24 April 2024
good Q1 performance
On track for full year
DELIVERY
Q1 2024
|
|
LFL1
growth
|
Volume
|
Price / Mix
|
Net Revenue (£m)
|
IFRS growth
|
Hygiene
|
7.1%
|
2.9%
|
4.2%
|
1,608
|
1.1%
|
Health
|
1.0%
|
-0.1%
|
1.1%
|
1,538
|
-6.4%
|
Nutrition
|
-9.9%
|
-9.4%
|
-0.5%
|
591
|
-13.5%
|
Group
|
1.5%
|
-0.5%
|
2.0%
|
3,737
|
-4.6%
|
1. Adjusted measures
are defined on page 5
Commenting on these results,
Kris Licht, Chief Executive Officer, said:
"We have delivered a good
first quarter. Following a period of price-led growth, we are now
returning to a more balanced contribution from price, mix
and volume. We grew volumes in many of
our powerbrands in the quarter, including Lysol, Dettol, Durex and
Finish, as well as our non-seasonal OTC portfolio. In addition, we
continue to benefit from carryover pricing and consumers trading up
to our premium innovations.
The
net revenue performance in the quarter is in line with our
expectations. Hygiene delivered broad-based growth. Health saw good
growth across many brands, reduced by a tough comparator in our
cold & flu OTC brands. Nutrition continues to normalise in the
US as expected, and we have maintained our value market share
leadership.
We are well placed to deliver value creation
by leveraging our
strong portfolio of brands through investment and
innovation. This drives our continued
strong free cashflow generation, our accelerated share buyback
programme and increased cash returns to
shareholders.
We
are on track to deliver our full year revenue and profit targets,
led by mid-single-digit growth across our Health and Hygiene
portfolios."
Q1 Highlights:
· Like-for-like (LFL) net
revenue growth of 1.5% with volume
decline of 0.5% and price/mix growth of 2.0%.
· Improving volume
momentum with volume growth of 1.4%
in our Hygiene and Health portfolios. Both delivered broad-based
volume growth across key brands.
· Group reported net revenue
decline of -4.6%, with LFL growth
more than offset by FX headwinds of -5.7%.
· Hygiene LFL net revenue
growth of 7.1%. Broad-based
volume growth across powerbrands - Finish, Lysol, Harpic and
Vanish. Growth also benefited from additional sell-in ahead of a
SAP implementation in Brazil.
· Health LFL net revenue growth
of 1.0%. Strong volume growth across
Intimate Wellness, non-seasonal OTC brands, VMS and Dettol, offset
by the expected lapping of prior year retailer inventory rebuild in
seasonal OTC products.
· Nutrition LFL net revenue
decline of -9.9%. Continued value
share leadership in the US, while the rebasing from temporary
market share gains from the competitor supply issue in prior years
continues.
· Broad-based geographic
growth with mid-single-digit growth
across Europe and Developing Markets.
· Acceleration of ongoing share
buyback programme. As
previously announced, the third tranche of our £1bn share buyback
programme commenced in April 2024. We expect to announce the next
programme in July
OUTLOOK
We reiterate our 2024
outlook:
· LFL net revenue
growth of between +2% to +4% for the Group
o Mid-single-digit growth for our Health
and Hygiene portfolios
o Mid- to high-single-digit decline for our
Nutrition business as it continues to rebase in the first half of
the year with a return to growth late in the year
· Adjusted
operating profit to grow ahead of net revenue growth
· Revenue and
profit growth to be second half weighted as we lap high OTC
comparatives from Q1 last year and will see the majority of the
rebasing of our US Nutrition business in H1
Other technical considerations
· Adjusted net
finance expense is expected to be in the range of £300m to £320m
(2023: £247m) (No change)
· The adjusted tax
rate is expected to be 25-26% (2023: 25.2%) (No change)
· Capital
expenditure is expected to be 3-3.5% of net revenue (2023: 3.1%)
(No change)
· If foreign
exchange rates were to hold at March 2024 closing rates for the
remainder of 2024, the estimated negative impact on 2024 GBP net
revenue would be around 2.5% and 2024 GBP adjusted diluted EPS
would be around 3.5% (as published on our website)
GROUP OVERVIEW
Net Revenue
|
LFL1
|
Volume
|
Price / Mix
|
£m
|
Net M&A
|
FX
|
IFRS
|
Q1
2024
|
+1.5%
|
-0.5%
|
+2.0%
|
3,737
|
-0.4%
|
-5.7%
|
-4.6%
|
1. Adjusted measures
are defined on page 5
Group net revenue
· Like-for-like
(LFL) net revenue growth of 1.5% with volume decline of 0.5% and
price/mix growth of 2.0%.
· Improving volume
momentum continues with growth of 1.4% for Hygiene and Health
portfolios. Both businesses delivered broad-based volume growth
across key brands. Nutrition volume decline reflects
the continued rebasing from temporary market share gains from the
competitor supply issue in prior years.
· On a geographic
basis, growth was driven by mid-single-digit growth
across Europe and Developing Markets, partially offset by expected
declines in North America from US Nutrition rebasing and the
expected lapping of prior year retailer inventory rebuild in
seasonal OTC products.
· Total net revenue
on an IFRS basis declined -4.6% YTD, reflecting net M&A impact
of -0.4% and foreign exchange headwinds of
-5.7%.
OPERATING SEGMENT
REVIEW
Hygiene
43%
of net revenue in Q1 2024
Net Revenue
|
LFL1
|
Volume
|
Price / Mix
|
£m
|
Net M&A
|
FX
|
IFRS
|
Q1
2024
|
+7.1%
|
+2.9%
|
+4.2%
|
1,608
|
-
|
-6.0%
|
+1.1%
|
1. Adjusted measures
are defined on page 5
· Net revenue grew
+7.1% on a LFL basis to £1,608m with broad-based volume growth of
+2.9% and Price / mix improvements of +4.2%, driven by carry over
pricing and some minor in-year pricing actions.
· Growth
benefitted by around 2% in the quarter from the phasing of sales in
Brazil ahead of a SAP implementation, to ensure continuity of
supply. This will unwind in Q2.
· Finish delivered
high-single digit LFL net revenue growth, with positive
contributions from volume, price and mix. Growth was led by our
latest thermoforming innovations as consumers continue to trade up
to more superior solutions.
· Lysol delivered
low-double digit LFL net revenue growth, led by strong volume
growth. Our innovation platforms, including Lysol Laundry
Sanitiser and Lysol Air Sanitiser drove growth in their respective
segments. Lysol wipes benefitted from year-on-year
distribution gains.
· Other key brands
delivered growth in the quarter, mitigated by low-single digit
decline in Air Wick.
.
Health
41% of net revenue in Q1
2024
Net Revenue
|
LFL1
|
Volume
|
Price / Mix
|
£m
|
Net M&A
|
FX
|
IFRS
|
Q1
2024
|
+1.0%
|
-0.1%
|
+1.1%
|
1,538
|
-0.7%
|
-6.7%
|
-6.4%
|
1. Adjusted measures
are defined on page 5
· Health net
revenue grew +1.0% on a LFL basis in Q1 to £1,538m, with stable
volumes and price / mix improvements of +1.1%.
· Volumes grew in
Durex, non-seasonal OTC brands, Dettol and VMS, offset by the
expected lapping of prior year retailer inventory rebuild in
seasonal cold and flu OTC brands (Mucinex, Strepsils and similar
local brands). In addition, with a relatively soft end to the flu
season, the slow down late in the quarter impacted Q1 as retailers
managed their inventory.
· Innovation
launches drove growth in our Durex portfolio, and an improved
supply chain environment helped us meet the strong consumer demand
for Gaviscon. In VMS, Move Free saw strong growth across both North
America and China.
· Price / mix was
positive across many brands offset by some pricing actions in
Dettol.
· Net M&A
includes a small traditional Chinese medicine business disposed at
the end of the quarter.
Nutrition
16%
of net revenue in Q1 2024
Net Revenue
|
LFL1
|
Volume
|
Price / Mix
|
£m
|
Net M&A
|
FX
|
IFRS
|
Q1
2024
|
-9.9%
|
-9.4%
|
-0.5%
|
591
|
-0.5%
|
-3.1%
|
-13.5%
|
1. Adjusted measures
are defined on page 5
· Nutrition net
revenue declined -9.9% on a LFL basis in Q1 to
£591m.
· Price / mix
declined -0.5% driven by a normalised trade spend environment
versus the prior year in the US and the lapping of the temporary
benefit in states where our competitor held the WIC
contract.
· Volume declined
-9.4%, led by the lapping of both peak market shares during the US
competitor supply shortage in 2022 and retailer inventory shelf
refilling in Q1 last year.
· We
have seen stability in our US non-WIC value market shares,
maintaining our market leadership position with an average of
around 40% share.
· Our Developing
Markets business saw low-single-digit decline with a broadly stable
performance in ASEAN offset by softness in LATAM due to a
combination of customer shipment phasing and destocking in certain
markets.
· The Group faces
contingent liabilities in respect of product liability actions
filed against Mead Johnson entities relating to Necrotizing
Enterocolitis. A trial in one of these actions is currently
scheduled to begin on 30 September 2024 in St. Louis, Missouri.
Further details on this matter can be found on pages 190 and 200 of
our 2023 Annual Report and Accounts.
Performance by Geography
Net revenue
|
LFL1
|
Volume
|
Price / Mix
|
£m
|
Net M&A
|
FX
|
IFRS
|
Q1
2024
|
|
|
|
|
|
|
|
North America
|
-5.5%
|
-3.6%
|
-1.9%
|
1,198
|
-0.1%
|
-4.0%
|
-9.6%
|
Europe / ANZ
|
+5.4%
|
-2.1%
|
+7.5%
|
1,298
|
-0.2%
|
-7.0%
|
-1.8%
|
Developing Markets
|
+5.1%
|
+4.6%
|
+0.5%
|
1,241
|
-1.0%
|
-6.4%
|
-2.3%
|
Total
|
+1.5%
|
-0.5%
|
+2.0%
|
3,737
|
-0.4%
|
-5.7%
|
-4.6%
|
1. Adjusted measures
are defined on page 5
· North America net
revenue declined -5.5% on a LFL basis, with growth in Lysol and
Finish more than offset by the expected decline in OTC brands as we
lap the prior year retailer inventory rebuilding, and the continued
market share rebasing of our Nutrition business.
· Europe / ANZ net
revenue grew +5.4% on a LFL basis, driven by broad based,
mid-single digit growth across both Hygiene and Health.
Volume growth was broad-based across Health and Hygiene brands,
including Finish, Air Wick, Vanish, Durex, Dettol and Gaviscon,
offset by declines in seasonal OTC brands.
· Developing Markets
net revenue grew +5.1% on a LFL basis, led by strong LFL net
revenue and volume growth in South Asia and Greater
China.
ALTERNATIVE PERFORMANCE
MEASURES
Like-for-like (LFL): Net
revenue growth or decline at constant exchange rates (see below)
excluding the impact of acquisitions, disposals and discontinued
operations. Disposals include low margin
manufacturing revenues which are agreed at the time of sale of a
brand or business. Completed disposals are
excluded from LFL revenue growth for the entirety of the current
and prior years. Acquisitions are included in LFL revenue growth
twelve months after the completion of the relevant acquisition. LFL
growth also excludes countries with annual inflation greater than
100% (Venezuela and Argentina).
Constant exchange rate
(CER): Net revenue and profit growth
or decline adjusting the actual consolidated results such that the
foreign currency conversion uses the same exchange rates as were
applied in the prior year and excludes the
effect of applying hyperinflation accounting in the relevant
subsidiaries.
IFRS to LFL
reconciliation Q1 2024
|
Hygiene
£m
|
Health
£m
|
Nutrition
£m
|
Group
£m
|
2023
Reported
|
1,591
|
1,643
|
683
|
3,917
|
M&A
|
-
|
(26)
|
(6)
|
(32)
|
Exchange
|
(56)
|
(60)
|
(12)
|
(128)
|
2023 LFL
|
1,535
|
1,557
|
665
|
3,757
|
2024
Reported
|
1,608
|
1,538
|
591
|
3,737
|
M&A
|
-
|
(13)
|
(1)
|
(14)
|
Exchange
|
36
|
47
|
9
|
92
|
2024 LFL
|
1,644
|
1,572
|
599
|
3,815
|
LFL
growth
|
+7.1%
|
+1.0%
|
-9.9%
|
+1.5%
|
|
North America
£m
|
Europe / ANZ
£m
|
Developing Markets
£m
|
Group
£m
|
2023
Reported
|
1,326
|
1,322
|
1,269
|
3,917
|
M&A
|
(4)
|
(3)
|
(25)
|
(32)
|
Exchange
|
(31)
|
(49)
|
(48)
|
(128)
|
2023 LFL
|
1,291
|
1,270
|
1,196
|
3,757
|
2024
Reported
|
1,198
|
1,298
|
1,241
|
3,737
|
M&A
|
(1)
|
(1)
|
(12)
|
(14)
|
Exchange
|
23
|
41
|
28
|
92
|
2024 LFL
|
1,220
|
1,338
|
1,257
|
3,815
|
LFL
growth
|
-5.5%
|
+5.4%
|
+5.1%
|
1.5%
|
CONFERENCE CALL DETAILS
We will be hosting a live audiocast followed by
a Q&A session for analysts and investors at 08:30 (BST) on
Wednesday 24 April 2024.
Please click on the
link below to join the audiocast on the day.
https://www.reckitt.com/investors/results-and-presentations/
Alternatively, dial in
details are as follows:
UK:
+44 20 3936 2999
All other
locations:
+44 800 358 1035
Participant
access code
249494
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
Cautionary note concerning forward-looking
statements
This announcement contains
statements with respect to the financial condition, results of
operations and business of Reckitt Benckiser Group plc and the
Reckitt group of companies (the "Group") and certain of the plans
and objectives of the Group that are forward-looking statements.
Words such as ''intends', 'targets', or the negative of these terms
and other similar expressions of future performance or results, and
their negatives, are intended to identify such forward-looking
statements. In particular, all statements that express forecasts,
expectations and projections with respect to future matters,
including targets for net revenue, operating margin and cost
efficiency, are forward-looking statements. Such statements are not
historical facts, nor are they guarantees of future
performance.
By their nature, forward-looking
statements involve risk and uncertainty because they relate to
events and depend on circumstances that will occur in the future.
There are a number of factors that could cause actual results and
developments to differ materially from those expressed or implied
by these forward-looking statements, including many factors outside
the Group's control. Among other risks and uncertainties, the
material or principal factors which could cause actual results to
differ materially are: the general economic, business, political,
geopolitical and social conditions in the key markets in which the
Group operates; the Group's ability to innovate and remain
competitive; the Group's investment choices in its portfolio
management; the ability of the Group to address existing and
emerging environmental and social risks and opportunities; the
ability of the Group to manage regulatory, tax and legal matters,
including changes thereto; the reliability of the Group's
technological infrastructure or that of third parties on which the
Group relies including the risk of cyber-attack; interruptions in
the Group's supply chain and disruptions to its production
facilities; economic volatility including increases in the cost of
labour, raw materials and commodities; the execution of acquisitions, divestitures and business
transformation projects; product safety and quality, and
the reputation of the Group's global brands; and
the recruitment and retention of key management.
These forward-looking statements
speak only as of the date of this announcement. Except as required
by any applicable law or regulation, the Group expressly disclaims
any obligation or undertaking to release publicly any updates or
revisions to any forward-looking statements contained herein to
reflect any change in the Group's expectations with regard thereto
or any change in events, conditions or circumstances on which any
such statement is based.
LEI: 5493003JFSMOJG48V108