Coronavirus Update

Reckitt Benckiser Group Plc - 3rd Quarter 2019 Trading Update

 

SLOW Q3. BUILDING RB FOR THE LONG TERM 

Q3 2019 Trading Update - Reckitt Benckiser Group plc (RB)   

 

 

Q3

YTD 2019

 

£m

LFL1

Reported

£m

LFL1

 

Reported

 

IFCN

OTC

737

496

+7.2%

-6.8%

+11.8%

-3.7%

2,253

1,371

+3.9%

-5.3%

+7.3%

-3.9%

Other Health

726

-2.5%

+1.3%

2,173

-1.8%

+0.2%

Health

 

1,959

-0.3%

+3.6%

5,797

-0.6%

+1.8%

Hygiene Home

 

1,326

+4.5%

+7.9%

3,728

+3.3%

+4.6%

Total

3,285

+1.6%

+5.3%

9,525

+0.9%

+2.9%

 

 

Highlights 

  • LFL growth in Q3 of +1.6%.  Growth consisted of volume -1% and price / mix +3%.  
  • LFL performance in Health in Q3 was -0.3%, after lapping the supply disruption in the IFCN business in the prior year.  An underlying decline of around -4% reflects improving but continued share loss and cautious retailer purchasing ahead of the 'flu season. 
  • LFL growth in Hygiene Home in Q3 of +4.5%.  Continues to deliver consistent and sustainable underlying growth in-line with market of around +3%.
  • Full year 2019 net revenue growth target reduced to 0-2% (LFL), reflecting the reduction in retailer inventory levels of seasonal products in Q3 and the inherent uncertainties of the season and associated stocking.
  • Full year 2019 adjusted operating margins expected to see a modest decline as we continue investment behind brand equity initiatives, building a more resilient business and increasing front-line capabilities.

 

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

"RB's performance in Q3 was disappointing.  We delivered another quarter of consistent growth in Hygiene Home.  Our Health business, despite good market growth and stable consumer offtake, delivered a weak net revenue performance.  This was primarily due to issues in the US and China. In the US, we saw more cautious retailer seasonal purchasing patterns.  In China, IFCN continues to face challenging market conditions.

This performance is a reflection of an extended period of significant change and disruption in the company.  I am prioritising execution and operational performance as a matter of urgency.  I have made it clear within the organisation that any activities that detract focus and attention from improving our operational performance, be paused. 

I have lowered our revenue outlook for the full year 2019 to reflect the combination of a weak Health performance in Q3 and inherent seasonal uncertainty in Q4.  We expect a modest margin decline in 2019 as we will continue our investment in the brands and the business to build RB for the long term.

Stepping back from current trading, I see confirmation of the reasons why I joined RB: we play in high-growth categories, with strong, market-leading brands, anchored in purpose; we have strong capabilities in innovation and e-commerce and we have an organisation full of owners who act with speed and agility. 

The issues I have seen facing the business are clear and addressable.  I am confident we can restore RB to the levels of performance that it is capable of achieving, and build a purpose-driven, responsible company. Our focus will be on: restoring performance credibility, bringing simplification and focus, driving commercial execution, unleashing our people and delivering a strong financial model. 

I firmly believe that we have significant potential, with an outstanding set of brands in structural growth categories.  I look forward to providing a more detailed update on the business, and our plans to restore long-term sustainable performance, in February with our FY19 results."