Lysol Maker Seeks to Capitalize on Covid Hygiene Concerns in Hotels, on Planes
By Saabira Chaudhuri
Lysol maker Reckitt Benckiser Group PLC is capitalizing on
booming interest in hygiene during the pandemic, launching a new
business selling its cleaning products and expertise to the travel
and hospitality industries.
The British company, which also makes Dettol soap, Finish
dishwasher tablets and Harpic toilet cleaner, said Tuesday the
preoccupation with cleaning had fueled a surge in second-quarter
sales. Now, it is trying to move quickly to position itself as a
hygiene expert and leverage Lysol's brand recognition with a new
Companies across the hard-hit travel and hospitality industries,
struggling to woo anxious customers, have started touting their new
cleaning rituals as reassurance. Hilton Worldwide Holdings Inc.,
Delta Air Lines Inc. and Avis Budget Group Inc. are among those
that have partnered with Lysol in the U.S. to launch -- and
advertise -- cleaning programs. Outside the U.S., Reckitt has
struck similar partnerships with Uber Technologies Inc. in
Australia and Saudi Arabia's state-owned Saudia Airlines under the
"They come to brands like this to provide a stamp of approval,"
Reckitt Chief Executive Laxman Narasimhan said of the company's new
corporate customers. He declined to outline how big he thinks the
new professional-services business could grow.
For the second-quarter, sales in Reckitt's hygiene arm rose
19.4% on a like-for-like basis from the year earlier. The gain was
driven by North America, where Lysol sales jumped over 70%.
The boom in demand for cleaning products -- also seen by rivals
Unilever PLC and Clorox Co. -- is a welcome boost for Reckitt,
which has struggled in recent years with volatile revenue growth,
narrowing margins and a series of one-off mishaps that led some
investors to question its business model. Now, the pandemic is
opening new windows of opportunity.
Mr. Narasimhan said Reckitt is investing in its hygiene
operations in once-ignored markets, including accelerating the
launch of Lysol in Brazil by three months. He expects demand for
Lysol and Dettol to remain higher than pre-pandemic levels and said
the company would spend an additional GBP100 million ($128.8
million) on expanding manufacturing capabilities.
"When behaviors are cemented for 60 days they do become embedded
in our daily lives," said Mr. Narasimhan.
Reckitt, like Unilever, has spent years trying to encourage
consumers to wash their hands and clean more. Earlier this month,
Reckitt said it would invest GBP25 million over several years to
create a public-health research institute to generate practical,
scientific research around hygiene intended to inform behavior
The company also said Tuesday it would invest GBP100 million in
tapping new growth opportunities, including building out a sales
team to sell its disinfectants to more corporate customers. The
head of the company's North American hygiene business will switch
roles to lead the new professional-services business in
Under the Delta deal, the U.S. airline will buy Lysol sprays and
wipes, as well as work with the cleaning brand to gather consumer
insights to help develop new disinfectants and protocols for use at
airports and on flights. The companies will start by focusing on
disinfecting airplane lavatories and plan to develop cleaning
routines for departure gates and airport lounges.
"The lavatory is a big source of concern for a lot of people,"
said Mr. Narasimhan, noting that lavatories are typically cleaned
before takeoff but often neglected during a flight.
Hilton has been publicizing a cleaning program it says it has
rolled out to 6,100 properties across 18 brands, intended to
demonstrate to guests that rooms, restaurants and gyms are being
thoroughly cleaned. Hilton's Chief Financial Officer Kevin Jacobs
last month said using Lysol was a way for the hotel chain to drive
customer loyalty and win market share. "The customer says, okay, I
like the way Hilton is doing this and so I'm going to preference
Hilton," he told an investor conference.
Mr. Narasimhan said Hilton is placing Lysol and Dettol cleaning
products at check-in desks and in rooms, and putting stickers on
bed sheets that say rooms have been cleaned according to standards
developed by Lysol.
Overall, Reckitt reported a first-half profit of GBP1.08
billion, up from GBP112 million a year earlier when results were
dragged down by a settlement with the Justice Department tied to
the company's former pharmaceuticals business. Net revenue for the
six months came in at GBP6.91 billion, up 10.8% from a year
Reckitt's health arm -- which includes Mucinex cold medicine and
Nurofen painkillers -- reported second-quarter sales growth of 5%
on a like-for-like basis.
The company said it expects high-single-digit revenue growth for
the full year, an update on previous guidance that it expected
revenue to be better than the previous year.
However, some analysts cast doubt on whether the company can
continue its hot streak next year as it comes up against this
year's strong sales. "RB are having a great year there is no doubt,
but we expect longer term questions to resurface," said Jefferies
analyst Martin Deboo.
Write to Saabira Chaudhuri at firstname.lastname@example.org
(END) Dow Jones Newswires
July 28, 2020 08:50 ET (12:50 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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