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Reckitt Benckiser

Reckitt Benckiser Group A flat Q2 but stronger H2 expected

Reckitt Benckiser Group (LON: RB.) have today published half year results for 2019.

Results at a glance(unaudited)Q2
£m
% change actual exchange% change constant exchangeHY
 £m
% change actual exchange% change constant exchange
       
Continuing operations      
Net Revenue3,083+2%0%6,240+2%+1%
– Like-for-like growth1  0%  +1%
Operating profit – reported   1,406+9%+6%
Operating profit – adjusted1   1,475+2%-1%
Net income2 – reported   979+13%+10%
Net income2 – adjusted1   1,032+4%+2%
EPS (diluted) – reported   137.9+13% 
EPS (diluted) – adjusted1   145.4+4% 
       
Total operations (including discontinued operations)
Net income2 – reported   112-87%-89%
Net income2 – adjusted1   1,032+4%+2%
EPS (diluted) – reported   15.8-87% 
EPS (diluted) – adjusted1   145.4+4% 
         

1 Non-GAAP measures are defined on page 2

Net income attributable to the owners of the parent

Highlights

· Like-for-like (LFL) performance in Q2 was flat (H1: +1%), with volume -3% price / mix +3%. Health declined by -1%. Hygiene Home continued its consistent delivery with +3% growth.

· Health – Q2 LFL decline of -1% (H1: -1%). IFCN was flat with slowdown in China market growth. OTC +1% with stabilisation in Mucinex market shares. Other Health weak due to Scholl, plus slower Dettol and Durex.

· Hygiene Home – Q2 LFL growth of +3% (H1: +3%). Another consistent quarter of broad-based growth across brands and geographies.

· RB 2.0. The creation of two structurally independent business units remains on track for mid-2020.

· Adjusted operating margin decreased 10bps to 23.6%. BEI increased by 10bps to 15.4% of Net Revenue.

· The Board declares an interim dividend of 73.0p per share (2018: 70.5p), an increase of +4%.

· Reduced uncertainty as a result of settlement agreed with DoJ for $1.4bn in respect of Indivior related matters and appointment of new CEO.

· Full year LFL net revenue target revised to +2-3% (from +3-4%) to reflect the slow start to the year and improving trends for H2. No change to adjusted operating margin expectations.

Commenting on these results, Rakesh Kapoor, Chief Executive Officer, said:

“Our like for like performance in H1 was +1%, somewhat below our expectations. Hygiene Home delivered another quarter of consistent top line growth but progress in Health in Q2 was disappointing.

We have now been operating in RB 2.0 for 18 months and have made some important achievements. Hygiene Home has been unleashed and is delivering consistently. But on our journey to be a world leader in consumer health, we have work to do to deliver consistent financial performance.

However, we believe that much of this is behind us and strong plans are in place to restore growth, including an exciting innovation pipeline such as Mucinex Night Relief and Enfa Grass Fed. We are further stepping up our investment in BEI and medical marketing to drive our growth.

We therefore expect H2 to be back to our more normal level of growth.

Our work to create two structurally independent business units continues to progress well and remains on track for completion around mid-2020.

With the slow start to the year, and the turnaround in Health still work in progress, we are revising our 2019 net revenue target to +2-3% LFL growth (previously +3-4%). Our target of maintaining adjusted operating margins remains unchanged.”

Chris Sinclair, Reckitt Benckiser Group Chairman, said:

“We have made good progress during the quarter in reducing uncertainty, with the appointment of Laxman Narasimhan, our new CEO, and drawing a line under Indivior related matters.

On behalf of the Board I would like to thank Rakesh for his outstanding contribution to RB over his 32 years at the company, eight of which were as CEO. During his tenure he has transformed RB from a household cleaning company to a global leader in Consumer Health. He has lived, and, indeed improved, RB’s values whilst maintaining the culture of entrepreneurship and ownership.

We still have work to do in restoring growth and outperformance. This is the Board’s and Laxman’s key priority. However, the future opportunities created by RB 2.0 have never been more exciting.”