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Reckitt Benckiser on Wednesday announced the strongest full-year sales growth in its history, with the Covid-19 hygiene boom leading to increased sales of its Dettol and Lysol disinfectants.
The company, which also makes Nurofen pain relievers and Durex condoms, said last year’s sales rose 11.8% on a comparable net basis to £ 14 billion, the highest figure since its created by merger in 1999.
Sales of hygiene products increased by a fifth as the company introduced Dettol and Lysol in 41 new markets to capitalize on pandemic demand for branded cleaning products. The Airborne immunity supplement brand has more than doubled its sales.
However, growth is not expected to continue at the same levels. Reckitt said he expects 0-2% sales growth in 2021 as he strives to improve on the exceptional numbers reported for last year and meet his target of an average figure single digit.
The past year has been a “turning point” for the company, said managing director Laxman Narasimhan. “We expect 2021 to be a year of further strategic progress and we remain confident that we will meet our medium-term goals.”
The company is keen to demonstrate that it is using the manna of the pandemic to reshuffle its broader operations, as Narasimhan seeks to move past a period of slow growth and run-down crashes that marred the final years of its predecessor Rakesh Kapoor .
The company’s stock price has returned to pre-Covid levels after peaking in July, with investors worried about long-term growth prospects beyond the immediate hygiene boom and wondering if new consumer cleaning habits would last.
Reckitt argues that a greater appetite for personal care products will persist, but he also said he was taking “decisive action to manage our portfolio” more broadly.
On Wednesday, it announced a strategic review of its Chinese infant formula business, acquired with the purchase of Mead Johnson Nutrition four years ago, which has struggled to compete with local brands and suffered a heavy blow from the closure of cross-border trade in Hong Kong amid pandemic. The company assumed an impairment charge of £ 985million on this business in 2020.
“We are delighted to see new management act quickly on this issue, which has been a problem for the past few years,” said Alicia Forry, analyst at Investec.
The company announced the sale of the Scholl foot care brand to private equity group Yellow Wood Partners for an undisclosed amount. He said he purchased the pain relief brand Biofreeze, a topical cold therapy product, following the acquisition last month of female sexual wellness brand Queen V.
Research and development spending rose 35% in 2020, while Reckitt invested £ 745million in growth initiatives.
Reckitt is betting on a continued focus on cleanliness with its business-to-business hygiene division, which on Wednesday announced a partnership between Dettol and the Football Association to provide hygiene advice and disinfect venues such as Wembley Stadium.
The company plans to pay an annual dividend of 174.6 pence for 2020, unchanged from the previous year.
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