Reckitt Benckiser

There's growth and there's growth

We’re never satisfied. No matter how far we expand our margins, we are always looking for new ways to manage costs. Our relentless work on margins pays dividends though. Over the past five years, our grip on the operating efficiencies that fund our growth has helped to deliver shareholder returns nearly ten times higher than our peers (200% returns compared to a 22% market average).

And still the search goes on – for small changes that multiply into massive cost savings. The Lysol aerosol can, for example. Instead of the usual pre-printed tinplate that wraps around to form the can, we looked at printing labels on a translucent film that wraps around less costly blank cans. But despite other benefits, like pack graphics that can be updated quickly and easily, we couldn’t find enough savings initially to justify it. And we never make changes at any cost – only when it pays.

However after working with suppliers for many months we finally came to a clear winner that we rolled out, first in the US, on Lysol, then in Europe and other markets. With impressive cost savings, lower net working capital and a simpler, faster process, we’ve labelled it a shining success.

Not that consumers notice. That’s deliberate. Even at our most cost-conscious, we never look for savings in anything that might impair the quality of our products or people’s experience of them. But it still leaves plenty of scope, because even savings in the smallest places can turn into huge numbers. Air Wick Freshmatic has sold so fast in the past two years, that changes like swapping blister packs for cardboard ones, and lightening the housing or the glass in refill bottles have helped Air Care to save millions of pounds. Even meeting new propellant regulations in the US gave us a chance to find lasting savings.

We’re here to convert business growth into shareholder returns; to turn good sales growth into even more attractive profits growth through higher margins. Cost savings have helped to increase gross margins by more than a thousand basis points over the past seven years. So when we say that we believe the strategy is working, you don’t have to take our word for it. You can see it reflected in the returns.