Reckitt Benckiser is to spin off its pharmaceutical division to concentrate on its core consumer goods business.
RB announced the demerger, which is schedule to take place over the next 12 months, in its half year results this morning.
Rakesh Kapoor, Chief Executive Officer, said: “We believe that RB Pharmaceuticals has the potential to deliver significant long term value creation as a stand-alone business.
“This will also allow RB to focus on its core strategy to be a global leader in consumer health and hygiene.”
RB put the division under strategic review in October and announced spinning off the business was the preferred exit in April.
The announcement came as RB reported that revenues for the first half have grown by 3% on a like-for-like basis.
Revenues rose by 3% on a constant currency basis to £4.7bn, but the effect of currency movements meant that reported revenues fell by 7% in the six months to 30 June.
The maker of Durex, Dettol and Strepsils reported a 16% rise in reported operating profit to £1.06bn, though adjusted operating profit fell by 7% due to significant exceptional costs in the first half of 2013.
Kapoor added: “Our focus and investment behind consumer health continues to deliver profitable growth, and our hygiene category is improved after a slow start. Home performance was weak in challenging market conditions. It is early days but we have made good progress on integrating our recent K-Y acquisition.”
He pledged to continue focusing on cost efficiencies after achieving savings from reviewing its media planning and buying in the first half.
However, he noted that market conditions “will remain challenging” in the second half, particularly in the USA and some emerging markets.
RB said it remained on track to hit full year revenues growth targets of 4-5% (not including RB Pharmaceuticals) and will continue to expand its margin in the second half.
The firm’s shares rose by 3.5% to 5,249p in morning trading, marginally lowest than its 52-week high of 5,280p achieved last month.
No comments yet