- CEO exits after three year hot seat stint
- Durante appointed on a rolling contract
- Price increases have offset inflation, so far
Shares in Reckitt Benckiser (RKT) cheapened 4.1% to £63.74 after the consumer goods goliath announced the shock resignation of CEO Laxman Narasimhan for personal reasons after only three years in the hot seat.
Narasimhan’s surprise departure comes at a time when investor confidence in the turnaround of the Dettol-to-Durex maker is improving.
His short term successor is Reckitt insider Nicandro Durante, the former boss of cigarettes titan British American Tobacco (BATS), who sits on the board and is deeply familiar with the FTSE 100 company’s strategy and direction.
UNEXPECTED EXIT
Narasimhan, the former PepsiCo (PEP:NASDAQ) man recruited in 2019 following the retirement of Reckitt veteran Rakesh Kapoor, will step down as CEO on 30 September having decided to move back to the US for personal and family reasons.
He has been ‘approached for an opportunity that enables him to live there’, said Reckitt Benckiser, without providing further details.
Senior independent director Durante will step into the role of CEO while the board finds the right long term candidate to take the Slough-based company ‘on the next phase of its growth and transformation journey’.
Since his appointment, Narasimhan has led ‘a successful rejuvenation of the company’s strategy, execution and foundational capabilities. The company’s purpose - to protect heal and nurture in the relentless pursuit of a cleaner and healthier world - is, and remains, foundational to the future direction of the company; as do its environmental, societal and governance commitments.’
Durante said he is ‘honoured to have an opportunity to lead Reckitt, a company that I have been a part of for many years. The transformation agenda Laxman and the group executive has led together is exciting and delivering results. I look forward to continuing the momentum.’
PRICING POWER
On 27 July, Reckitt announced better than expected first half results and upgraded its full year sales and margin targets having demonstrated the value of its brands by raising prices across the board to offset surging input costs.
For the half to June, Reckitt posted an increase of 8.6% in like-for-like sales thanks to a 7.4% improvement in prices and product mix and a 1.2% rise in volumes.
In the second quarter alone, the company posted like-for-like sales growth of 11.9% driven by a 9.7% improvement in prices and product mix and a 2.2% rise in volumes.
Thanks to its ‘excellent’ first half performance, Reckitt upped its forecast for full year like-for-like sales growth from the top end of its previous forecast of 1% to 4%, to between 5% and 8% potentially, and said adjusted operating margins would be higher than last year rather than unchanged as per its April guidance.
