(Alliance News) - Health and hygiene firm Reckitt Benckiser swung to profit for 2020 as its disinfectant brands got a boost from Covid-19, and it said it expects to benefit permanently from "improved habits" by consumers in the wake of the virus pandemic.
Net revenue for 2020 increased 8.9% to GBP13.99 billion from GBP12.85 billion the year before, with the firm swinging to a pretax profit of GBP1.87 billion from a loss of GBP2.11 billion in 2019. In 2019, Reckitt took impairments totalling GBP5.12 billion, which reduced to just GBP985 million in 2020.
Like-for-like net revenue growth was 12%, with the company noting the "very strong, volume-led growth in a Covid environment". Reckitt said it saw "sustained" strong demand for disinfectant product Dettol throughout the year.
"Our category-leading germ protection/disinfection brands have all seen substantial market growth, with around 80% of our consumers expecting to retain many of their new improved habits post pandemic. We capitalised on these new behaviours with Dettol and Lysol entering 41 markets, with plans to enter a further 29 markets in 2021," said Chief Executive Laxman Narasimhan.
Narasimhan described 2020 as a "turning point" for the company, expecting further strategic progress in the year ahead.
Separately, Reckitt said it has agreed to sell its Scholl brand and will be buying the Biofreeze brand.
Reckitt said it will sell footcare brand Scholl to Yellow Wood Partners, with the deal marking a "step forward in RB's plan to bring greater focus to its portfolio". The sale is subject to consultation with Reckitt's works council in France, which the company will now initiate, and the deal is expected to complete in the third quarter of this year.
Separately, Reckitt has agreed to buy the Biofreeze brand from Performance Health, a company owned by Madison Dearborn Partners. Reckitt said that Biofreeze is the number one clinically recommended topical pain relief brand in the US, and has delivered "robust double-digit sales growth".
The Biofreeze buy is expected to complete in the second quarter of 2021. No financial details were disclosed for either deal.
Reckitt shares were up 1.6% early Wednesday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.4% at 6,601.95
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Hang Seng: down 3.0% at 29,704.02
Nikkei 225: closed down 1.6% at 29,671.70
DJIA: closed up 15.66 points, or 0.1% at 31,537.35
S&P 500: closed up 4.87 points, or 0.1%, at 3,881.37
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EUR: unchanged at USD1.2160
GBP: up at USD1.4183 (USD1.4103)
USD: up at JPY105.57 (JPY105.11)
Gold: up at USD1,807.87 per ounce (USD1,803.05)
Oil (Brent): firm at USD65.32 a barrel (USD65.07)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Wednesday's Key Economic Events still to come
1430 GMT UK BoE Governor Bailey appears before Treasury Committee
1000 EST US new residential sales
1000 EST US Fed Chair Powell presents Monetary Policy Report to House Financial Services Committee
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The UK says its economy has been damaged by EU import bans on certain seafood, just weeks after its departure from the bloc was finalized. "There is no scientific or technical justification for the European Commission to ban the import of live bivalve molluscs from Class B waters," a spokeswoman for the UK Department for Environment, Food & Rural Affairs told dpa. "This is already impacting business and damaging markets on both sides of the channel," she said. According to an EU classification, Class A waters are the cleanest, followed by Class B. Molluscs from Class A waters can be imported into the EU without first being cleaned, according to regulations. Most British waters, however, are Class B. The EU prohibits the import of certain shellfish - such as Category B - from Britain, as well as from other non-member countries.
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The German economy grew slightly more than initially expected for the final quarter of 2020. Gross domestic product rose by 0.3% quarter-on-quarter in the final three months of 2020. This latest reading beat the initial estimate, released in January, of just 0.1% growth. After slumping a historic 9.7% in the second quarter of 2020, the German economy recovered in the third quarter to post 8.5% growth. However, a resurgence in coronavirus infections and subsequent restrictions imposed saw the rebound slow sharply towards the end of the year. GDP in the fourth quarter of 2020 was down a price-adjusted 2.7% compared with a year ago. For 2020 as a whole, the economy contracted 4.9%. This, again, was improved from January's reading of a 5.0% decline in 2020.
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BROKER RATING CHANGES
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CREDIT SUISSE CUTS J SAINSBURY TO 'NEUTRAL' ('OUTPERFORM') - TARGET 271 (270) PENCE
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TRADERS: MORGAN STANLEY CUTS UNITED UTILITIES TO 'EQUAL-WEIGHT' ('OVERWEIGHT')
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DEUTSCHE BANK CUTS INTERCONTINENTAL HOTELS TO 'HOLD' ('BUY') - PRICE TARGET 5,380 (5,600) PENCE
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COMPANIES - FTSE 100
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Lloyds Banking Group posted a slump in profit and net income for 2020, though still managed to beat market expectations. For 2020, the high-street and commercial lender saw pretax profit plunge 72% to GBP1.23 billion from GBP4.39 billion but was able to outperform market expectations of profit of GBP905 million. Driving the drop in profit was the sharp increase in impairments, rising to GBP4.25 billion from GBP1.29 billion in 2019. Market consensus had predicted the credit loss charge at GBP4.71 billion. Net income slumped 16% to GBP14.40 billion from GBP17.14 billion, after a 13% drop in net interest income to GBP10.77 billion from GBP12.38 billion. Despite the double-digit percentage fall, Lloyds net income was ahead of market consensus, which had called for GBP14.24 billion. Lloyds's CET1 ratio ended 2020 at 16.2%, up from 13.8% at the end of 2019. The lender declared a final dividend of 0.57 pence, the maximum allowed under the current guidelines in the UK, and outlined its intention to resume progressive and sustainable ordinary dividend policy in 2021.
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Insurer Aviva has agreed to sell its entire 40% stake in its Tukey joint venture, AvivaSA Emeklilik ve Hayat, to Ageas Insurance International for GBP122 million.
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Vodafone confirmed its plans for an initial public offering of mobile phone tower operator Vantage Towers. The IPO will be in Frankfurt before the end of March and will consist entirely of existing shares held by Vodafone GmbH. Vodafone said it is targetting a meaningful minority free float for Vantage Towers, which has 82,000 sites across 10 countries in Europe. The IPO is being co-ordinated by Bank of America, Morgan Stanley and UBS.
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COMPANIES - FTSE 250
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Synthomer, noting press reports, confirmed it is not in talks over a possible offer for the company. Late Tuesday, Bloomberg said CVC Capital Partners has been exploring a bid for chemicals firm Synthomer. CVC made an initial approach to gauge Synthomer's interest in a deal, Bloomberg said, citing people with knowledge of the matter, though the parties are not currently in negotiations.
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Wednesday's Shareholder Meetings
Bankers Investment Trust PLC - AGM
Electra Private Equity PLC - AGM
Gooch & Housego PLC - AGM
Paragon Banking Group PLC - AGM
VR Education Holdings PLC - EGM re replacement of CREST with Euroclear
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By Tom Waite; thomaslwaite@alliancenews.com
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