Reckitt Benckiser Group PLC Earnings Call Nuggets: Flu Season Analysis and Competitive Environment
Reckitt Benckiser Group PLC (RB.) recently reported its second quarter earnings and discussed the following topics in its earnings conference call.
Flu Season Analysis
Iain Simpson – Barclays: Just couple of quick questions for me if I can. You talked about the flu season going on a bit longer this year in the U.S. Are you able to give us any sort of indication as to how we should think about the benefit you got from that in the second quarter? Was it roughly comparable to the benefits that you’ve got in the first quarter? That would be extremely helpful. Then secondly, you carried out some sort of smaller acquisitions other than Schiff in recent months. Any sort of update on how those are going would be very welcome?
Rakesh Kapoor – CEO: Thank you, Iain. Let me start with the first question. We clearly did have a longer than normal flu season, particularly in the U.S., but let me put a context, all our health care brands are performing well and a lot of them are also non-seasonal in nature, brands like Durex, like Scholl footcare, like Gaviscon and so on and so forth. So I would say that we did have an impact of the flu season in the second quarter as normal – more than a normal than a longer flu season, but our health care brands continued to outperform in these strong conditions. It’s very difficult to quantify the exact value associated within extra flu season. All I would say is that you should certainly not expect the kind of growth rates we have achieved in the first half on health care to continue in the second half for two major reasons. Of course, there has been some tailwind from a good season, but also our comparators in the first half versus the last first year first half and also the comparators in the second half are quite different. On your second question, how well we’re doing on our other acquisitions. First of all, the two other acquisitions that collaboration agreement; one is in China. I already said that we are very happy about our acquisition in China. It has got off to a good start. We have achieved all the milestones that we expected to achieve at this point in time in terms of integration, in terms of synergy, in terms of working capital, but more importantly, in terms of brand quality and in market performance. So I believe that it’s going to be a very nice acquisition for us in the future, not just I would say for establishing a health care business from the sore throat brand that we acquired, but hopefully over a period of time, also to form an important platform for consumer health in China. On the last one on BMS, we’ve just completed the regulatory (implementation) in May. So it’s really early days, but again our first instinct on VMS in Latin America is that we’ve acquired a very high quality portfolio or acquired rather collaborated on a very high quality portfolio brands in both Mexico and in Brazil, and we remain very excited about the opportunity there.
Erik Sjogren – Morgan Stanley: Two questions from me please. Firstly, can you just talk a bit of the competitive environment and how you are seeing the promotional levels, particularly in the household business in Europe and North America? Then secondly, on RB Pharm and the margin development here, the investments you are making in the business is under the pipeline, et cetera, will they remain pretty constant too in the second half of the year or is this more phased in any way?
Rakesh Kapoor – CEO: Erik, I am going to take the first question and then I am going to defer to the CFO to answer the second one. On the first one, the competitive environment to my mind remains as it has been for some time already; very tough, very challenging, no better, no worse.
Adrian Hennah – CFO: An equally shortened sharp – I think a shortened sharp (on the) second question, pipeline investment fluctuates. It has to fluctuate because it’s determined by the pipeline. That said, we expect it to be somewhat higher than as in past but not hugely variable.