Reckitt Benckiser to hive off drug arm as it warns of tough H2

28th Jul 2014 07:40

Household goods group Reckitt Benckiser unveiled plans to hive off its drug arm into a separate UK-listed company as it reported higher first half revenue and profit at constant exchange rates, but warned of a potentially tough second half.Reckitt, which makes products such as Nurofen, Strepsils and Cillit Bang, said it believed RB Pharmaceuticals could significantly increase long-term shareholder value as a stand-alone business.We have therefore decided to pursue a de-merger of RB Pharmaceuticals with a separate UK listing," the group said."We expect this to take place in the next 12 months. This will also allow RB to focus on its core strategy to be a global leader in consumer health and hygiene."Reckitt said first half net revenue at constant exchange rates rose 3% to £2.3bn on a similar rise in underlying operating profit to £1.08bn.But underlying diluted earnings per share fell 4% to 113.4p and the group left its interim dividend unchanged at 60p.Chief Executive Rakesh Kapoor said its consumer health business continued to expand profitably and its hygiene operation had improved after a slow start.But it said its home products business had stayed weak in challenging markets.The group said it had saved money from improving efficiency of media planning and buying in the first half and would make further gains from improving structural efficiency in the second half and next year.Reckitt said it was still on track to hit an annual target of increasing total revenue by up to 5% and expected to boost margins again in the second half.But it added: "We believe market conditions will remain challenging in the second half of the year, particularly in the US and certain emerging markets."PW