Reckitt Benckiser auctions plant

HARARE - Distressed hygiene and health products maker, Reckitt Benckiser Zimbabwe (RB), is auctioning its plant and equipment, signalling a total collapse of the company.

The assets are set to go under the hammer mid-March.

Hammer and Tongues (HT), the official auctioneers, said they expect the sale — including furniture and vehicles — to rake in millions of dollars.

“On behalf of Reckitt Benckiser, we will be conducting this auction sale within the client’s premises,” said an HT official who preferred anonymity.

RB started scaling down its operations last August and finally stopped operations towards year-end due to deteriorating economic conditions in the country.

Agrippa Mandiwona, RB’s managing director, said the company — a subsidiary of London Stock Exchange-listed Reckitt Benckiser Plc — was forced to close down its Harare plant in December due to “cost competitiveness pressures”.

“Manufacturing and cost inefficiencies’ that are derived from economies of scale make it necessary for companies like ours to consolidate as many of our operations as is feasible to reduce the overheads component in our cost structures,” said Mandiwona in an earlier interview with businessdaily.

Operational costs related to labour, utilities such as power and water, and raw materials are regarded to be higher in Zimbabwe relative to other countries in the region.

As a result, locally-produced products have not been able to compete with products manufactured in the region, especially South Africa.

Companies now prefer to buy products from the region and retail them on the local market. The country’s trade deficit continues to bloat.

Statistics from the Zimbabwe National Statistics Agency (Zimstats) show that the country’s total imports between January and November last year climbed to $7,1 billion, while exports rose to $3,3 billion, yielding a trade deficit of $3,9 billion.

RB joins a high number of companies that have shut down their operations locally citing factors such as shortages of raw materials, power, water and long term funding to sustain their businesses, affecting the competitiveness of local products.

The National Social Security Authority said between July 2011 and July 2013, 711 companies folded in Harare alone, resulting in 10 000 job losses.

Over the years, many companies across the country have closed down, with Bulawayo and Manicaland being the hardest hit.

Investment into the country has not reached the levels necessary to sustain economic growth. This deterioration in the economy has seen capacity utilisation in the manufacturing sector coming down from 44,9 percent in 2012 to 39,6 percent last year.

Zimbabwe has remained unattractive to international financing, largely due to negative perception and an external debt estimated at about $6,1 billion.

This has resulted in the unavailability of sustainable long-term funding to revive companies, with the available short-term loans being too expensive to sustain the recovery of the manufacturing sector.

Reckitt Benckiser, the multinational, was formed in 1999 after the merger of UK-based Reckitt & Colman Plc and Benckiser NV, based in the Netherlands.

Some of its renowned brands include Strepsils, regarded as the world’s largest selling sore throat medicine; Air Wick, the world’s second largest selling air freshener and Dettol, the world’s largest selling antiseptic.

It had a market capitalisation of approximately $51,17 billion by end of last year.

Comments (8)

That is why we need our own currency back - on condition the RBZ is independent of all politicians. Any country that is consuming nearly twice what it is producing needs some stiff medicine in the form of a weak exchange rate. That exchange rate must be determined by producers on the basis of need, not chefs on the basis of greed. Only that way will our industrial areas get back to humming the way they did in the 70' and 80's. A tough exchange rate is there to beat you into living soberly and sensibly and within your means, not to enable the GG's of the establishment to parade their Mercs

John Banda - 5 March 2014

please please hamuone here kuti tonyura nedhora , adopt rand or even use chinese yuan hayo , it mkes t easy for borrowing and producing at a lower cost

kaliphi gundwane - 5 March 2014

Guys its not currency that is causing all this. The issue is about productivity and political risk in Zimbabwe.

Exiled - 5 March 2014

Zimbabwe needs its own currency as soon as possible. Out of over 185 countries in the world, less than 10 use the US dollar as their domestic currency. People, do you think all other countries that do not use the USD are crazy or stupid. Wiseup Zimbabweans. Companies will keep on closing and the country will be completely de-industrialised, if we cannot set aside our irrational fears and push for the introduction of our own currency. America is printing over 50 billion dollars a month to prop up its economy in the Quantitative Easing program and bailing out its "Too Big to Fail" companies because it can control its currency and we can not. Please remember, most of the closing companies took over 50 years to built and we are destroying them in days and we will need over 30 years or more to rebuilt them again. Guys, just because you drive a company car or an ex-Japanese car does not mean the economy is ok, the reality is that the economy is hurting and needs attention, yesterday.

FEZ - 6 March 2014

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handy man - 6 March 2014

When Reckit mentioned that they were closing we all thought they were sabre rattling but now this...Something has to happen before the Bronze Age station on our journey to the Stone age.

gutter poet - 6 March 2014

continue telling it like it is

andrew duri - 6 March 2014

pamberi ne ZANUPF !!!!!..mbora mugedhi!!!!.gushungo hoyeeeeeee!!! conqueror of the british have done it baba..makorokoto amhlope you have conquered reckit benckiser,now our children can make that home made cleaning detegents and our zinatha members make herbs instead of strepils.mborrrrrrrraaaaaaaa mugedhiiiiiiiiii !!!!!!!!!!!!!!!!!!!!!!!!!!!!

chokwadi - 8 March 2014

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