Coronavirus Update

Reckitt Benckiser Group Plc - Final Results

This content has been sourced from:

Reckitt Benckiser Group Plc 

Full-Year Results

Results at a glance



% change actual exchange

% change constant exchange


% change actual exchange3

% change constant exchange3








Continuing operations







Net Revenue







Like-for-like growth1







Operating loss - reported







Operating profit - adjusted1







Net loss2 - reported







Net income2 - adjusted1







Loss per share (diluted) - reported






Earnings per share (diluted) - adjusted1













Total operations (including discontinued operations)

Net loss2 - reported







Net income2 - adjusted1







Loss per share (diluted) - reported






Earnings per share (diluted) - adjusted1













1 Non-GAAP measures are defined on page 6

Net (loss)/ income attributable to the owners of the parent company

Restated for the adoption of IFRS 16 (see Note 14).

Operational Highlights (continuing operations)

  • LFL net revenue growth in 2019 of +0.8%.   -2% from volume and +3% from price / mix with balanced growth in Hygiene Home offset by volume decline in Health.  Continued strong progress in e-commerce channels, share trends improving across both Hygiene Home and Health. 
  • LFL net revenue growth in Q4 of +0.3%.  Improving consumption trends in Health, however net revenue decline of -2.2% impacted by supply challenges.  Hygiene Home, LFL growth of +4.3% reflects continued delivery, combined with seasonal strength in Lysol.
  • Full year adjusted operating margin of 26.2%.  50bps decline driven by 60bps increase in brand equity investment (BEI).
  • Impairment of Mead Johnson Nutrition (MJN) - £5,037m impairment of goodwill in respect of MJN acquisition (refer Note 6).
  • Full year reported operating loss of £1,954m.
  • Adjusted diluted EPS was 349.0p, benefitting from significant items in net financial expense (refer to p14).
  • Full year dividend of 174.6p (2018: 170.7p) reflecting Board recommendation of a final dividend of 101.6p per share (2018: 100.2p).
  • Free cash flow generation of £2,145m (2018: £2,099m3reflecting 87% cash conversion, held back by exceptional items expenditure (refer p15).

Total Operations (includes charges related to discontinued operations)

  • Net loss of £3,683m includes £898m from discontinued operations reflecting the $1.4bn settlement agreed with the DoJ in respect of Indivior related matters (refer Note 13).


Strategic Review Highlights

  • Strong presence in three attractive categories and growth markets:  mid-single digit growth in the medium term, led by penetration, market share improvement; expansion to new places and adjacencies; strong presence in e-Commerce and a global presence, particularly in key emerging markets
  • RB brands are strong, anchored in purpose, and well supported:  growth underpinned by strong #1 or #2 market positions in most categories; our brands address powerful social causes with strong consumer trust
  • Recent performance issues are executional, not structural:  driven mainly by significant recent disruption and change, combined with under-investment in capabilities across supply and sales
  • RB's future structure to benefit from both scale and focus: Organisation to centre around three category global business units (GBUs) - Hygiene, Health and Nutrition; Greater China to have a unique focus due to its long-term importance
  • Three phase plan to rejuvenate RB and rebuild a strong earnings model: mid-single digit top-line growth, mid-20s margins and 7-9% EPS growth
  • Rejuvenation funded by a temporary margin reduction (see 2020 guidance on page 5) and enhanced multi-year productivity programme (see page 3):  Three-year programme of investment to drive growth initiatives and improvements to core capabilities

 2020 Outlook (see page 5)

  • 2020 a transitional year; work to rejuvenate RB to accelerate growth and create long-term shareholder value
  • Expect higher level LFL revenue growth than last year (2019: 0.8%), with steady progress toward our medium-term target. Year off to a strong start, although uncertain environment due to an evolving COVID-19 impact
  • 2020 adjusted operating margin expected to reflect 100bps of headwinds and 150bps from recurring investment, with additional finite-life transformation costs of c.100bps in 2020 and 2021 only

 Commenting on these results, Laxman Narasimhan, Chief Executive Officer, said:

"We ended 2019 broadly in line with our expectations for net revenue growth and adjusted operating profit from October, as our Hygiene business delivered another stable performance.  Health remained weak from a net revenue perspective, but consumption and market share trends are encouraging. 

We now look forward to a new decade. 

I am inspired by our purpose-driven brands that consumers love and have seen in action the benefit they bring to our communities.  I have met customers around the world, and terrific talent in various parts of the organisation, who act as owner entrepreneurs.  While the recent years have been difficult, I believe strongly in our ability to restore performance credibility, and over time, outperform, while making a positive impact on the world.  I know that my leadership team and the broader organisation is inspired and ready to take on the work to make this happen.

Our strategy will be to play in three attractive spaces of Hygiene, Health and Nutrition and we will invest in our organisation accordingly, to leverage both the significant scale RB has in key markets, but also the benefits of focus which has already been proven in Hygiene Home.  In addition to doubling down on our focus on penetration and category creation, we will expand where we play, by increasing our reach from 75 core category market units (CMUs) to 100 and build on our proven strengths in digital and e-Commerce - a critical capability for the future.  We will elevate our focus on Greater China and manage it as an integrated business region, and also elevate e-Commerce in a similar way, to ensure we deliver on their significant growth potential.

We have started a journey of three phases: first stabilise and perform, then perform and build, and finally, outperform.  We will create a strong company which can consistently generate mid-single digit organic revenue growth, 7-9 percent EPS growth and strong cash conversion.

We have a clear plan to invest £2 billion in our business over the next 3 years to make this happen.  Specifically, in 2020 we will increase investment behind our digital capability, in-market competitiveness and operational resilience, particularly in customer service, as well as innovations, as we align around our new organisation.  While we are growing faster than last year - and in some areas, significantly faster - we are targeting a higher level of like-for-like net revenue growth than we achieved in 2019, reflecting some of the uncertainty around the impact of the COVID-19.  Our recurring investment of around £200m, combined with a step up in productivity of £1.3 billion over 3 years, builds a more stable and sustainable growth business.

RB operates in strong, structural growth categories and has an outstanding collection of trusted, market leading brands.  When combined with an organisation structure that leverages both its category focus with its investment in capabilities at scale, RB is positioned well for faster growth and significant value creation as we look towards the new decade."

2020 Outlook 

2020 is a transitional year, as we rejuvenate RB to accelerate growth to deliver long-term shareholder value. For 2020 we should generate a higher level of revenue growth on a like-for-like basis than achieved in 2019 (2019: 0.8%) and make steady progress toward our medium-term target.  While we have started the year strong, there are a number of challenges, including the uncertainty already being seen around the impact of COVID-19 (see below).  In addition, we expect our 2020 revenue growth to be stronger in H2 as we lap weaker quarters in 2019 and we start to see the benefit of the strategic actions announced today.

From an operating margin perspective, in addition to the 100 basis points of operating margin headwinds, principally normalising variable pay assumptions, we will invest a further £200m (c.150 bps) in the business to rejuvenate our commercial capabilities and address issues where needed with consumer service and value.  In addition, we will invest in cost-to-achieve transformation spending of roughly £125m (c.100 bps) in each of the next two years (total of £250m).  These one time costs to achieve will be included within adjusted operating profit.  As a result, we expect 2020 adjusted operating margins to be around 350 bps lower in 2020 than those achieved in 2019.


It is too early to fully assess the impact of the COVID-19 outbreak on the operational and financial performance of the Group.  We are committed to China, to the health of our consumers in China and to the health and safety of our employees in China.  We are seeing some increased demand for Dettol and Lysol products and are working to support the relevant healthcare authorities and agencies, including through donations, information and education.  We do see increased activity online for our consumers in China.  Conversely we are seeing some disruption to offline retailers, distribution channels and the supply chain connected to China.