the pharmaceuticals business for several years, arguing that it is a poor fit with its consumer and health brands. The unit's main drug, heroin addiction treatment Suboxone, has started declining due to competition from generic rival treatments.

By Steve McGrath; stevemcgrath@alliancenews.com; @SteveMcGrath1

Copyright © 2014 Alliance News Limited. All Rights Reserved.

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