* FY adjusted EPS 264 pence vs forecast 249 pence
* Q4 sales growth ex-pharma 6 pct, Europe & N. America 3 pct
* Makes 'modest' buy of Chinese traditional medicine firm
By Rosalba O'Brien
LONDON, Feb 13 An unusually severe cold and flu
season in the United States helped drive full-year profits
higher at Britain's Reckitt Benckiser, maker of Strepsils
throat lozenges and Mucinex decongestant.
The intensity of the North American flu season pushed up
demand across the board for hospitals, pharmacies and the makers
of cold remedies.
"The cold and flu season was a good one, the buying was very
good and clearly there has been some benefit from this," Chief
Executive Rakesh Kapoor told journalists following the company's
results on Wednesday.
Reckitt's sales in Europe and North America, where many
firms have struggled with sluggish consumer demand, grew 3
percent in the fourth quarter, traditionally the peak cold and
flu season. Full-year earnings per share were up 7 percent and
ahead of forecasts.
Kapoor said the company would target revenue growth of
between 5 and 6 percent for 2013, including acquisitions and
disposals announced to date, with margins to be maintained at
This compares with growth, excluding non-core
pharmaceuticals, of 5 percent over the past year, which
accelerated to 6 percent in the final quarter.
"With the positive impact of the strong flu season flowing
into Q1 2013, both in the Health and Hygiene categories, we
believe 2013 has started well for Reckitt," analysts at Shore
"We expect the market to respond positively to today's
results, whilst recognising they may be underwhelmed by
management's full year targets, which may ultimately prove
Shares in Reckitt opened up 3 percent at a record high,
before retreating to trade up 1.3 percent at 4,423 pence by 1052
GMT. The shares have had a strong run, outperforming the market
and rising around 23 percent in 2012.
EMERGING MARKET SHIFT
The company, which also makes household cleaning products
such as Cillit Bang, has been shifting its focus to the
fast-growing health and hygiene sector, with brands such as
Durex condoms, Gaviscon indigestion treatment and Dettol
disinfectant. It is also targeting emerging markets.
Reckitt said it wanted half of its net revenue in its core
business to come from emerging markets by 2015, a year earlier
than previously planned, while its health and hygiene products
would account for 72 percent of net revenue.
Health & hygiene makes up 69 percent of revenue currently
and emerging markets 44 percent.
The group has already made a string of acquisitions to
expand in these areas.
At the end of last year, Reckitt saw off competition from
Germany's Bayer to secure U.S. vitamin maker Schiff
Nutrition Inc for $1.4 billion, gaining access to the vitamin
and supplement market for the first time.
On Tuesday, it announced it a $482 million licensing deal
with Bristol Myers-Squibb for Latin American health
brands such as cough reliever Naldecon and painkiller Tempra,
with an option to buy after three years.
On Wednesday, Kapoor said Reckitt had bought a
"modest-sized" traditional Chinese medicine firm, without giving
The purchase of Oriental Medicine Company Ltd - which sells
leading sore throat brand Manyanshuning in China - would help
Reckitt create a healthcare platform in the country, he said.
The company's full-year adjusted earnings per share was
264.4 pence, up 7 percent, and ahead of Thomson Reuters I/B/E/S
estimates of 246.8 pence and a company-supplied forecast of 249