Reckitt plays it cool on takeover front

RECKITT Benckiser chief executive Bart Becht made it clear today that the household cleaning products giant would not be bounced into a major acquisition in the wake of the massive $57bn (£30bn) takeover of Gillette by American consumer goods giant Procter & Gamble.

The US deal will create the world's largest households goods producer, with brands ranging from Duracell batteries to Pampers nappies and Tide soap powder, and there has been widespread speculation that the deal will spark a new wave of consolidation in the industry.

Reckitt, with its stable of household name brands ranging from Dettol, Harpic and Mr Sheen to Vanish stain removers and Airwick air fresheners, has been looking for suitable acquisitions, but is now also being tipped as a potential target for Colgate-Palmolive.

Speaking as the group unveilled record figures for 2004, Becht said: 'We are not going to do silly stuff. We are not going to do an acquisition just to get a tick in the box. We shouldn't forget that 70% or 80% of transactions fail.'

The group, which was itself formed through the successful merger of Britain's Reckitt group with the Dutch Benckiser five years ago, pushed 2004 pre-tax profits ahead 17% from £660m to £770m last year, after a record fourth quarter in which sales broke through the £1bn barrier for the first time.

Net income for the quarter jumped by 20% to £201m - equivalent, Becht pointed out, to underlying profits made by the group for the whole 12 months of 1999, the year of the merger.

Sales for 2004 were ahead by 10% excluding currency fluctuations, to £3.87bn and net profits were 26% higher at £586m. This was ahead of analysts' expectations of around £570m to £573m. The dividend total is raised by 21% to 34p a share.

The figures beat the company's own forecasts, which were raised twice during the year, and Becht said Reckitt had outperformed the industry for the fifth year in a row.

Behind the forecast-busting performance was another strong contribution from new products, which account for around 40% of sales.

For 2005, Becht is predicting a further year of 'strong, organic growth'. He has set a target of 5%-6% growth in net revenues and 'low double-digit' growth in net income and earnings.