Reckitt recovery in doubt, says CE

BRITISH consumer goods group Reckitt Benckiser has cautioned its trading was tough in southern Europe due to depressed consumer demand and stiff competition and reported lagging half-year sales and earnings growth compared with some rivals.

Its sales fell across the southern European markets of Spain, Italy, Greece and Portugal as it battled for market share for products such as Finish dishwasher tablets and Vanish fabric cleaners.

“Southern Europe is significantly worse than other markets, and although there is a flattening of the decline, we see no near-term sign of recovery,” CE Rakesh Kapoor said yesterday after the half-year results. Kapoor, who took over last September after Bart Becht’s shock decision to retire, reported half-year underlying sales rose 4% and earnings increased 2%, below growth levels of rival Unilever.

Reckitt maintained its targets to increase underlying sales by 3%-4% and hold margins steady, in contrast to competitor Procter and Gamble which warned on profits, but the results were seen as dull and the share price dipped.

Unilever reported half-year underlying sales rose 7%, and its Reckitt-comparable product sales were up 10% as it gained from its bigger exposure to fast growing emerging markets, while Colgate Palmolive’s organic sales grew 8% in the second quarter.

Reckitt shares slipped 1,4% to 3 491p in early trade yesterday to be the second biggest faller in the FTSE 100 index after gaining around 10% so far this year.

Mr Kapoor aims to focus on the company’s fastest-growing hygiene brands such as Dettol, Strepsils and Durex and to move quicker into the major emerging markets of Brazil, Russia, India and China.

But analysts say Reckitt still has 55% of its revenue coming from mature European and North American markets, compared with Unilever at 45%, and a bigger relative exposure to the eurozone crisis, which has depressed southern European markets. Reuters