Reckitt Benckiser - Full Year Results 2018

Results at a glance

(unaudited)

Q4
£m

% change actual exchange

% change constant exchange

FY
 £m

% change actual exchange

% change constant exchange

 

 

 

 

 

 

 

Continuing operations

 

 

 

 

 

 

Net Revenue

3,339

+2%

+4%

12,597

+10%

+15%

- Pro-forma growth1

 

 

 

 

 

+3%

- Like-for-like growth1

 

 

+4%

 

 

+3%

Operating profit - reported

 

 

 

3,047

+11%

+16%

Operating profit - adjusted1

 

 

 

3,358

+8%

+12%

Net income2 - reported

 

 

 

2,166

-36%

-33%

Net income2 - adjusted1

 

 

 

2,410

+7%

+11%

EPS (diluted) - reported

 

 

 

305.5

-36%

 

EPS (diluted) - adjusted1

 

 

 

339.9

+7%

 

 

 

 

 

 

 

 

Total operations (including discontinued operations)

Net income2 - reported

 

 

 

2,161

-65%

-63%

Net income2 - adjusted1

 

 

 

2,410

+4%

+9%

EPS (diluted) - reported

 

 

 

304.8

-65%

 

EPS (diluted) - adjusted1

 

 

 

339.9

+5%

 

                 

1 Non-GAAP measures are defined on page 2 and 3

Net income attributable to the owners of the parent

 

Highlights 

·      Pro-forma and LFL growth in 2018 of +3%.  +2% from volume and +1% from price / mix on a pro-forma basis.  Growth was broad-based and innovation-led across both Business Units (BUs).  Strong progress in e-commerce channels, contributing to 9% of the Health BU's net revenue.   

·      Balanced LFL growth in Q4 of +4%.  In both Health and Hygiene Home, LFL growth was +4% - reflecting further progress in Health, and continued strong momentum in Hygiene Home.

·      The RB2.0 operating structure is delivering and work to create two structurally independent business units remains on track for mid-2020.  

·      Accelerated delivery of MJN synergies.  In-year synergies of £158m ($211m) delivered.  We remain on track to achieve our increased synergy target of $300m. 

·      Adjusted operating margin was 26.7%. +20bps on a pro-forma basis and a decline of -60bps on a reported basis.

·      Adjusted diluted EPS was 339.9p, benefitting by 10p from the resolution of various tax matters.

·      The Board recommends a final dividend of 100.2p per share (2017: 97.7p), an increase of +3%.  Total dividend for 2018 of 170.7p (2017: 164.3p), an increase of +4%.

·      Free cash flow generation of £2,029m (2017: £2,129m), reflecting strong cash conversion.

·      2019 LFL net revenue growth targeted at +3-4%.  Adjusted operating margin expected to be maintained in 2019.

 



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

"2018 was a year of good financial progress, achieved in an environment of both significant change within the company, and challenging market conditions.  We delivered the upper end of our 2018 revenue growth target, and accelerated the delivery of MJN cost synergies versus our ingoing expectations.

 

2018 was also a year of significant strategic progress.  RB2.0 represents a platform to transform RB for growth and outperformance. In 2018 we fully integrated MJN to create RB Health.  And at the same time we created RB Hygiene Home, which has reignited growth with a more focussed and agile organisation. 

 

As we look to the future, we are well positioned for long term, sustainable growth, from the excellent portfolio of brands within each of our more focussed and agile Business Units.

 

For 2019 we expect momentum to continue, and target +3-4% LFL net revenue growth.  We expect to maintain the adjusted operating margin as we generate our usual RB cost and efficiency savings, and deploy them into building two even stronger businesses."

 

Chris Sinclair, Chairman, said:

 

"RB has been on a well-established journey with a focussed, strategic evolution from a household cleaning company to a world leader in consumer health.  Our most recent acquisition, MJN, has been a catalyst for RB2.0 - the creation of two end-to-end accountable Business Units.  RB2.0 provides a platform for future growth and outperformance in each Business Unit.  We remain committed to executing on this important project and will continue to evaluate opportunities to maximise shareholder value from RB2.0.

 

We are also under way in the search for a successor to Rakesh, whether internal or external, who will be a fit with the distinctive culture of RB and consistent with execution of RB2.0."