Reckitt Benckiser CEO Laxman Narasimhan

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Reckitt Benckiser CEO Laxman Narasimhan will step down as CEO later this month and will be replaced by current independent director and former British American Tobacco CEO Nicandro Durante on an interim basis.

Reckitt said Narasimhan has decided for personal and family reasons to relocate back to the United States and has been approached for an opportunity that enables him to live there.

Durante will take the CEO role on 30 September as the board evaluates and selects the future leadership

The group’s chairman and the nomination committee have begun the process to identify the best long-term candidate to take Reckitt “on the next phase of its growth and transformation journey”.

Since his appointment in September 2019, Reckitt said 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.”

“Reckitt is a well-invested resilient business with a clear strategy and purpose, a strong and evolving culture, an excellent portfolio of leading brands and a dynamic and engaged leadership team. There is great momentum across the business and we are seeing the benefits come through in its performance.”

Reckitt noted that Durante is a highly experienced CEO who led the transformation of BAT over a nine-year period.

“He is deeply familiar with the strategy and direction of Reckitt, having been on the board for a number of years… Under his leadership, Reckitt will continue to implement its current successful strategy.”

Chris Sinclair, chairman of Reckitt, commented: “On behalf of the entire board, I want to thank Laxman for leading the organization through a significant transformation over the last three years. We wish him and his family all the very best as he fulfils his desire to return to the United States.”

“We are also very fortunate to be able to appoint Nicandro Durante as our CEO. Having worked closely with Nicandro since I joined the Board, I have no doubt that he will provide the leadership needed for Reckitt at this important stage of transformation while we find the right long-term leader for the business.”

Narasimhan said: “I am very grateful to have had the opportunity to lead Reckitt. It is a great Company with an incredible team and I am extremely proud of what we have accomplished together in these last three years. I have been offered an opportunity to return to the United States and although it is difficult to leave, it is the right decision for me and my family.”

Durante added: “I am 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.”

With immediate effect, Durante will cease to be the senior independent director, replaced by Andrew Bonfield for an interim period until Jeremy Darroch joins the board on 1 November 2022.

Reckitt shares have dropped 4.7% on the news to 6,336pts.

Morning update

French spirits group Pernod Ricard has posted a “record year with excellent performance” as on-trade and travel sales rebounded.

Sales in the year to 30 June 2022 grew by 17% organically to €10.7bn, with reported sales growth up 21% helped by foreign exchange.

Sales in all regions grew at a double digit rate, with Americas up 12%, Asai/RoW up 19% and Europe up 19%.

All spirits categories also delivered strong double digit growth, with strategic international brands up 18%, driven by excellent growth across all regions led by Jameson, Chivas Regal, Ballantine’s, Absolut and Martell

Specialty brands were up 24% led by American whiskies, gins and agave brands, while strategic wines fell 4% partly due to lower New Zealand harvests.

Overall growth was driven by strong recovery of the on-trade, resilience in the off-trade and rapid rebound in travel retail, albeit passenger traffic still subdued in China.

Profit from recurring operations was up 19% to €3bn, delivering organic operating margin expansion of 52bps.

Gross margin expanded by 12bps as price, mix and fixed cost absorption offset wider cost increases.

The company said it is starting its new fiscal year with very healthy trade inventory levels across regions, in a context remaining volatile.

It expects dynamic, broad based net sales growth, on a normalizing comparison basis, with a good start to the first quarter.

Meanwhile, it will have an intense focus on revenue growth management and operational efficiencies in a high inflationary environment.

Chairman and CEO Alexandre Ricard commented: “Three words summarize Pernod Ricard’s excellent performance in FY22: record, balanced and sustainable.

“FY22 was a record year in many respects. Our sales broke the symbolic milestone of €10bn with our fastest growth rate in over 30 years, delivering a record €3bn profit from recurring operations at a record operating margin of 28.3%.

“Most importantly, our performance was sustainable thanks to the real progress we’ve made on delivering our strategic roadmap “Good Times from a Good Place”.

“There has definitely been a newfound appreciation for conviviality since the covid outbreak and I would like to take this opportunity to praise our teams whose commitment has never wavered, and who continue to play a key role in facilitating convivial experiences with our brands around the world.

“While we are faced with a challenging and volatile environment, I am confident that our unique competitive advantages and the rapid deployment of our digital transformation will enable us to deliver our FY23 to FY25 medium-term financial framework.”

Elsewhere this morning, in an unexpected turnaround, footfall strengthened across UK retail destinations in August, according to Springboard.

Footfall improved to -13.2% compared to the same month in pre-pandemic 2019 from -14.2% in July, when it had weakened from -12.3% in June.

Footfall strengthened in high streets to -15.1% and to -17.5% in shopping centres, but worsened in retail parks to -4.5%.

Diane Wehrle, marketing & insights director at Springboard, said: “It seems that the headlines around the increasing cost of living are not yet deterring people from spending. Indeed, the continuous heat in August clearly encouraged people to take staycations which fuelled activity in retail destinations.

“Also many consumers took a much longed for and deferred summer holiday during August - many of which will have been paid for last year or even the year before - driving pre-holiday spending, and creating what might be seen as the “last hurrah” before the rise in the energy price cap kicks in during October.”

She added that the rise in temperatures to record levels during the middle of the month only had a localised and short-lived impact on footfall, meaning that footfall weakened from the week before in the second and third weeks driven by some shoppers avoiding high streets.

“Looking forward to September, we are expecting the traditional dip in footfall from August as schools go back, which has occurred every year since Springboard started publishing its footfall data in 2009.

“The magnitude of the dip from August to September in 2019 was -3.3%, and as the euphoria of a hot and sunny summer ends and the anticipation of austerity awaits, we anticipate that the drop in footfall from August to September this year will be at least equal or even greater than this.”

On the markets this morning, the FTSE 100 has fallen another 1% to 7,211.9pts.

Risers include Bakkavor, up 5.1% to 84p, Science in Sport, up 1.3% to 29.9p and Kerry Group, up 1.3% to €101.00.

Fallers, along with Reckitt, include Parsley Box, down 7.1% to 9.5p, Fevertree, down 3.8% to 880.5p and Naked Wines, down 3.5% to 129p.

Yesterday in the City

The FTSE 100 fell back 1.1% yesterday to continue its losses for the week.

Fallers included Naked Wines, down 7.2% to 133.7p, Bakkavor, down 4.9% to 79.9p, Just Eat, down 3.1% to 1,442.8p, Greencore, down 2.7% to 85.1p, Kerry Group, down 2.6% to €99.72, Devro, down 2.3% to 186p and THG, down 2.2% to 55p.

The day’s risers included WH Smith, up 2.1% to 1,429.5p, SSP Group, up 1.1% to 211.7p, Imperial Brands, up 1% to 1,896.5p and Nichols, up 0.9% to 1,110p.