Phil Oakley 

Reckitt Benckiser might have to break itself up

Phil Oakley

Reckitt Benckiser might have to break itself up

The past decade has seen investors flock to the shares of consumer brand companies. They have done so in the belief that the strength of brands will lead to regular repeat purchases by consumers, which in turn will give rise to strong, predictable and growing cash flows. Throw in the fact that such companies tend to be very profitable with high profit margins and high returns on capital employed (ROCE) and you can see why investors have been willing to pay high valuations for the shares of these businesses.

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