Reckitt Benckiser Group PLC (LSE:RKT, ETR:3RB)’s dramatic upheaval plans will result in the divestment of approximately 30% of its business, according to analysis from UBC.
Announced alongside an interim trading update on Wednesday, the restructuring forms part of Reckitt's strategy to sharpen its brand portfolio and streamline its operations, focusing on higher-growth, high-margin Powerbrands.
As part of this plan, Reckitt plans to dispose of some big-name brands, including Air Wick, Mortein, Calgon, and Cillit Bang, by the end of 2025.
UBS noted that these brands accounted for £1.9 billion in revenue in the last financial year.
Reckitt is also mulling the disposal of its Mead Johnson Nutrition business, which constitutes 16% of annual sales.
Although Reckitt plans to exit nearly a third of its business, it will come with a comprehensive overhaul of its management structure that will inevitably lead to large-scale job losses.
The company hopes to reduce yearly fixed costs from 22% currently to 19% by 2027, though not before £1 billion worth of one-off cash restructuring and transformation costs.
Reckitt’s trigger-happy reshaping plans were met with optimism from UBS, with the bank restating its buy rating and 12-month share price target of 7,170p.
The market broadly concurred, pushing Reckitt’s share price 1.3% higher to 4,464 on Wednesday afternoon.