Reckitt shares bounce after Becht upset

By This Is Money
Updated: 11:07 EDT, 20 April 2011

An upbeat first quarter bulletin from household goods giant Reckitt Benckiser has reassured investors shaken by last week's news of the retirement of boss Bart Becht.

Household brands: Cillit Bang is among Reckitt's well-known products

Shares were up 5% or 168p to 3,345p after the company reported a 5% gain in like-for-like sales.

Underlying operating profits rose 17% to £530m and net revenue was 15% higher at £2.28bn in the first three months of 2011.

The stock slumped 7% last Thursday, following the announcement Becht was stepping down after heading Reckitt and before that its Dutch merger partner Benckiser for 16 years.

He is being replaced by Reckitt veteran Rakesh Kapoor, who joined the firm's Indian operation in 1987, from September.

Reckitt said today that recent product innovations, such as Dettol No Touch, had helped to increase sales.

But Europe - which accounts for 45% of revenues - failed to deliver sales growth as a weaker performance from fabric care and dishwashing brands held back strong progress in health and personal care.

The group is planning for a 4% rise in like-for-like net revenues this year and profit growth ahead of that - excluding its recent acquisition of Durex and Scholl firm SSL.

But Reckitt has warned of possible downward revisions to this year's targets if generic competition emerges for its heroin substitute Suboxone in the US.

The group is shifting sales towards a new patent protected version of Suboxone to head off the threat to its tablet-based treatment.

Reckitt also faces an £89m lawsuit from the National Health Service relating to claims it engaged in anti-competitive behaviour involving its heartburn medicine Gaviscon.

It was recently fined £10.2m by the Office of Fair Trading for abusing its dominant position by withdrawing its Gaviscon Original Liquid medicine to boost sales of a version with an active patent and block sales of a generic version.

Reckitt said that while the NHS claim was still under review, it does not believe any impact would be material.

Slough-based Reckitt makes some of the world's best-known brands across health, personal care and food - including Cillit Bang, Nurofen and French's Yellow Mustard.