Reckitt Benckiser Group – Half-year Results

STRONG MOMENTUM CONTINUES 

FULL-YEAR REVENUE AND MARGIN TARGETS UPGRADED

1. Adjusted measures are defined on page 25

2. Change vs prior year presented. Constant measured on a constant exchange rate basis (see page 25)

All amounts £m, unless otherwise stated

Highlights (H1 unless indicated):

·   Group like-for-like (LFL) revenue growth of 8.6% .  Price/mix was 7.4% and volume 1.2%.  Continued broad-based growth and momentum across all Business Units and geographies.  Growth includes an estimated 2.4% benefit from US Nutrition temporary competitor supply issues.

·   Q2 Group LFL growth of 11.9%.  Price/mix was 9.7% and volume 2.2%.  Strong growth across our Health (+24.2%), Nutrition (+26.8%) and Hygiene (-2.5%, +8.9% excluding Lysol) portfolios, with Lysol in line with expectations.  Growth includes an estimated 3.3% benefit from US Nutrition temporary competitor supply issues.

·   70% of the portfolio less sensitive to Covid dynamics grew low double digits (Q2: mid-teens). Excluding the positive impact from US IFCN, growth was high-single digits (Q2: low-double digits), driven by continued innovation and in-market execution across the portfolio.

·   Our Health GBU delivered 22.4% LFL growth driven by a combination of strong demand and share gains in our OTC portfolio, and continued momentum in our Intimate Wellness, VMS and germ protection brands.

·   Disinfection performance fully in line with expectations.   Dettol in growth for Q2 with stable revenue trends at c.40% above pre-pandemic levels.  Lysol was down by around 30% from Covid peaks in H1 2021 plus some retailer de-stocking in H1. Lysol consumption trends were strong at 50-65% above pre-pandemic levels.  

·     Nutrition growth in Q2 of 26.8% driven by low-teens growth in Latin America / ASEAN and around 40% growth in the US with strong execution amidst temporary competitor supply issues.

·   H1 adjusted operating margin of 25.6%: Growth of +290bps was driven by the combination of favourable product mix, productivity initiatives, pricing and phasing of investments, aided by leverage benefits in US Nutrition and the gain on sale of surplus land in Asia (+85bps).

·     H1 adjusted EPS (diluted) of 178.6p (+25.2%). Strong growth driven by a combination of revenue growth, margin expansion, and foreign exchange benefits.

·     H1 2022 dividend recommended to be 73.0p: in line with H1 2021.

Outlook:

·     Following a strong H1 we are increasing our expectations for 2022.  We now expect LFL net revenue growth of +5 – 8% for 2022, and growth in adjusted operating margins.

·     We are already delivering sustainable mid-single digit net revenue growth and remain firmly on track to deliver our medium-term goal of mid-20s adjusted operating margins by the mid-2020s.

Commenting on the results, Laxman Narasimhan, Chief Executive Officer, said:

“We have delivered an excellent first half performance in 2022.  Innovation and improved in-market execution are driving sustained, broad-based revenue growth and market share momentum across our portfolio. Our brands less sensitive to the impact of Covid are growing ahead of our mid-single digit target, whilst our disinfection brands are performing as expected, well above pre-pandemic levels. The actions we have taken to broaden the shoulders of our Lysol and Dettol franchises, combined with our innovation and penetration building initiatives have built a significantly larger, sustainable base from which we will grow.

Driving our earnings model to mitigate the very challenging inflationary environment is a key focus throughout our entire organisation. Our productivity programme has delivered over £370m of savings in the first half, well ahead of our ingoing expectations.  This, combined with favourable product mix and pricing, accompanied by one-off and short-term benefits, have enabled us to deliver adjusted operating profit growth in H1 well above net revenue growth.

Imperative to our strong performance this period is the exceptional execution across our global operations. I want to thank each and every one of our colleagues for their tireless commitment during our transformation journey, and for their outstanding delivery amidst extremely challenging circumstances.  It is this embedded ownership culture that continues to be a unique factor in our success for the future

We have built a stronger, more resilient business around our portfolio of trusted brands in growth categories.   Despite challenging conditions, we are confident about the rest of the year, we are already delivering sustainable mid-single digit net revenue growth, and remain firmly on track to deliver our medium-term adjusted operating margin goal”.