26 July 2023
STRONG FIRST HALF – GROWTH ACROSS ALL BUSINESS UNITS
| Q2 2023 | H1 2023 | |||||
| Change2 | Change2 | |||||
| £m | Actual | Constant | £m | Actual | Constant | |
| Net Revenue | 3,529 | +1.9% | +4.2% | 7,446 | +8.1% | +6.0% |
| Like-for-like (LFL)1 | +4.1% | +6.0% | ||||
| Adjusted1 | ||||||
| Operating Profit | 1,769 | +0.2% | -2.4% | |||
| Operating Profit Margin | 23.8% | -180bps | ||||
| Diluted EPS | 173.0p | -3.1% | ||||
| IFRS | ||||||
| Operating Profit | 1,754 | +0.5% | ||||
| Operating Profit Margin | 23.6% | -170bps | ||||
| Diluted EPS | 171.6p | -8.6% | ||||
1. Adjusted measures are defined on page 24.
2. Change vs prior year presented. Constant measured on a constant exchange rate basis (see page 24).
H1 Highlights:
· The strong first-half performance across our business units and through our earnings model reflects continued delivery from the investments we have made. We delivered like-for-like net revenue growth of +6.0%, drove gross margin expansion and increased brand investment (by around £100m) behind our innovation programme.
· Group like-for-like (LFL) net revenue growth of +6.0%. Growth was broad-based across our Global Business Units (GBUs), with a strong innovation programme. On an IFRS basis net revenue grew by +8.1%.
· Hygiene LFL net revenue growth of +3.6%. Growth was driven by Finish, Harpic, Vanish and Air Wick, and underpinned by early success of innovation launches.
· Health LFL net revenue growth of +8.8%. Growth was led by our OTC portfolio and Intimate Wellness brands with an improving performance in China. Dettol declined by mid-single digits with category decline and in-market challenges across certain Asian markets – we expect an improvement in H2.
· Nutrition LFL net revenue growth of +5.3%. Continued strong market share in North America and mid-single digit growth in LATAM, against the lapping of tough prior year comparatives due to the US competitor supply issue.
· Adjusted operating margin of 23.8% (-180bps). Productivity efficiencies and carry-over pricing drove gross margin expansion, and funded increased investment behind innovation launches.
· Adjusted diluted EPS of 173.0p (-3.1%). Net revenue growth and positive impact from foreign exchange is offset by lower operating margins and a higher effective tax rate.
· H1 2023 dividend recommended to be 76.6p. The increase of 5% is consistent with our aim to deliver sustainable dividend growth.
Q2 Highlights:
· LFL net revenue growth of +4.1%. Mid-single digit growth was delivered across our Hygiene (+5.5%) and Health (+4.9%) portfolios whilst Nutrition declined (-0.9%). On an IFRS basis net revenue grew by +1.9%.
· Lysol grew high-single digits, driven by innovation launches, distribution gains and category growth.
· Nutrition – North America maintained strong market-leading share, whilst lapping the competitor supply issue in the prior year.
Outlook:
· We maintain our Group LFL net revenue growth target of +3% to +5% in 2023 (including the lapping of the US Nutrition impact in 2022), and now expect adjusted operating margins to be slightly above 2022 levels (previously “in line with or slightly above 2022 levels”) when excluding the one-off benefit of circa 80bps in 2022 related to US Nutrition.
Commenting on the results, Nicandro Durante, Chief Executive Officer, said:
“Reckitt’s strong first-half performance across our business units and through our earnings model reflects continued delivery from the investments we have made. We delivered like-for-like net revenue growth of +6.0%, drove gross margin expansion and increased brand investment (by around £100m) behind our innovation programme.
Our investments in R&D and innovation are now delivering. Finish “Ultimate Plus All-in-One” has contributed to market share gains across Europe, and our recent launches of Air Wick “Active Fresh” and “Vibrant” have helped return Air Wick to growth in H1. In June, we launched our latest Lysol innovation, “Air Sanitiser”, that kills 99.9% of viruses and bacteria in the air. Whilst early days, I am particularly excited about this ground-breaking innovation, the first and only antimicrobial product to effectively kill both viruses and bacteria in the air. Across Health, we launched the Mucinex “InstaSoothe Sore Throat and Pain Relief Spray”, further strengthening our position in the US sore throat category, and have seen good early success of our new Durex “Invisible” and Biofreeze “Overnight Relief” innovations.
The strong first-half performance gives us confidence in our full year targets, despite some tough comparatives in our OTC portfolio and an expected tougher competitive environment in US Nutrition in H2.
We look to the future with confidence under Kris Licht’s leadership. Amidst a backdrop of challenging market conditions and uncertainty, the business has strong momentum, yet with an opportunity to further strengthen our execution, optimise our cost base, and deliver improved returns to shareholders.”
H1 2023 RESULTS PRESENTATION TODAY
There will be a results presentation for analysts and investors at 08:30 BST which will be held at the Auditorium, Deutsche Bank, 1 Great Winchester Street, London, EC2N 2DB.
To attend in person, please email your details to ir@reckitt.com to register.
For those wishing to follow the webcast please click on the link below:
https://www.reckitt.com/investors/results-and-presentations/. Alternatively, dial in details are as follows:
| United Kingdom: | +44 20 4587 0498 |
| All other locations: | +44 800 358 1035 |
| Participant access code: | 520841 |
FURTHER INFORMATION AND CONTACTS
Richard Joyce / Hazel Chung +44 (0)7807 418516 / +44 (0) 7408 850537
Investor Relations
Patty O’Hayer +44 (0)7825 755688
External Relations and Government Affairs
FGS
Faeth Birch +44 (0)7768 943171