US probe and cyber attack deliver Reckitt double blow
● Consumer goods boss speaks of tough conditions
Reckitt Benckiser, the household goods major, yesterday laid bare the financial damage of the cyber attack that devastated its factories last month and exacerbated tough trading conditions.
The Durex-to-dettol firm confirmed that like-for-like sales fell 2 per cent in the second quarter after the ransomware attack significantly disrupted its manufacturing and orders systems across a raft of markets, including the UK.
Reckitt Benckiser chief executive Rakesh Kapoor said: “From an operational perspective, as expected we had a tough first half, with challenging conditions exacerbated by a sophisticated cyber attack.
“We are experiencing tough market conditions, and we still have work to do on addressing the full implications of the recent cyber-attack.”
Net revenue in the first half of the year rose 2 per cent at constant exchange rates to £5 billion, and adjusted operating profit edged up 1 per cent to £1.19bn.
Pre-tax profit lifted to £1.02bn in the six months to end-june – up from £697 million in the same period of 2016. Reckitt also said that it was taking a provision of £318m linked to ongoing investigations by the US Department of Justice into its pharmaceuticals business that it spun off in 2014.
Reckitt recently bought US baby formula maker Mead Johnson Nutrition in a $21.2bn (£16.3bn) deal to expand its consumer health arm, and said yesterday that the integration was going well.
Last week, the firm confirmed a $4.2bn deal to sell food brands including French’s mustard and Frank’s hot sauces to the maker of Schwartz spices.
US group Mccormick fought off a number of rival bidders to secure Reckitt’s food business in a move that will propel it to the number one position in America’s condiments market.
Kapoor added: “In the first half of the year, we have made significant progress on portfolio transformation and becoming a more focused consumer health and hygiene business, with both the acquisition of Mead Johnson Nutrition, and the agreed sale of our Food business.”
On 27 June, the group was one of several major businesses to be badly hit by the Notpetya computer virus. But most of Reckitt’s systems and main manufacturing plants are now producing near to full capacity, the firm said yesterday.
It added that it expected most issues to be resolved during the third quarter. Aberdeenshire-based energy services firm Proserv has secured contracts worth some $4 million (£3.1m) for its decommissioning services in the Asia Pacific. The deals have been awarded by Premier Oil in Indonesia; Chevron, through Baker Hughes, in the Gulf of Thailand; BHP, through Fugro, in Australia and by PCPP Operating Company, through Sapura Technology Solutions Sdn Bhd in Malaysia. Proserv has bagged some $12m of related work recently.