RB boosts revenues 16% but warns on promotional spend

Rakesh Kapoor: RB chief executive
Rakesh Kapoor: RB chief executive

Reckitt Benckiser (RB) has reported a 16% year-on-year jump in Q3 revenues but warned like-for-like growth is in reverse in Europe, where it has also increased promotional spend to protect volume shares against "aggressive competition".

The FMCG company today reported its first quarterly results under new chief executive Rakesh Kapoor, who was promoted from vice-president for category development to fill the role left vacant by Bart Becht's retirement.

Third quarter net revenues from the likes of Cillit Bang and Air Wick came in at £2.4bn, rising 4% on a like-for-like basis without the contribution of acquisitions such as SSL.

However, in Europe, which accounts for 43% of sales, like-for-like growth was minus 1%.

The company reported: "Volume sales were stable year-on-year, but net pricing has been negative reflecting higher levels of promotional spend to protect volume shares agains aggressive competition and this continues to be the key factor behind the like-for-like reduction in net revenue.

"Heavy promotional investment continues behind Vanish to protect volume share against competition."

The company increased its media spending by 8% year on year.

RB said it is continuing to switch its media spend from traditional TV channels to digital and other media for reaching consumers, with a focus on health and personal care powerbrands, which is "more cost effective".

Pre-tax profit climbed 12% to £634m, while operating profit rose 13% to £638m.

Kapoor attributed growth to the launch of products such as Dettol and Strepsils Warm in European and developing markets. He said in a statement: "Assuming a normal ‘flu season, we are on track to reach our full year 2011 targets of 12% growth in net revenue.

"Delivery of our full year targets will mean Reckitt Benckiser achieving another year of above-industry average growth in very challenging market conditions."

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