Return
to Story Page
To print: Select File and then Print from your
browser's menu
FE Investor Bureau
NEW DELHI, August 4: Reckitt & Colman Plc's Indian subsidiary, Reckitt & Colman (India) has failed to live up to market expectations. The scrip of this FMCG major multinational had spurted from Rs 265 to a high of Rs 316 on expectations of an encouraging performance and a likely bonus. The bullish sentiment at the counter was further fuelled by an encouraging performance from other FMCG multinationals like Smithkline Beecham Consumer, Procter & Gamble and Hindustan Lever.
However, the first-half results for Reckitt & Colman's proved to be an aberration with a company announcing a negative growth in the bottomline. As a result, the scrip was hammered on Monday from Rs 314.5 to Rs 304.8 and plunged further to Rs 282 on Tuesday before recovering and closing the day marginally higher from the previous close at Rs 305 on the National Stock Exchange (NSE). Trading volumes shot up substantially with more than 91,000 shares traded on Tuesday against 12,000 shares on Monday.
On the BSE, the scrip gained Rs 7 to NEW DELHI, August 4: Reckitt & Colman Plc's Indian subsidiary, Reckitt & Colman (India) has failed to live up to market expectations. The scrip of this FMCG major multinational had spurted from Rs 265 to a high of Rs 316 on expectations of an encouraging performance and a likely bonus. The bullish sentiment at the counter was further fuelled by an encouraging performance from other FMCG multinationals like Smithkline Beecham Consumer, Procter & Gamble and Hindustan Lever.
However, the first-half results for Reckitt & Colman's proved to be an aberration with a company announcing a negative growth in the bottomline. As a result, the scrip was hammered on Monday from Rs 314.5 to Rs 304.8 and plunged further to Rs 282 on Tuesday before recovering and closing the day marginally higher from the previous close at Rs 305 on the National Stock Exchange (NSE). Trading volumes shot up substantially with more than 91,000 shares traded on Tuesday against 12,000 shares on Monday.
On the BSE, the scrip gained Rs 7 toend at Rs 310 on a huge volume of 2.49 lakh shares. For the first half ended July 4 this year, Reckitt & Colman's operating profit (excluding other income) slumped 39 per cent from Rs 25.06 crore to 15.45 crore. Net profit dropped by 14 per cent to Rs 15.31 crore despite a 16 per cent improvement in turnover. High media spendings took a toll on the company's bottomline. The profitability margins have been under severe pressure with operating profit margin (excluding other income) almost halved to 7.44 per cent, down from 14.09 per cent in the corresponding period of last year. Net profit margin too slumped from 10.05 per cent to 7.37 per cent.
The company's board has recommended an interim dividend of 18 per cent (Rs 1.8 per share). The annualised earning per share (EPS) works out to Rs 9.3, marginally higher than the full year EPS of Rs 9.13. The company's stock is trading at a price earning multiple of 32.8.
The 53 per cent growth in net profit to Rs 30.07 crore for the year ended January 3, 1998 wasaided by other income, which shot up from 6.05 crore to Rs 14.26 crore. Another Rs 8 crore has come through the sale of the Epilex brand, and Rs 2 crore was added to the kitty as compensation in lieu of alternative accommodation. Operating profit excluding other income was only marginally up from Rs 31 crore to Rs 37.07 crore.
Reckitt & Colman is in the midst of restructuring its operations which would yield result in the coming year. It recently transferred the marketing of some of its key brands like Dettol to a joint venture with Nicholas Piramal, which is expected to yield an annual turnover of around 120 crore. It also bought the Burnol brand from Knoll Pharma. The company is now repositioning itself as a health & hygiene, home care company doing business in categories like pest control, fabric care, antiseptic, analgesic, lab care, surface care and polish.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
------------------------------------------------------------
This story was printed from Net Express located at http://www.expressindia.com. Net Express provides a portal to India, with news from The Indian Express and The Financial Express along with sites on travel and tourism, the entertainment industry, the power sector, the environment and much more.
------------------------------------------------------------