Reckitt Profit Seen Up, New Targets Awaited

Reckitt Benckiser Plc’s targets for this year will take center stage next week when the world’s largest household cleaning products group is expected to report a leap of at least 18% in 2002 net profit. British firm, which sells Finish/Calgonit dishwasher products, Lysol disinfectant and Mr. Sheen polish, is expected to meet its 2002 sales growth target of around 6% at constant exchange rates and 18% net profit growth at actual exchange rates, analysts said on Friday.

The group is expected to report 2002 net profits of 401-407 million pounds ($648-657 million) after 340 million pounds in 2001 when it issues results on Wednesday, February 19. The group, formed by the takeover of Dutch firm Benckiser by Britain’s Reckitt & Colman in December 1999, is likely to be questioned on strategy as it is set to pay off the last of its debt this year, and after it recently missed out on two big acquisition opportunities, analysts added.

Reckitt lost out on the Bayer AG household insecticides business in October to privately owned U.S. company SC Johnson & Son Inc. which paid 725 million euro, then it was outbid in January by U.S. battery maker Energizer Holdings Inc for the $930 million purchase of Schick-Wilkinson Sword.

Analysts said they will be looking for guidance on what the company intends to do as it pays off its debts, and share buybacks and increased dividends look likely options.

The group has been keeping its full-year dividend steady at 25.5 pence a share since its merger until dividend cover reaches the average of its international peer group, and 2002 is likely to mark the third successive year of unchanged dividends.

Chief executive Bart Becht and a new management team has revived the company over the last three years by cutting costs and spending more on marketing a host of new product lines to add to its stable of well-known brands, such as Dettol antiseptic, Harpic toilet cleaner, and Lemsip, for treating the symptoms of colds and flu.

Analysts say there are a good flow of new product launches scheduled for 2003 to maintain strong sales growth, supported by an increase in advertising and promotional spending.

The group set its 2002 sales and profits targets at the start of that year then edged them up twice throughout the year, as it saw strong growth in Western Europe and North America, which account for 70% of sales and 90% of profit, offsetting weak trading in many emerging markets.

The group saw nine-month operating profits margins in 2002 rise to 15%, and it hopes for further rises to push it toward the 20% -and-above level of U.S. rivals Procter & Gamble Co. and Colgate-Palmolive Co.