Reckitt Benckiser competes during economic downturn
Posted on 30/06/2009 in Pharmacy Supplier News
Reckitt Benckiser has benefitted from fallen oil prices and slashed interest rates, it has been reported.
Matthew Smith from the Majedi Tortoise fund told Reuters this had resulted in consumers having more disposable income, which the household products company was able to take advantage of.
He explained to the news agency that the firm's profit margins are very high because it tries to encourage customers to upgrade the products they purchase.
"Reckitt is trying to get you to buy its all bells and whistles bathroom cleaner versus Tesco's home brand product that's half the price," Mr Smith noted.
People are more likely to go for own brands because of the economic downturn, he added.
Overall, the key to Reckitt Benckiser's "strong performance" has been the ability to take short positions of falling stocks, he concluded.
The company has five core categories ? health & personal care (23 per cent of net revenues), fabric care (24 per cent), surface care (18 per cent), dishwashing (12 per cent), home care (15 per cent) and food (four per cent).
