Health and hygiene giant Reckitt has declared a massive brand overhaul. The company revealed plans to sell several ‘non-core’ homecare brands, which currently generate nearly £2bn in annual sales. This move is part of a broader strategy to maximise shareholder value.
With an aim to finalise these sales by the end of 2025, Reckitt is set to streamline its brand portfolio as part of a £1bn restructuring plan. The focus will now be on high-performing products within its ‘Powerbrands’ portfolio, promising long-term value for consumers and shareholders alike.
Non-Core Brands Identified for Sale
Health and hygiene giant Reckitt has announced the sale of several ‘non-core’ homecare brands, which collectively generate annual sales close to £2bn. Brands within the Essential Home division, such as Air Wick, Calgon, and Cillit Bang, have been marked as ‘no longer core’. Reckitt aims to maximise shareholder value through this move.
Reckitt expects to finalise the sale of these non-core brands by the end of 2025. The Essential Home division brought in a total net revenue of £1.9bn for the fiscal year 2023. This decision is part of an extensive £1bn restructuring plan that intends to streamline Reckitt’s brand portfolio and concentrate on high-performing products.
Focus on Powerbrands
The restructuring strategy highlights Reckitt’s decision to focus on its ‘Powerbrands’ – those that are leaders in their respective categories. These include household names like Mucinex, Strepsils, Gaviscon, Nurofen, Lysol, Dettol, Harpic, Finish, Vanish, Durex, and Veet. By consolidating its attention on these core products, Reckitt aims to enhance long-term value for its consumers and shareholders.
The company’s CEO, Kris Licht, emphasised the importance of a simpler and more effective organisation. He stated that this move positions Reckitt to better serve their consumers and customers. Licht also announced the appointment of several long-term Reckitt leaders to the Group Executive Committee. Their objective will be to drive growth and value creation.
This focused approach will help Reckitt streamline operations by reducing management layers, and thus lowering fixed costs from 22% to 19% by the end of 2027. The company also looks at automation, digital, and generative AI opportunities to achieve substantial savings.
Mead Johnson Nutrition Business Exit
In addition to shedding non-core homecare brands, Reckitt is also planning to exit its Mead Johnson Nutrition business. This move aligns with its overarching strategy to focus on its core portfolio. The Mead Johnson Nutrition business has been instrumental in providing nourishment to infants and children worldwide.
However, Reckitt believes that divesting this segment will allow the company to sharpen its focus on its designated Powerbrands. This strategy aims to optimise resources and reinforce its market-leading positions in various consumer health and hygiene categories.
Operational Efficiency and Cost Reduction
By restructuring and divesting certain segments, Reckitt aims to improve operational efficiency significantly. The company plans to remove several layers of management to streamline decision-making processes. This restructuring is expected to reduce fixed costs from 22% to 19% by the end of 2027.
Additionally, Reckitt is exploring automation, digital, and generative AI opportunities to enhance productivity. These innovations are anticipated to result in significant cost savings, contributing to the company’s overall efficiency and profitability.
Science and Innovation Centres
Reckitt’s commitment to innovation remains strong, with significant operations continuing at its Science and Innovation Centre in Hull. This centre plays a critical role in driving product development and technological advancements, aligning with the company’s strategic objectives.
Headquarters and Global Operations
Reckitt’s headquarters are based in Slough, reinforcing its global presence and strategy alignment. However, the company preserves its ties to its origins with a major operational site in Hull, continuing its legacy of innovation and production.
Leadership and Future Growth
CEO Kris Licht has expressed optimism about the future, citing the recent appointments of experienced leaders to the Group Executive Committee. Their role will be to execute Reckitt’s growth strategies and value creation initiatives. This leadership is expected to navigate the company through its restructuring phase.
Reckitt’s decision to sell its non-core brands and focus on Powerbrands marks a significant shift for the company. This restructuring aims to maximise shareholder value and streamline operations.
By divesting from segments like Mead Johnson Nutrition, Reckitt can better allocate resources to its high-performing brands. This strategic move is expected to enhance operational efficiency and drive long-term growth.
Ultimately, Reckitt’s focus on innovation, cost reduction, and leadership positions it for a promising future. The company’s efforts to optimise its portfolio and invest in advanced technologies and management will likely lead to sustained success.