Reckitt Unveils £2bn Revamp, Takes Big Mead Writedown
British household goods maker Reckitt Benckiser launched a corporate revamp on Thursday that will invest £2 billion in its business over three years as it seeks to reclaim ground lost to sector peers and generate stronger revenue growth.
The results of a strategic review by new Chief Executive Officer Laxman Narasimhan also saw the company take a £5 billion writedown on its 2017 acquisition of infant formula maker Mead Johnson, valued at the time at almost $17 billion.
Reckitt's sales growth has trailed its peers in recent years after a spate of one-off problems and Thursday's results were widely seen as a chance for Narasimhan to launch his tenure at the company with major changes.
He shied away from selling any of its businesses, however, aiming to fund the new investment through internal "productivity savings" of £1.3 billion, and aligning its brands around three categories - Hygiene, Health and Nutrition.
The company said it would focus more on Greater China, integrating its businesses there and rebranding its 'Hygiene and Home' unit to just 'Hygiene'.
It also said it was too early to fully assess the impact of the Coronavirus outbreak on its business but was seeing disruption at retailers, and in distribution and supply chains.
The company also said it was seeing a spike in online orders for Dettol and Lysol disinfectant as a result of the outbreak.
Like-for-like sales were up 0.8% in year ending December. The company had forecast growth of between zero and 2% this year, trailing peers including Procter & Gamble who have aimed for a 3-5% expansion.
Lower sales were a result of a slowdown in demand for over-the counter medicines in the United States and infant formula in China, its biggest market, the company said.