Pandemic Drives Reckitt Benckiser's Swing to 2020 Profit, Boosts Prospects for 2021 -- Second Update
24 Fevereiro 2021 - 7:52AM
Dow Jones News
By Matteo Castia
--Reckitt Benckiser swung to profit in 2020 on higher revenue,
boosted by strong hygiene sales amid the coronavirus pandemic
--Together with hygiene items, a demand surge is expected for
flu-relief and sexual-wellbeing products as society reopens
--The company bought the Biofreeze pain-relief brand from
Performance Health for an undisclosed amount
Reckitt Benckiser Group PLC continues to benefit from the
coronavirus pandemic as high demand for hygiene products drove a
swing to net profit in 2020, and prospects of growth in its drugs
and sexual-wellbeing businesses increase as the reopening of
society approaches.
"Increased demand for Dettol and Lysol provided the opportunity
for expansion into a total of 41 markets during the year," the
company said, adding that sales blossomed amid a demand surge in
the hygiene division as consumers battle with the fear of
contagion.
The consumer-goods giant--which houses Dettol, Harpic and Durex
among its brands--made net profit of 1.19 billion pounds ($1.68
billion) for the year, compared with a net loss of GBP3.68 billion
in 2019. Pretax profit was GBP1.87 billion, compared with a loss of
GBP2.11 billion a year earlier, it said.
Revenue rose to GBP13.99 billion from GBP12.85 billion the prior
year. In the fourth quarter, revenue rose to GBP3.57 billion from
GBP3.32 billion in the year-earlier period, it said.
The group's hygiene division increased its revenue by 22% during
the fourth quarter to GBP1.59 billion, and by 16% to GBP5.82
billion for the full year. On a like-for-like basis, revenue from
the hygiene division jumped 26% on year during the fourth quarter
and 20% in the full year.
Reckitt Benckiser said it expects demand for Mucinex, Nurofen
and Strepsils flu-relief products to rise as schools reopen and
mobility increases. Similarly, the reopening of society is likely
to boost the already recovering group's sexual-wellbeing business,
it added.
As mobility and social interactions increase, we expect our
sexual-wellbeing business to rebound," the company said, adding
stronger demand is already being seen in countries managing
post-lockdown conditions.
Reckitt Benckiser said it expects like-for-like revenue for 2021
in a range from flat to 2% growth, including a strong first quarter
and continued underlying progress toward its mid-single-digit
sustainable-growth target, as it benefits from considerable
investments.
It said that during the year it has invested a record high
GBP745 million in building capabilities to strengthen execution and
customer service, digital and brand building and
sustainability.
The productivity program exceeded expectations and delivered
savings of over GBP400 million, driving an increase in the
company's projected productivity savings to GBP1.60 billion from
GBP1.30 billion, it added.
"We will deliver further growth for hygiene and germ protection,
as we work to hold on to the penetration gains achieved, while
growing in new places, channels and categories, strong growth in
sexual-wellbeing and start seeing the benefits of our growth
investments in other areas, including the wider hygiene, consumer
health and nutrition categories," Reckitt Benckiser said.
The company warned that pandemic-driven lower birth rates in
2020 and 2021 will contribute to a short-term slowdown for its
infant-formula business.
Already back in 2019, a lower birth rate was one of the reasons
behind Reckitt Benckiser's disappointing performance for infant
formula in China, which contributed to a GBP5.04 billion impairment
leading to a swing to net loss that year.
The board declared a final dividend of 101.6 pence, taking the
full-year payout to 174.6 pence, flat on year.
Also Wednesday, the company said in a separate release that it
has entered into a definitive agreement with Performance Health--a
company owned by Madison Dearborn Partners--to acquire the
Biofreeze pain-relief brand for an undisclosed amount.
"The brand taps into the growing global trend for wellness and
self-care and aligns with our strategy to build our U.S. health
footprint into new spaces and places," Chief Executive Laxman
Narasimhan said. Completion is expected to occur in the second
quarter of the year, Reckitt Benckiser said.
In another separate release Wednesday, the company said it is
selling the Scholl footcare brand to Boston-based private-equity
firm Yellow Wood Partners. While no financial details of the
transaction were disclosed, Reckitt Benckiser said it anticipates
the deal to complete in the third quarter of this year. Reckitt
Benckiser had acquired Scholl as part of its acquisition of SSL
International in 2010. The proposed sale also includes the Amope,
Krack and Eulactol footcare brands, the company said.
Write to Matteo Castia at matteo.castia@dowjones.com
(END) Dow Jones Newswires
February 24, 2021 05:37 ET (10:37 GMT)
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