* First quarter sales up 4 pct vs analyst consensus 3.7 pct
* Health unit sales up 11 pct, hygiene only 2 pct
* Pharma spin-off emerging as "strong option"
(Adds CFO quotes, background, details, byline, bullets)
By Martinne Geller
LONDON, April 16 Consumer goods maker Reckitt
Benckiser Group stood by its 2014 financial targets on
Wednesday despite unusually weak sales of disinfectants and
signalled it was leaning toward spinning off its declining
The British company said a strategic review of Reckitt
Benckiser Pharmaceuticals (RBP) that it launched in October was
progressing well and that a "capital markets solution is
emerging as a strong option".
"We mean that RBP would be an independent, publicly listed
company," said Chief Financial Officer Adrian Hennah, although
he noted that all options including selling or keeping it
remained on the table.
Reckitt gave no new details of its acquisition plans,
dashing the hopes of some investors that it might signal an
interest in a consumer health business that may be sold by Merck
. Reckitt is seen as a potential bidder.
Reckitt is expanding its consumer health business, which
already includes Nurofen tablets, Mucinex allergy medicine and
Airborne supplements, as it targets ageing populations in
Western countries and rising incomes in emerging markets.
Excluding the pharmaceutical business, which sells a drug to
treat heroin addiction, Reckitt posted a slightly better than
expected 4 percent rise in first-quarter like-for-like sales on
a constant currency basis.
Analysts were expecting a 3.7 percent rise, according to a
consensus forecast supplied by the company.
Sales in the health business rose 11 percent in the quarter,
whereas Reckitt's other segments - hygiene and home - grew by
only 2 percent and 1 percent, respectively.
Because this year's flu season was less severe than last
year's, people bought less Lysol and Dettol disinfectants, the
company said, resulting in "an unusually low growth rate ... and
not one that we expect to see repeated very often".
Its health business, however, was boosted by the roll-out of
new products including MegaRed supplements in Europe. The
company said that even without the roll-outs, performance would
have been "tremendous".
The pharmaceuticals business saw sales fall 11 percent as it
continued to face competition from cheaper generic rivals.
Uncertainty about the outcome of the strategic review has
preoccupied investors and weighed on Reckitt's shares. The stock
was up 0.7 percent in morning trading on Wednesday.
Reckitt is aiming for revenue growth of 4 to 5 percent this
year and an operating margin that is flat to moderately higher.
Fluctuations of the currencies in which it does business are
expected to reduce reported sales by 9 percent.
(Reporting by Martinne Geller in London; editing by Tom