This blue-chip success story is still booming.
During the late Noughties, Bart Becht became one of the UK's most talked-about big bosses.
Brilliant Becht
When British business Reckitt & Colman took over Dutch firm Benckiser in December 1999, Becht took the helm as chief executive of the merged group Reckitt Benckiser (LSE: RB).
Over the next decade, Becht turned Reckitt Benckiser into one of Europe's most admired companies. Through better marketing of its core brands, new product launches and well-timed acquisitions, Reckitt became one of the best-performing companies in the blue-chip FTSE 100 index of elite British businesses.
Reckitt's last major purchase was to buy SSL International -- owner of the Durex (condoms) and Scholl (footcare) brands -- for £2.5 billion, a deal that completed in November 2010.
As well as bringing him corporate admiration, Becht's success at Reckitt Benckiser brought him massive personal rewards. Thanks to a huge surge in Reckitt's share price -- it has quintupled, up 400% since 1999 -- Becht became one of the UK's highest-paid bosses.
Indeed, Becht caused a public outcry when he received a package worth £92 million in 2009, despite donating £110 million to a charitable trust that very same year.
Nevertheless, Reckitt shareholders adored Becht and didn't begrudge their super-CEO his fortune, as he had helped to make them about £20 billion better off. Indeed, when Becht announced his shock resignation in April 2011, Reckitt's market value dived by £1.8 billion, down 7.5% in one day.
Benckiser after Bart
Becht stepped down at the end of August 2011, to be replaced by Rakesh Kapoor, a Reckitt veteran with 25 years of service. So, is Reckitt still booming after Becht's departure?
Based on the figures released at noon on Tuesday, Reckitt is doing just fine. Indeed, the maker of, Cillit Bang, Dettol, Nurofen and Strepsils is doing rather well.
In the first quarter of 2012, Reckitt reported that it was "on target", thanks to a 4% increase in net revenues to nearly £2.4 billion. This was driven by strong revenue rises in its Latin America/Asia-Pacific (up 13%) and RUMEA (Russia/CIS, Africa, North Africa, Middle East and Turkey, up 9%) operations, plus 6% uplifts at its food and pharmaceutical divisions.
However, in a now-familiar tale, Reckitt's performance in its core region, Europe and North America, was weaker, with revenue dipping by 1% to below £1.2 billion. So, emerging-market growth is helping to offset a slowdown in the 'old world'.
Reckitt -- the world's biggest maker of cleaning products -- did well in certain areas, recording strong revenue growth in its core Hygiene division, up 7% to nearly £1 billion. Growth was a more modest 2% in its Home and Portfolio Brands arms, and there was no revenue growth from Health.
New chief Kapoor welcomed these results, which showed that Reckitt was growing faster than its markets once again. He remarked: "Reckitt Benckiser's first-quarter results were on track and in line with our ingoing expectations. These results give us the confidence to reiterate our [financial year] 2012 target of like-for-like net revenue growth of 200 [basis points] above our market growth rate of 1-2%. We also expect to maintain full-year operating margins."
In other words, Reckitt's sales are beating expectations, while its margins are holding up. That's good news for shareholders of the cleaning colossus.
Powerful brands at a premium price
As I write, Reckitt shares have slipped 15p to 3,605p, which values the group at over £26 billion. At this price, it trades on a forward price-to-earnings ratio of 14.8 and offers a prospective dividend yield of 3.6%, covered a healthy 1.9 times.
As a value investor, these fundamentals would not normally be attractive enough to lure me into buying shares in Reckitt Benckiser. However, I also recognise that Reckitt is no ordinary company. Hence, although Bart Becht is no longer at the helm, I'd still be happy owning a slice of this Anglo-Dutch success story. Thanks to its brand power, Reckitt remains a market-beating juggernaut!
Neil Woodford also owns shares in Reckitt Benckiser. The identities of his favourite blue chips are revealed in this free Motley Fool report -- "8 Shares Held By Britain's Super Investor".
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> Cliff does not own any of the shares mentioned in this article.
