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Reckitt Benckiser achieves its largest annual sales increase in history

Disinfectant demand lifts consumer goods giant Reckitt Benckiser to its largest ever annual sales increase

  • Durex sales also rose despite periods of strict social distancing regulations
  • Reckitt Benckiser expects net revenue growth this year of 0-2 per cent
  • The firm also announced it had bought pain relief label Biofreeze

A pandemic-driven demand for medicine and cleaning products helped consumer goods giant Reckitt Benckiser achieve its highest-ever annual rise in sales last year.

The Cillit Bang maker saw like-for-like revenues grow by 11.8 per cent to £14billion in 2020, its biggest increase since it was formed in 1999, thanks to double-digit percentage jumps in purchases of goods in the health and hygiene categories.

Greater health consciousness among customers strongly boosted sales of the disinfectants Dettol and Lysol, which entered 41 new markets last year and are now used by more than 300 million households worldwide.

Disinfectants Dettol and Lysol grew robustly, entering 41 new markets as customers became more conscious about protecting their health

Other high-performing products included the dishwasher detergent Finish, which saw significant demand from the United States, heartburn medicine Gaviscon, and the dietary supplement brand Airborne, which more than doubled.

Durex sales also rose despite a drop-off in demand during periods of stringent social distancing restrictions, particularly in the first six months of the year when people started working from home en masse and many hospitality venues were shut. 

Social distancing rules did lead to considerably fewer flu, cough, and cold cases across healthcare systems, but this caused RB’s over-the-counter purchases to fall by 3 per cent annually and its fourth-quarter sales to plunge by more than a fifth.

Meanwhile, cross-border restrictions between Mainland China and Hong Kong hit its nutrition business, which declined by 2 per cent on a reported basis, though it also blamed stiffer price competition for trouble in its Mother and Baby Store channel.

Further difficulty was experienced in sales of its infant and child nutrition goods due to the pandemic reducing people’s desire to have babies, despite its infant formula brand Enfamil doing very well in North America.

Looking ahead, the FTSE 100 firm is exercising a cautious outlook of between 0 and 2 per cent growth in net revenues, partly due to this lower birth rate, but it is anticipating growth in hygiene, germ protection, and sexual hygiene products.

Durex sales rose in 2020 despite demand falling in periods of stringent social distancing restrictions when people started working from home en masse

Durex sales rose in 2020 despite demand falling in periods of stringent social distancing restrictions when people started working from home en masse

Chief executive Laxman Narasimhan remarked that the company’ successfully navigated unchartered waters’ last year and that it was ‘clearly resilient – with or without COVID-19 – and we are building a stronger business for the future.’

He added: ‘2020 was a turning point for RB. Our performance is strong, we are building capability, actively managing our portfolio and transforming our culture. We expect 2021 to be a year of further strategic progress, and we remain confident that we will meet our medium-term targets.’

In addition to the annual results released today, RB also announced it had bought pain relief label Biofreeze from the medical firm Performance Health, and is proposing to sell orthopaedic footcare brand Scholl to private equity group Yellow Wood Partners.

Social distancing regulations led to considerably fewer flu, cough, and cold cases across healthcare systems, but this caused RB's over-the-counter sales to fall by 3 per cent last year

Social distancing regulations led to considerably fewer flu, cough, and cold cases across healthcare systems, but this caused RB’s over-the-counter sales to fall by 3 per cent last year

Despite the sales boom, the company’s share price was down 1 per cent this morning and is close to where it was at the same time last year. 

In 2020, it rose consistently from March to July to touch the £80 mark at its peak before starting to drop in September to less than £60 today.

Adam Vettese, an analyst at eToro, said ‘shareholders have a right to question whether or not Reckitt’s strong recent sales growth has been artificially boosted by Covid-19. Remember, this is a firm that reported lacklustre revenue growth and a £2.1billion pre-tax loss a year ago.’

‘Laxman Narasimhan…believes the firm has turned a corner. I suppose we will only know for sure once coronavirus is a distant memory, and we can see how it has affected consumers’ long-term buying behaviour,’ he continued.

Shares were down 0.34 per cent to £59.90 at around lunchtime today. 



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