Reckitt Benckiser CEO's Cost-Saving Plan Includes Flying Economy and Job Cuts
February 12, 2015
By Alex Keown, BioSpace.com Breaking News Staff
LONDON -- In an effort to cut more than $200 million in annual costs, Rakesh Kapoor, Reckitt Benckiser 's chief executive officer, said that he is prepared to fly economy on flights of less than six hours.
The cost containment announcement came on the heels of lower than expected earnings for 2014 for the $61 billion consumer goods giant. Net revenue for the year, which ended Dec. 31, fell 5 percent to about $10 billion but the company is cutting costs to support profits. However, the company reported a $2.4 billion rise in pre-tax profits for the year.
Reckitt faced a tough 2014, with economic and political troubles in key growth markets such as China, Thailand, Indonesia and Brazil.
With an expectation of tough markets in 2015 Kapoor announced a plan to target “like-for-like net revenue growth of 4 percent, which is broadly similar to 2014 and moderate to 'nice' operating margin expansion in 2015.”
Kapoor will not the be the only Reckitt employee to seek more affordable travel options, the restrictions will be company wide as the company adjusts to tougher financial conditions. In addition to travel, the company is looking at various forms of cost savings such as stationary and office supplies.
Reckitt announced its cost cutting measures this week as part of a measure to adapt to more competitive markets. The company is expecting some layoffs to be part of its plan.
Additionally the company will geographically restructure its business by combining operations in Russia and former Soviet countries with its Europe and North America business and combine Latin America and Asia with the Middle East and Africa.
Reckitt manufactures a number of household goods and pharmaceuticals, including Mucinex cold remedies, Scholl foot products, Durex condoms and Dettol cleaners.
In 2014 Reckitt Benckiser, spun-off its drug division into a new company called Indivior, which manufactures a drug to treat heroin addiction. Indivior posted lower pretax profit for 2014 due to generic competition in the US and price cuts in Europe.
After serving 25 years at Reckitt, Kapoor was appointed CEO in 2011, succeeding Bart Becht, who is credited with transforming the British consumer goods company into the corporate giant it is today. Kapoor receives a base salary of $1.28 million.
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