REG - Reckitt Benckiser Gp - 1st Quarter Results

Reckitt BenckiserAnnouncement

24/04/2024 07:00

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RNS Number : 7663L  Reckitt Benckiser Group PLC  24 April 2024

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  LFL(1)  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  LFL(1)  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  LFL(1)  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  LFL(1)  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         LFL(1)  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  Health  Nutrition  Group

                £m       £m      £m         £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  Europe / ANZ  Developing Markets  Group

                £m             £m            £m                  £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/
(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

 

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