From Packaging Digest
http://www6.lexisnexis.com
July 26, 2005, Tuesday
Oil price pushes Reckitt to cut plastic packaging
By Philip Aldrick
THE high oil price has forced consumer products group Reckitt Benckiser to be more environmentally friendly, succeeding where green lobbyists have failed.
The group, which makes stain remover Vanish and Airwick air fresheners, has cut back on packaging to offset the rising cost of oil-derived plastics. Bart Becht, chief executive, revealed the move at yesterday's half-year results. "We have re-engineered several products to take out much of the plastic," he said. "It's more environmentally friendly and it helps our profit margin." Display packaging is also being reduced. In some cases, cardboard has replaced plastic "blister packs".
Environmentalists have lobbied hard but to little effect for manufacturers to use less packaging, which now accounts for 40pc of Britain's household consumer waste.
Reckitt will stick with the new packaging designs even if the oil price falls dramatically, Mr Becht claimed. Reckitt's half-year operating margin rose 0.3 percentage points to 17.1pc - better than analysts expected. The group plans to raise this to 20pc.
Pre-tax profit rose 16pc to pounds 360m on revenues 8pc higher at pounds 2.01billion. Volumes rose 6pc - "well ahead of industry average", Mr Becht said. He raised Reckitt's target for profit growth from "low double digit" to "at least mid-teens", and lifted next year's planned share buyback spend from pounds 300m to pounds 350m. The interim dividend was raised by 13pc to 18p, payable on September 29.
Including share buybacks, the group will return pounds 1.1billion to shareholders. Reckitt has pounds 760m of cash, giving it a pounds 2billion war chest for acquisitions "if opportunities arise". The shares rose 42p to pounds 17.07.
Cheers,
PM