Reckitt Benckiser in brands clear-out

RECKITT BENCKISER, the newly merged consumer products group,yesterday announced plans to sell off 75 of its underperformingbrands and promised to increase after-tax profits by 25 per cent in2000.

The Disprin to Finish group, which was formed last year by thepounds 5bn merger between the UK's Reckitt & Colman and Benckiser ofThe Netherlands, said revenue growth for 2000 would accelerate by 5per cent, slightly more than originally forecast, and after-taxprofits by 25 per cent at constant exchange rates.

The company said it would increase its media spend on its 50 starbrands, including Lemsip flu remedy and Vanish fabric care tablets,to 10 per cent of group revenues in the coming year. The move mirrorsan earlier announcement by Unilever, the Oxo to Persil group, that itwould focus on just 400 core products from its 1,600-strongportfolio.

Reckitt Benckiser shares closed up 32.5p at 489p, despite a 20 percent drop in 1999 profits, in line with analysts' expectations.Underlying pre-tax profits were down pounds 71.6m at pounds 288.7m onsales down 1 per cent at pounds 3.05bn.

Bart Becht, the former Benckiser chief who now heads up theenlarged group, accused the former Reckitt management of "milking thebusiness" by underinvesting in brands. He said: "It's a bit like theplant that hasn't been watered for four to five weeks. You have togive it water or it will die."

Mr Becht would not name any of the products on the block, but hesaid they would not include any well-known names in major markets,such as the UK. It is understood that the brands to be sold aremostly Reckitt & Colman products which contribute about 7.5 per centof group turnover, less than pounds 3m each.

The post-merger integration was, Mr Becht said, "completely ontrack" to deliver the pounds 38m of cost savings which the companyhad earlier promised for current year.

He said the group would probably be ready to make "a majoracquisition" in 2001 to boost its presence in countries such asJapan, Korea, the Philippines and India and to strengthen itsposition in markets such as healthcare, where existing productsinclude Lemsip and Disprin.

Mr Becht also promised to deliver a detailed internet strategylater in the year.