KARACHI (February 27 2003) : Profits of Reckitt Benckiser Pakistan for the year ended December 31, 2002 was nearly doubled which boosted the cash position of the company.
Following the turnaround in 2001, the business continued improving its performance, which is reflected in the growth in sales and profit over the previous year.
Focus on reducing the level of Net Working Capital has continued as a result of which the cash position has shown further improvement.
Improved operating profit has resulted in a profit before tax of Rs 272.2 million in 2002 whereas in 2001 it was Rs 144.1 million and profit after tax of Rs 166.2 million was achieved in 2002 whereas in 2001 it was Rs 79.1 million.
The Board also declared a dividend at Rs 2.50 per share.
During 2002, sales of household products showed a strong growth of 25.7 percent over last year.
Handsome volume growth was achieved in most key categories; and through several new product launches (AIR WICK air fresheners, Dettol Talc and VEET depilatories) which helped boost household product sales from Rs 1.1 billion to Rs 1.3 billion.
Gross margin showed an improvement of 10 percentage points over last year in this segment is mainly attributable to volume growth, savings from various restructuring activities, price increases and the impairment loss, which was booked in the year 2001.
Sales of pharmaceutical segment were impacted twice during the year under review due to suspension of dispatches when Sales Tax was imposed by the government in March and later on in August when this Sales Tax was withdrawn.
Despite the above while the segment showed an increase of five percent in sales over the comparative period last year, yet the operating profit reduced by Rs 7.8 million.
This reduction is attributable to the sales mix and to one-time restructuring costs which were incurred during the course of the year under review.
Sabir Sami, Chief Executive, Reckitt Benckiser Pakistan said, “2002 was a good year for the company, which highlights the growth strategy the company launched. Business has picked up momentum, which is reflected in the profits we have generated.
We are pleased with the way of new initiatives are performing and boosting net revenue growth encouragingly, profit margins are expanding strongly behind our cost optimisation programmes and cash generation continues to improve. Our performance in 2002 gives us increasing confidence in achieving our targets for the future.
Reckitt Benckiser is now completely focused on executing a clear strategy to deliver growth by concentrating on our categories and further increasing our rate of innovation to cater to wider consumers base.”
In continuation of their strategy Reckitt Benckiser, further restructured certain business activities during the year.
This was achieved through outsourcing some functions and by refining some other processes.
Whilst the cost of restructuring has been expensed, the savings therefore will provide a continuing beneficial impact on operating costs in the future.
The land and buildings of the household products unit at A-44 Site, Karachi, which was shut down last year, were disposed off.
Competition from smuggled goods, under-invoiced imports and counterfeit products continue to affect the performance of some of the key brands.
Reckitt Benckiser will continue to use all pricing, marketing and selling measures in order to combat competition from these sectors.
Investment in core brands, new product introductions and widening of the categories will continue to get increasing focus.
As part of the ongoing restructuring initiative, the company will also look for significant business simplification opportunities and will consider opportunities for reducing variable and fixed costs.
The ultimate aim is creating value far shareholders.
Reckitt Benckiser (formerly known as Reckitt & Colman Pakistan Pvt Ltd) began operations in the late fifties in Pakistan.
Today there are two RB manufacturing units in the country providing quality household and health and personal care products to a diversified consumer base.