Marketing push pays off for Nurofen maker Reckitt

Updated: 17:37 EST, 10 February 2010

Household goods giant Reckitt Benckiser today said a major marketing drive paid off after annual profits lifted 23 per cent to £1.9billion last year.

Reckitt said well-known brands including Nurofen and Strepsils performed strongly after it increased media spending to 11.1 per cent of all revenues.

Easing input prices and cost reduction programmes also helped group profits during a 'very good year', according to chief executive Bart Becht.

Get out what you put in: Well-known brands including Nurofen and Strepsils performed strongly after the firm increased media spending to 11% of revenues

Although the group has been given a tailwind by the effects of a weaker pound, Reckitt has traded strongly through the downturn and achieved an 8per cent rise in net revenues at constant exchange rates to £7.75billion.

Excluding its pharmaceuticals business, the figure rose 6 per cent in 2009 and should increase by 5 per cent in the current financial year, Reckitt said.

Highlights of the year for Reckitt included strong sales of Dettol as swine flu fears caused a surge in demand for anti-bacterial and virus products - helped by the marketing drive as the firm also benefited from cheaper advertising rates during the recession.

Revenues across the health and personal care division increased 14 per cent to £2.08billion. It is hoping for further growth though product launches this year, including the introduction of Strepsils in tube packaging and the launch of its Lysol no-touch hand soap system.

The group said its strong showing reflected good performances across its 17 so-called 'powerbrands', which also include Cillit Bang and Vanish.

The firm, which traces its roots back to 1823, was formed by a merger of Reckitt & Colman and Benckiser in 1999.

Shares were more than 2 per cent higher today.

This was despite Reckitt disclosing that the uncertain timing of generic competition to its Suboxone heroin substitute in the United States meant it would not provide targets for total group revenues in 2010.

Full-year revenues for its prescription drug business grew 50 per cent to £588million, helped by strong sales of Suboxone.

Keith Bowman, an equity analyst at Hargreaves Lansdown Stockbrokers, said: 'Reckitt has again delivered profits at the high end of analyst forecasts, although uncertainties going forward continue to build.

'Whilst a trusted formula of product innovation and heavy advertising is driving sales, the loss of a key patent and likely generic competition for the company's pharmaceutical offering is providing some caution.'