Rakesh Kapoor, chief executive at British consumer goods firm Reckitt Benckiser, on Monday said India is showing "improvement in consumer sentiment" even as the maker of Dettol antiseptic liquid and Durex condoms reported better-than-expected performance for the quarter ended June.
"The pickup in emerging markets was mixed with an improvement in consumer sentiment in some countries, such as India, but challenging conditions in others, including Brazil and Indonesia," Kapoor said.
The India-born CEO of Reckitt Benckiser revised the firm's annual net revenue and profit margin targets after reporting 10% increase in its net profits for the first half ended June when it also achieved 5% like-for-like growth due to better consumer sentiment in most markets.
Analysts said RB India has been leveraging Prime Minister Narendra Modi's 'Swachh Bharat' campaign for its hygiene and anti-germ brands Dettol and Harpic.
Last year, the firm had committed investments of Rs 100 crore on the campaign and it has been developing low-priced products for bottom of the pyramid consumers to drive volumes in both urban and rural markets.
"There is some pickup in the overall cleanliness quotient in the country, which also helps (RB India)," said Abneesh Roy, associate director at financial services firm Edelweiss Securities, linking the firm's better performance in the country to the Swachh Bharat campaign.
He said signs of improvements in urban markets, too, helped the firm. "Companies, which are more urban-focused are showing some signs of recovery. Rural remains a drag, but RB's portfolio is more urban-centric," Roy said. RB India declined to comment.
The firm's anti-germ soaps and floor cleaner brands, including Dettol, Lizol, Harpic and Colin, dominate most categories they operate in, though traditionally these have catered mainly to urban markets.
The Slough, UK-headquartered firm has revised its global sales targets for the year to 4-5% growth, up from its earlier forecast of 4% in February. "Europe and North America are more stable than a few years ago," Kapoor said.
In the quarter ended April, Reckitt Benckiser's sales in LAPAC (Latin America and Asia Pacific) were slower over 2014, bogged down by slowing market conditions and emerging market deceleration.
The firm on Monday said in six months ended June, sales rose 5% on a like-forlike basis ahead of Street expectations, excluding impact of currency, acquisitions and discontinued operations. It said improvement was broadbased by geography, consumer health and hygiene led.
In February this year, Reckitt Benckiser had restructured operations to reduce its business clusters to two from three and make reporting structures linear, accelerate decision making and prune costs.
India, under the developing markets group, is now clubbed in the cluster of Latin America and Asia clubbed with the Middle East and Africa. Prior to that, India had been regional headquarters for Southeast Asia, covering 12 nations, including Singapore, Thailand and Malaysia.
The Latin America and Asia Pacific region had contributed 27% of core net revenue to Reckitt Benckiser in financial year 2014. The firm had demerged its pharmaceuticals business last year end to step up focus on its healthcare business. Its developing markets business rose 7% in the first half, the firm said.