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Sunday, May 19, 2024

Reckitt reboot

New Reckitt Benckiser boss Laxman Narasimhan is keen to finalise a group shake-up and breathe new life into its consumer health business. By Eamonn Duff

Some incoming Chief Executives assume control with the company already firing on all cylinders. For others, like Laxman Narasimhan, there’s a pressing urgency to restart the engine and make vital repairs.
The former Pepsico executive took charge of Reckitt Benckiser in September after the company was forced to cut its full-year revenue target on the back of lower than expected sales in its last quarter under departing boss Rakesh Kapoor.
Far from being a solitary blip, the downgrade was the most recent in a series of setbacks that have befallen the 200 year old British consumer goods giant. That list includes a costly cyberattack, a toxic health scandal in South Korea and a $1.4 billion drug probe settlement with US authorities.
Aside from bringing Reckitt back on track, Narasimhan’s first task is to execute the partially finished ‘RB 2.0’ plan of splitting the firm into two
stand-alone business units, one focused on health and the other on home
and hygiene. “My incoming mandate is to execute RB 2.0 whilst restoring the health of the consumer health business,” he said.
“Our capabilities and our culture need to evolve to be fit for a digital world. As I take over, I’m committed to leading Reckitt Benckiser to faster growth and delivering sustained outperformance by building a stronger, better business.”
Narasimhan is the company’s first external leader since the merger of Reckitt & Colman and the Dutch firm Benckiser, 20 years ago. He takes over from Kapoor who spent more than three decades at the company, eight of which were as CEO. During a colourful career, Kapoor had helped transform the Slough based business from a household cleaning company to a super power in Consumer Health. Today, the Vanish, Dettol and Lemsip maker has operations in 60 countries and employs more than 37,000 people.

During Kapoor’s reign, investors benefitted from a 90 percent surge in shares. His time in the chair, however, was not without its controversies.
Aside from a 2015 shareholder revolt over his impressive salary package, he was confronted by a 2017 cyber-attack which halted production across several countries, costing £100 million. Around the same period, a former South Korean executive of the firm received a seven-year jail term over a disinfectant linked to the death of almost 100 people, including children. As one of several companies that sold the product, Reckitt has paid significant compensation to both victims’ families and survivors living with permanent lung damage. There was more bad publicity following the spectacular failure of a new $40 electronic foot file contraption which, under the Scholl brand, was designed to smooth dry heels.
More recently, in July this year, the company agreed to pay the US government $1.4 billion to end criminal and civil investigations into the marketing of an addiction treatment medication called Suboxone, by its former pharmaceutical business Indivior. It was reportedly the largest opioid settlement in US history. In a statement, Reckitt said it denies all allegations that it engaged in any wrongful conduct but, after careful consideration, the board determined the settlement was in the best interests of the company and shareholders, particularly at a time of significant transformation – including CEO transition.
When Reckitt originally identified Narasimhan as a possible successor to Kapoor, he was serving as Pepsico’s Global Chief Commercial Officer, overseeing digital transformation across the group. Before that, he was CEO of the beverage giant’s Latin America, Europe, and sub-Saharan Africa operations, overseeing 125,000 employees and £14.5 billion in revenues across 100 countries. Prior to PepsiCo, there was also a 20 year stint as a Director at McKinsey & Company, where he gained priceless expertise in retail, technology, consumer health and manufacturing.
“Narasimhan’s experience running large-scale consumer businesses in developed and emerging markets helped him beat 60 candidates reviewed for the job,” revealed Reckitt’s Chairman of the Board, Chris Sinclair, to Reuters. Narasimhan, meanwhile, explained that whilst working across those markets, he had personally looked on and “admired” Reckitt’s “growth DNA, its performance, its values and its culture.”
In a message to investors ahead of his first day, he spoke of both his pride in joining the company and the “big ambitions” and “humility” he would bring to the role. “I know the opportunities for the company are immense across consumer health, as well as home and hygiene,” he said, adding: “The speed in which this company moves is a clear strength and one to be nurtured – and yet we need to respond to the outside changing world. For me, that starts with the consumer and our relationship with our customers.”

He added: “We require innovation in everything we do. The foundation of our work will be grounded in the value of responsibility. Safety and quality,
as well as customer service, are key priorities.”
Chris Sinclair said the new CEO brings “exceptional strategic capabilities and consumer insight” along with a proven track record in developing purpose-led brands and driving consumer-centric and digital innovation.”
He acknowledged, however, there’s “work to do” in restoring growth and outperformance. “This is the Board’s and Laxman’s key priority…the future opportunities created by RB 2.0 have never been more exciting.”

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