Reckitt Benckiser (PK) (USOTC:RBGLY)
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1 Year : From Apr 2019 to Apr 2020
By Saabira Chaudhuri
LONDON -- Reckitt Benckiser Group PLC has tapped one of PepsiCo. Inc.'s most senior people to be its new chief executive, as the owner of Durex condoms and Dettol cleaning products looks to revive growth after a challenging few years.
The U.K.-based company said Wednesday that Laxman Narasimhan, currently Pepsi's global chief commercial officer, would join the business in July before taking the reins from outgoing CEO Rakesh Kapoor in September.
Mr. Narasimhan's departure is a blow to Pepsi, which three months ago appointed him commercial head, a new position focused on creating long-term strategy for the soda giant. He previously led Pepsi's Latin America, Europe and sub-Saharan Africa arm. His exit follows that of Chief Scientific Officer Mehmood Khan in March to join an anti-ageing startup.
For Reckitt, the appointment offers the opportunity to move past a number of recent challenges. The Slough, England-based company began its search for a new CEO earlier this year after announcing that Mr. Kapoor would step down at the end of 2019.
Mr. Kapoor, who has run Reckitt since 2011, is credited with pushing it deeper into higher-margin consumer-health products and away from slower-growing packaged food. He split the company into two divisions, running the consumer health business himself while the home-and-hygiene division was run by a deputy. However, the company also attracted criticism from investors during his tenure for its high pay.
For years, Reckitt was seen as an example of how a consumer-goods company should operate. It consistently delivered strong sales and ample profit margins, reflecting a laser focus on costs and products like fast-acting painkillers and dishwasher tablets that it convinced consumers to pay more for.
However, its performance -- and low-cost model -- has been questioned more recently amid high turnover among senior executives, volatile sales growth and narrowing margins, all challenges its new CEO will have to contend with.
After a period of strong growth, Reckitt in recent years has disappointed investors with underwhelming results. The company was hit by a cyberattack, failed innovations and manufacturing disruption. Also, confronted by protests in South Korea, it had to apologize for a humidifier disinfectant that killed more than 100 people. More recently, Reckitt has reported weak first-quarter sales in its consumer-health arm, once a huge growth driver.
Mr. Narasimhan said in a statement it was "an exciting time for the business" and that he would "continue to transform" Reckitt.
Analysts said his appointment reduces the likelihood that Reckitt would spin off its home-and-hygiene unit -- a move that has been widely speculated since the restructuring -- since the Pepsi executive is unlikely to have joined a company on track to shrink significantly. Like Mr. Kapoor, he will be group CEO while directly running the consumer health business.
Although the India-born Mr. Narasimhan's seven-year stint at Pepsi has focused on food and drink, he previously co-led McKinsey & Co.'s consumer and shopper insights business as well as its research on emerging-market consumers.
While at Pepsi the 52-year-old is credited with having grown sales and profits by focusing more on consumer needs, technology, strengthening leadership and driving productivity. He managed GBP14.5 billion ($18.4 billion) in revenue across 100 countries and 125,000 employees.
Write to Saabira Chaudhuri at email@example.com
(END) Dow Jones Newswires
June 12, 2019 05:03 ET (09:03 GMT)
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