US probe and cy­ber at­tack de­liver Reckitt dou­ble blow

● Con­sumer goods boss speaks of tough con­di­tions

The Scotsman - - Business - By MARTIN FLANA­GAN

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.

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