The one-minute expert: Reckitt & Colman
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Your support makes all the difference.Reckitt & Colman, the taste of old England, Colman's English mustard, and all that. Right?
Wrong. The mustard business, along with its other foods businesses, was sold off to Unilever more than a year ago. It also sold off that other quintessentially English brand, Robinson's fruit squashes, to Bass. In all, it raised pounds 250m.
What was wrong with mustard?
Who knows. Perhaps directors became jaded with the taste at boardroom lunches.
So where to now?
Wants to go global. Tired of fuddy-duddy food brands. Intends to become "the world's leading household products company". The proceeds went on a pounds 1bn purchase of US household products group L&F. However, for the traditionalists among you, it still retains the likes of Brasso, and Lemsip for coughs and colds. And other well-known brands including Mr Sheen, Harpic, Dettol and Disprin.
So it's taking on the likes of Procter & Gamble and Unilever then?
Er, not quite. Chief executive Vernon Sankey is keen to emphasise the distinction that it aims to become Number One in household cleaning products alone. Nor, he emphasises, is the group all that far away from its goal. It has - don't titter - half the American market for toilet cleaners, 45 per cent of the Australasian insecticide market, and 40 per cent of the Brazilian market for surface cleaners. "We are," says Mr Sankey, "closer than you think." And to lend itself credence, it has recruited Philip Darnton from Unilever, where he was head of global strategy for laundry goods (sic), to become group director, global marketing. Oh yes, and it wants to be number one in over-the- counter medicines, in the regions where it is strong at present.
Where's that?
The UK and the British Commonwealth.
So what's happening?
Interim results on Thursday. The City reckons the group can produce pre- tax profits of around pounds 165m to pounds 170m, up from pounds 149m at the interim stage a year ago. However, analysts are hoping there won't be any unpleasant surprises as there were at the time of the last preliminary figures in March. Then, the group had to declare it had been caught out by the amalgamation of different stock systems at L&F, leading to a pounds 60m charge. There is also a sense of deja vu among long-standing investors in the business - of somehow having been here before.
Why so?
In 1990, Reckitt bought Boyle-Midway of the US for $1.25bn - just under the $1.55bn it paid for L&F. Sales of B-M were roughly similar to L&F; as were most of the other financial details. Reckitt & Colman said at the time it bought B-M, it was because of the complementary nature of the products. Ditto, L&F. However, once it had bought the company, it found it had bought a group with poor product development, and badly directed marketing support. Likewise, L&F was a peripheral part of a large conglomerate. Hopefully, they have learnt their lesson this time around.
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