Hair-shirt wearers in Southern Europe slow Reckitt – MoneyWeek

Thelistofwell-knownbrandsinthatstatementunderlinesoneoftheofmainattractionsofReckittasaninvestment,buttheinvestmentcommunitysantennaeareeverattunedtopossiblebumpsintheroad,anditwasthesecondhalfofthefirstparagraphinKapoorsstatementwhichsetalarmbellsjangling:WhiletheconsumerandcompetitiveenvironmentinEuropeandNorthAmericaremainschallenging,wearedoingtherightthingsforthelongtermbyincreasingourBrandEquityInvestment。

SouthernEuropeintheshade

Like-forlike(LFL)salesinEuropeandNorthAmerica(ENA)were1%lowerinthefirsthalfof2012thaninthefirsthalfof2011,onceexchangerate(FX)fluctuationsarefactoredout;throwFXchangesandtheeffectsofacquisitionsanddisposalsintothemixandENAsLFLsalesweredown4%year-on-year。

ThatcomparesveryunfavourablywithLatinAmericaandAsia-Pacific(LAPAC),whichachievedunderlyingLFLsalesgrowthof11%,andRUMEA(Russia,MiddleEastandAfrica),whichsawunderlyingLFLsalesgrowthof9%。

ENAoperatingprofitslides

ENAsawthegroupsmarketshareonavolumesbasisimprovebehindsignificantBEI(brandequityinvestmentReckittlovesitsinitialisms,whichfranklyareaPITA),butdepressedmarketconditions,especiallyinSouthernEurope,ledtoaslightdeclineinthetopline,nottomentiona5%year-on-yeardeclineinoperatingprofitto£460m,andaonepercentagepointdeclineintheadjustedoperatingmargin。

ThesubduednatureofmarketsinSouthernEuropecannothavecomeasasurprisetothemarketbutmanyofReckittsbrandsaresupposedtobevirtuallyrecessionresistant。

TheHealthbrands,however,aresubjecttothevagariesofviralinfectionsandthelikeand,unfortunatelyforReckitt,peoplehavejustnotbeencatchingfluandcoldsasmuchthisyearastheydidlastyear。

IntheHomecategory,themarketshareofVanishinENAshowedpositivemomentum,althoughthemarketwasstilldownonlastyear。

WithinportfoliobrandsLaundryDetergentsandFabricSoftenersinSouthernEuroperemainweak;hairshirtsareinfashioninSouthernEuroperightnow,sothereisnotmuchcallforfabricsofteners

NakedTextNakedText