Durex condom maker Reckitt Benckiser has pledged to sell off its home care and nutrition brands as part of a simplification drive, instead focusing on health and hygiene.
Focusing on ‘powerbrands’, the company plans to sell off home care brands it no longer considers ‘core’, such as Cillit Bang, water softener Calgon, and air freshener Air Wick.
Its American infant formula business Mead Johnson is also set for the chopping block, with Reckitt saying it would “consider all strategic options”.
“Reckitt’s allocation framework remains constant, and these actions allow the company to focus capital against brands that offer the best long-term opportunity for growth,” the company said.
Instead, Reckitt will focus on its premium ‘powerbrands’, like Strepsils, Gaviscon, Nurofen, Lysol, Dettol and Vanish, as it said these brands have delivered strong growth and high margins, generating a seven per cent annual growth in revenue over the last five years.
It will also keep around “likely future powerbrands” including Move Free and Biofreeze, and important ‘local hero’ brands such as Lemsip, Airborne, KY, Veja, Jik, Tempra and Jontex, it added.
The simplification of brands will be joined by a simplification of organisation, reducing management layers across the globe and moving to a “unified category structure” across North America, Europe and Emerging Markets, scrapping its Global Business Unit structure.
Reckitt estimated that the changes it has proposed will create a three per cent saving in fixed costs by 2027, though the restructuring will cost around £1bn.
The new organisational structure is set to come into place at the start of 2025.
Kris Licht, chief executive of Reckitt, said: “Today we announce an important step forward to firmly establish Reckitt as a world-class consumer health and hygiene company, with one of the strongest growth and margin profiles in the industry.
“Our core portfolio of market-leading Powerbrands and simpler, more effective organisation position us to better serve our consumers and customers. This will deliver attractive long-term value creation for Reckitt’s shareholders through our earnings model and cash returns.
“I am pleased to announce the appointment of a number of talented, long-term Reckitt leaders to the Group Executive Committee to deliver this growth and value creation opportunity.”
Alongside the restructuring announcement, the company also announced its results for the first half of 2024.
For the first six months of the year, the company reported like-for-like net revenue growth of 0.8 per cent on an adjusted basis.
The company announced an operating profit of £1.7bn, down 4.9 per cent and a decline in diluted earnings per share of -6.8 per cent.