* Archive page for historical reference only. This profile is no longer being actively updated. See active page here *

Reckitt Benckiser (UK)

Profile subscribers click here for full profile

Reckitt Benckiser is the world #1 in household cleaning, with a huge portfolio of well-known brands ranging from cleaning products Lysol, Dettol, Harpic, Calgon and Vanish to automatic dishwasher tablets Finish. Virtually the only household care segment in which it doesn't have a major presence is laundry detergents, where it has avoided competition with traditional leaders such as P&G and Unilever. However its biggest growth area in recent years has been healthcare. In 2005, the group bolstered its small portfolio of over-the-counter medicines with the purchase of Boots' OTC portfolio, which included brands such as Nurofen and Strepsils. Other major acquisitions have included the companies behind brands as varied as Mucinex, Durex, Scholl footcare and MegaRed and Airborne vitamin supplements, as well as the Indian marketer Paras Pharmaceuticals. In its most significant purchase to-date it snapped up infant formula manufacturer Mead Johnson in 2017.

Advertising

Who handles advertising? Click here for agency account assignments for Reckitt Benckiser. The group declared "brand equity" investment expenses, in other words advertising and marketing, of 13.2% of net revenues in 2016, or £1.31bn.

Competitors

See Household Care Sector index for other companies

Brands & Activities

Reckitt Benckiser has done well out of exploiting niche opportunities in established markets, although some of its divisions (especially French's culinary sauces) have long made for an uncomfortable fit and would benefit from either being built through further acquisition or sold off altogether. The group has 45 manufacturing facilities and offices in 60 countries worldwide; it sells its products in more than 100 others. By concentrating on niche products, instead of going head-to-head with P&G and Unilever in the mainstream laundry segment, the company has grown to be the world's #1 manufacturer of non-wash cleaning products. However its fastest growing segment has been OTC healthcare, bolstered by a series of sizeable acquisitions.

Following a restructuring process in 2012, the group now collects the majority of its products into three groups of Hygiene, Health and Home. Of these three segments, RB regards Health and Hygiene as the focus for the most significant development.

Hygiene

Hygiene is the biggest segment of all, comprising a variety of brands in sectors such as dishwashing, surface and lavatory care, pest control and skincare. Reckitt Benckiser is the clear leader worldwide in automatic dishwashing with around 38% of the developed global market. It is the #1 in Germany, UK, Spain, Italy, Greece, Australia, New Zealand and Eastern Europe, and #2 in North America. The group's key brand is marketed under different brandnames in different territories. Calgonit is the main brand in most of Western and Eastern Europe. It is marketed as Finish in the UK, where it dominates the sector with around 56% share and sales of £123m in the year to Nov 2016 (reported in The Grocer). It is also sold as Finish in Italy and Australia, and that name was introduced in North America in 2009 to replace previous brands names Electrasol and rinse aid Jet-Dry.

Surface Care Products covers the disinfectant cleaner, lavatory care and specialty cleaner sectors. Lysol is the leading disinfectant cleaner in North America with a 50% share. It is marketed as Dettol (formerly Dettox) in the UK, accompanied by Harpic, as Sagrotan in Germany or Pine O Cleen in Australia. The brand family now extends across a wide range of different liquids, wipes and sprays, as well as the Dettol Easy Mop product introduced in Europe in 2003 and Lysol Ready Brush in the US. To capitalise on its cleaning reputation, Dettol was extended into the personal wash sector in 2012 with a line of anti-bacterial shower gels.

Another new development in 2012 was the launch of a line of automatic foaming "No-Touch" hand-soap dispensers, tested initially in Japan. That system was launched in the US under the Lysol banner, and in other markets under the Dettol banner. In the UK, IRI estimated combined sales of £85m across the Dettol range in the year to Nov 2016 (reported in The Grocer). It is the country's top-selling branded household cleaner, ahead of P&G's Flash and Unilever's Domestos. Harpic and Cillit Bang added £34m and £20m respectively, making RB the overall #1. In lavatory care, the group is the worldwide number two due to Lysol in North America and the strength of Harpic in close to 50 countries around the globe. Like Lysol, Veja in Brazil is the umbrella for a range of cleaning products and is that country's #1.

Pest Control brands include leading US rodenticide D-Con, Mortein and Aerogard (Australia and Asia Pacific), Shieldtox (Asia), Rodasol (Latin America) and Neocid (Europe). Selected skincare brands are also consolidated under the Hygiene banner, including the world's best-selling depilatory cream, Veet (previously known in some countries as Immac); and also anti-acne product Clearasil. This joined the portfolio with the acquisition of Boots Healthcare, having itself been acquired by Boots in 2001 from Procter & Gamble, with sales of around £95m.

Combined revenues from the Hygiene portfolio were £4.07bn in 2016.

One significant black mark over the business was its acquisition in 2001 of Oxy, one of more than 20 companies marketing humidifier sanitisers in South Korea. By 2011 the chemicals used in these products, designed to prevent the growth of bacteria in household humidifiers, had been found to cause serious respiratory damage and even death. RB withdrew its own products immediately, and established a £300m fund in 2016 to compensate victims and their families.

Health

Health is the umbrella for the majority of the group's OTC and consumer healthcare products, most of which joined the group in 2005 as a result of the purchase of the international healthcare portfolio then owned by Boots. The acquisition, which completed in early 2006, almost doubled the size of RB's existing healthcare portfolio. Biggest brand in the portfolio is Nurofen, now the best-selling analgesic in Europe, with sales of around £150m. The group introduced a new ibuprofen/paracetamol mix in 2011 under the name Nuromol, which promises superior pain relief over a longer period. Other products include #1 medicated sore throat throat remedy Strepsils (also marketed as Benactiv and Cepacol, and with combined sales of £93m); a clutch of dermatological skincare brands including Lutsine in France, E45, Balneum, Optiderm and Aqeo; eye lotion Optrex and children's decongestant Karvol. In 2007, RB announced the purchase of US OTC manufacturer Adams Respiratory for $2.3bn. Its brands include the country's top-selling cough medicine Mucinex (sales in excess of $578m in 2013, according to IRI, Drugstorenews) and congestion remedy Delsym.

The company also has strong cold and flu and remedy businesses in the UK, parts of Europe and the emerging markets of Asia, the Middle East and Africa. Brands include gastro-intestinal treatments Gaviscon, Fybogel and Senokot; analgesic Disprin, cold & flu remedy Lemsip (the UK's best-seller in the cold and flu sector, with sales of almost £63m in 2015/16), and Bonjela for mouth ulcers.

In a further boost to its healthcare portfolio, RB issued an offer in July 2010 to acquire SSL International, long-considered a likely target, for £2.5bn. SSL's biggest brands were Durex, the top-selling condom brand worldwide, and Scholl footcare products outside the US. (Within the US, rights to the Dr Scholl brand are now owned by Bayer). The Scholl brand is now partnered in some countries, including the US, by the Amopé range of electronic footcare and nailcare devices, launched in 2014. Additional healthcare remedies in Europe include Full Marks, Meltus, Wasp-Eze, Merocaine and Resolve. Italian brands include Sauber and Mister Baby.

At the end of 2010, Reckitt agreed to acquire leading Indian OTC healthcare manufacturer Paras Pharmaceuticals for £460m. That added a collection of popular local brands including pain-relieving ointment Moov, paracetamol-based analgesic Stopache, cold remedy D'Cold, antiseptic foot cream Krack, fungal creams Itch Guard and Ring Guard, Dermicool heat powder and antiseptic cream Borosoft.

In November 2012, following an extended lull in takeover activity, RB launched a break-up bid to snatch US vitamins firm Schiff Nutrition from under the nose of rival buyer Bayer. The German company had already offered $1.2bn for Schiff; RB issued its own bid of $1.4bn. Brands include MegaRed, Move Free and Airborne. The same year, Oriental Medicine Company, a maker of traditional throat remedies in China joined the portfolio. Another deal followed in early 2013, with the purchase for $438m of local manufacturing and distribution rights to several OTC products owned by Bristol-Myers Squibb in Mexico and Brazil, including antacid Picot, analgesic Tempra, antifungal Micostatin, cough & cold remedy Graneodin, anti-rash cream Dermodex, anti-gas medicine Luftal, and cold & flu remedy Naldecon. RB subsequently excercised an option to acquire full control of those brands in 2016.

Also in 2014, RB agreed to acquire intimate lubricants brand K-Y from Johnson & Johnson for a reported $240m. The brand is paired with RB's existing Durex business. The brand was approved in all global markets except the UK, where competition regulators ruled that it must be sub-licensed to another company for at least eight years because of the local dominance of the Durex brand. By late 2015, no such partner had yet been found.

Combined revenues from the Health portfolio were £3.33bn in 2016.

In 2017, RB made plans to enter a completely new sector with an agreement to acquire infant and adult nutrition specialist Mead Johnson for $16.6bn. The deal more than doubles the company's consumer health portfolio, and considerably strengthens its profile in emerging markets in Asia - especially China - and Latin America. With brands including Enfamil and Sustagen, Mead Johnson is the global #3 in child nutrition after Nestle and Danone. The price tag is equivalent to a multiple of around 3.5 times MJ's annual sales of $3.7bn in 2016. The Enfa brand family accounted for 80% of sales. Completion of the deal took place in June 2017.

Home

The Home portfolio covers a wide range of stain removers and water softeners. Vanish is the company's leading stain remover, now marketed in almost 60 countries as a result of rebranding or adaptation of local products including Kosla (Turkey), Kalia (Spain), Blanka (Portugal), Blanco (France) and Lavasbianca (Italy). The launch of new Vanish Oxi Action and several spin-off variants coincided with a concerted push into new markets, especially in Europe. It is supported by Spray 'n Wash and Resolve in North America. Calgon is the clear market leader worldwide in water softeners and limescale build-up (Calfort in Italy). Specialist products include Napisan for nappy soaking and the world's #1 fine fabric pre-wash Woolite, marketed in around 30 countries. In the UK, Nielsen measured sales of £53m for the Vanish brand.

Specialty cleaners include a wide variety of different types of products including metal cleaners Brasso and Silvo; and lime and grease cleaners Lime-A-Way and Easy-Off, the latter marketed as Cillit Bang in Europe and Rest of World. Other key brands include Procenex (Argentina), St Marc (France), Glassex (Netherlands), Mr Sheen (UK and Australia) and Poliflor floor polish (Latin America).

The company is the #2 player worldwide (now behind Procter & Gamble) in Air Care with Air Wick air fresheners in North America, the UK and some other markets. Air Wick is the top seller in the UK with sales estimated by IRI at £108m in 2016 (well ahead of #2 Glade from SC Johnson and P&G's Febreze and Ambi-Pur).

Combined revenues from the Home portfolio were £1.83bn in 2016.

A separate collection of brands are grouped under the banner of "Portfolio products". These include a small collection of laundry detergents. Ava and Colon are among the leading washing powders in Italy and Spain respectively, originally launched in the 1960s. The Dosia brand launched into Eastern Europe in 1994, while Power 28 is one of China's original washing powders, acquired by Benckiser in 1966. Elsewhere, the group supplies private label detergents to supermarkets and other manufacturing groups. Sales have gradually dwindled, falling to around £250m in 2016.

Despite the sale of the old Colman's sauces brand the group retains a small mustard and sauces business, mainly in North America, with the French's, Frank's and Cattlemen's brands. Revenues were £411m in 2016. Despite its apparent lack of fit with the rest of the group, RB repeatedly reaffirmed its commitment to the business, regarding French's as one of its 19 "Powerbrands". Finally in Spring 2017 it announced a strategic review of the sauces unit. Bids were received from Unilever and Hormel among others, but the prize went to spice king McCormick with a knock-out offer of $4.2bn.

Until recently, the group also owned rights to prescription-based opiate-addiction replacement therapy Subutex/Suboxone. Based in the US, this unit traditionally reported separately from the rest of the healthcare portfolio. RB originally controlled the drug only in the US and Australia, but acquired all remaining rights in 2010 from Schering-Plough, following that company's acquisition by Merck & Co. Suboxone lost its patent in 2010, but no generic competition emerged until 2013. In 2012, the group developed a new "sublingual" oral version for the drug, which has patent protection until 2020. Suboxone still has a 68% share by volume of its market in the US, where it generates 80% of its sales. At the end of 2014, this business was spun off as a separate standalone company under the name Indivior.

Financials

Group performance continued strongly in 2009, with revenues rising by 18% to almost £7.8bn, and net income jumping 27% to £1.4bn. However 2010 delivered less dramatic growth, disappointing investors used to more spectacular results from the company. Revenues rose 9% to £8.5bn, while pretax profits climbed 11% to £2.1bn. The acquisition of SSL and Paras boosted performance in 2011, with revenues growing by 12% to £9.5bn, while pretax profits were up 11% at £2.4bn.

The group delivered its slowest growth for several years in 2012, also the first year under a new CEO. Revenues rose by just 1% on a reported basis to £9.57bn, although those figures were dampened by adverse exchange rates. The group claimed a like-for-like increase of 5%. Net income rose 5% to £1.83bn.

Revenues topped £10bn for the first time in 2013 at £10.04bn, or £9.27bn excluding the Suboxone pharmaceuticals business. However net income slipped 5% to £1.74bn as a result of an extraordinary charge for regulatory issues and restructuring.

The spin-off of Indivior, as well as exchange rate fluctuations, reduced reported revenues for 2014 to £8.84bn. At constant exchange rates, like for like growth would have been 4%. However, net income from continuing operations jumped 19% to £1.66bn, and reported net income soared by 85% to £3.22bn because of the exceptional gain from Indivior.

Revenues for 2015 were flat at £8.87bn, but at constant exchange rates the increase would have been 5%. Reported net income was £1.74bn. For 2016, revenues rose to £9.89bn, almost entirely as a result of exchange rates. Net income rose 5% to £1.84bn.

For 2016, topline was boosted by acquisitions and exchange rates. The reported figure of £9.9bn represented like-for-like growth of 3%. The Europe / North America / Australasia (ENA) geographic group generated close to two-thirds of revenues (£6.4bn), but revenues in that division rose by just 1% like-for-like, compared to 8% in the developing markets group. Net income came in at £1.83bn, up 5% on a reported basis, but down by the same percentage at constant exchange rates. That figure included an exceptional charge of £367m connected to damages and compensation associated with the South Korean humidifier sanitiser case.

Management

Reckitt Benckiser's startling growth during the 2000s was overseen by CEO Bart Becht. He stepped down from the group in September 2011 and was replaced by Rakesh Kapoor, previously group EVP, category development. Kapoor's role as effective #2 within the group was in turn filled by Heather Allen. She too left the group in 2015 and was replaced by Roberto Funari. Kapoor retired in Sept 2019, and was succeeded by former PepsiCo executive Laxman Narasimhan. Chris Sinclair is non-executive chairman.

Following several sales of its stake, private investment company JAB Holdings is still the largest individual shareholder in Reckitt Beckiser but its holding has reduced to a little under 9%. Former RB CEO Bart Becht is now chairman of JAB, an investment vehicle for the German-Austrian Reimann family, who also control Coty, Jacobs Douwe Egberts and other businesses.

Background

The Colman in Reckitt & Colman was originally the well-known mustard manufacturer (sold off to Unilever in 1995). Jeremiah Colman set up a mill in Norwich, England in 1814, processing flour and mustard seed. In 1823, his nephew James joined the business, which became J&J Colman. Keen not to waste any of the by-products from the milling process, they moved into starch and laundry whiteners around 1840. At around the same time, Isaac Reckitt acquired a starch factory in Hull, and also began making laundry whitener as well as polish. Inherited by his four sons, the business flourished, expanding overseas with an Australian factory in 1886. Two years later, the company went public in London.

By the early 20th century both companies had fast-growing international businesses, and Colman's had a virtual monopoly of the British mustard industry, having bought up all of their regional competitors. Rather than fight for trade, Colman and Reckitt formed a partnership in 1913 under the name Atlantis, initially to enter South America. Subsequently this operation expanded to encapsulate all of both companies' international operations, including the acquisition of US food company RT French in 1920. Also in 1913, Reckitt & Sons became a partner in the UK-based Chiswick Polish Company, making a range of metal and shoe polishes, including top brand Brasso. This company also grew rapidly, introducing a wide range of other household goods, and renaming itself Chiswick Products in 1930.

In 1933, Reckitt & Sons introduced germicide Dettol, which rapidly became one of the company's most successful brands. Five years later, Reckitt and Colman sealed their highly productive Atlantis joint venture with a formal merger. Chiswick Products also became a wholly owned subsidiary of the group in 1954. The group continued to grow through acquisition, especially in the US. In 1985, air freshener group Airwick Industries joined the business, followed in 1990 by American household products group Boyle-Midway, whose brands included Woolite, Wizard and Sani-Flush. An attempt to enter the US condiments market was less successful. The group had acquired Durkee's Famous Foods in 1986, but finally gave up the business, selling off the seasonings division in 1992. In 1994, Reckitt & Colman paid Eastman Kodak $1.6bn for Lehn & Fink, makers of leading American disinfectant Lysol. To fund the L&F purchase, Colman's foods was sold to Unilever for $405m a year later, and the US personal products division to a private investment group for $123m in 1996. The latter included a miscellaneous collection of non-core baby wipes, bubble bath and breath spray brands.

In 1997, the group acquired fabric cleaners Spray'n Wash, Vivid, Yes and leading glass cleaner Glass Plus from SC Johnson for $160m. Also that year the group formed a joint venture with Indian pharmaceutical company Nicholas Piramal to market their respective consumer healthcare brands. Reckitt Piramal began operations in January 1998, quickly becoming the # 1 OTC manufacturer in that country. It later changed its name to Reckitt Benckiser India.

However, during 1998 the company was dogged by a series of competitive problems, particularly in the US following the L&F acquisition. These culminated in a profits warning in late 1998. Chief executive Vernon Sankey offered his resignation early the following year, claiming the company needed a fresh perspective. A few months later the group unveiled plans for a complete transformation, revealing that it would merge with Dutch group Benckiser to create the world's biggest non-laundry household products group. The deal was framed as a purchase by the British company of its Dutch counterpart - Reckitt shareholders received the majority share in the new company and company HQ remained the UK. However it was in effect a reverse takeover by the Dutch company - most of Reckitt's senior management team left the business as part of the deal, and Benckiser boss Bart Becht was installed as CEO of the enlarged business.

Just six days after finalizing the merger, Reckitt Benckiser saw its share price plunge after issuing another profits warning. The group blamed lack of investment in Reckitt & Colman's brands in 1999 for a fall in profits. These were later revealed to be down sharply by 88% to £52.5m, worsened by reorganisation and merger costs of almost £260m. The group promised to accelerate revenues in 2000, and cut 75 of its smaller products to concentrate on 50 key brands. CEO Becht lived up to his promise, shedding a number of small household brands in Australia and New Zealand (including Janola, Aura, Bluo, Longlife, Scotts and Soft as Soap), as well as its Gesal plant care business in Italy and Austrian skincare company Savoderm.

The group then announced the acquisition of Korea's #4 household goods business Oxy Co for $128m. Its brands include Oxy Clean fabric treatment, Tinkerbell air care, Cherie fabric softener and Thirsty Hippo de-humidifier. However at the same time, Reckitt announced the launch of a consolidation drive to merge most of its regional brands into 15 global "power brands". Over the following months a series of brand mergers were announced. The UK's Dettox brand was merged into Dettol during 2002; and Haze air fresheners worldwide into Airwick. UK-based depilatory product Immac was rebranded as Veet, its name in other territories. In a separate development Reckitt withdrew its well-known UK household insecticide Vapona in early 2002 after evidence that one of its ingredients could cause cancer.

In 2003 the group was reported to be in negotiations to acquire SSL International, which owns Durex condoms and Dr Scholl footcare products in the UK, but that deal failed to materialize. Far more substantial was the purchase of Boots' international healthcare products division in 2005 for £1.9bn. RB returned to SSL in 2010, tieing up a deal to acquire the business for £2.5bn.

Last full revision 8th October 2017

* Archive page for historical reference only. This profile is no longer being actively updated. See active page here *


All rights reserved © Mind Advertising Ltd 1998-2021