RB trumpets increased investment in brands for revenue growth

Reckitt Benckiser has cited its choice to increase the proportion of revenue it reinvests back into brand building for fuelling a “strong” first half sales performance.

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The FMCG giant raised investment behind its brands 0.8 percentage points year on year to 14.4 per cent of its net revenue in the six months to 30 June.

The increase is defined by its own Brand Equity Investment (BEI), which is a sum of media advertising, digital activity and consumer and b2b education programmes as a percentage of revenue.

The increase in equity investment was focused on health and hygiene “power brands” – such as Durex, Dettol and Nurofen – in 16 “power markets”, particularly emerging nations such as Brazil, Russia, India and China. RB has spent an extra £70m in the year to date on BEI, following a commitment to spend an extra £100m in 2012 on building brands

Net revenue grew 6 per cent to £4.99bn. Net income fell 15 per cent to £660m due to a charge the company took to make provisions for the outcomes of “historic” regulatory issues – principally involving competition law – restructuring costs and acquisition and associated integration costs. On an adjusted basis, net income rose 6 per cent to £864m.

Rakesh Kapoor, RB chief executive, says: “We continue to face challenging market conditions. Nonetheless these strong [first half] results, our sustained investment behind the equity of our brands, together with excellent progress on the integration of our recent acquisitions, give us confidence that we can achieve full year total revenue growth at the upper end of the 5 to 6 per cent range while maintaining adjusted operating margins.”

In the second half of the year, RB is launching a series of new product initiatives across health, hygiene and home that it hopes will continue the solid sales performance. Launches include Durex Embrace – a product that combines two “pleasure gels” in one product – and Veet Facial Precision Wax and Care, which combines a wax with an after-care cream.

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