Household goods group Reckitt Benckiser unveiled plans to hive off its drug arm into a separate UK-listed company as it reported higher first half revenue and profit at constant exchange rates, but warned of a potentially tough second half.
Reckitt, which makes products such as Nurofen, Strepsils and Cillit Bang, said it believed RB Pharmaceuticals could significantly increase long-term shareholder value as a stand-alone business.
We have therefore decided to pursue a de-merger of RB Pharmaceuticals with a separate UK listing," the group said.
"We expect this to take place in the next 12 months. This will also allow RB to focus on its core strategy to be a global leader in consumer health and hygiene."
Reckitt said first half net revenue at constant exchange rates
rose 3% to £2.3bn on a similar rise in underlying operating profit to £1.08bn.
But underlying diluted earnings per share fell 4% to 113.4p and the group left its interim dividend unchanged at 60p.
Chief Executive Rakesh Kapoor said its consumer health business continued to expand profitably and its hygiene operation had improved after a slow start.
But it said its home products business had stayed weak in challenging markets.
The group said it had saved money from improving efficiency of media planning and buying in the first half and would make further gains from improving structural efficiency in the second half and next year.
Reckitt said it was still on track to hit an annual target of increasing total revenue by up to 5% and expected to boost margins again in the second half.
But it added: "We believe market conditions will remain challenging in the second half of the year, particularly in the US and certain emerging markets."
The finance chief of set-top box maker Pace has quit as the set-top box maker predicted higher-than-expected annual profits.
Roddy Murray will leave immediately and his role will be filled by Group Financial Controller Belinda Ellis for the interim period, the group said without saying why Murray had left.
The news came as the group posted a 13.6% fall in first half revenue to $1.14bn, as expected.
However, full year revenue is expected to climb to $2.7bn from $2.47bn a year earlier, with an operating margin of no less than 8.5%, up from 7.8% a year earlier. It also said it was seeing higher demand for network products.
The group added: "As such the outlook for the remainder of the year has improved and as a result we anticipate full year profits and cash flow for the group will be higher than previous guidance."
Ellis, who has been Financial Controller for three years, was previously the Finance Director of Planning and Analysis for Rupert Murdoch's News International.