Reckitt Benkiser Group- Final Year 2021 Results

17 February 2022

RECKITT (RKT.L)

Strong 2021 Revenue, Ahead Of Expectations. 

Strengthened Portfolio. Transformation Firmly On Track

¹ Adjusted measures are defined on page 30.

All amounts shown in £m and including IFCN China, with the exception of LFL net revenue and unless otherwise stated. LFL net revenue excludes IFCN China, EnfaBebé, Scholl and Biofreeze for the entirety of the current and prior periods.

Highlights

Full year LFL net revenue growth of +3.5% (+17.4% on a two-year stacked basis¹) ahead of expectations led by a strong performance in Hygiene and a recovery in Health as we exited the year.

• Q4 LFL net revenue growth of +3.3% with Health (+17.5%) offsetting Hygiene (-6.1%) lapping tough prior year comparators.
• Strong momentum: Brands less sensitive to COVID dynamics, representing c.70% of the portfolio grew, on average, by mid-single-digits in each quarter of 2021.
• Strong progress in repositioning our business towards higher growth.  Key highlights include the divestments of IFCN China and Scholl, the proposed disposal of E45, and the acquisition of Biofreeze.  Approximately 9% of the portfolio repositioned.
• Adjusted operating margin (ex IFCN China) of 22.9% in line with guidance. Adjusted operating loss related to IFCN China of £67m, reflecting difficult trading throughout the year and c.£40m of exit costs incurred immediately prior to the disposal of the business.
• IFRS operating loss of £804m (2020: £2,160m profit) reflects the loss in relation to the strategic review and disposal of IFCN China.  
• Proposed full year dividend of 174.6p (2020: 174.6p) reflecting Board recommendation of a final dividend of 101.6p.

Outlook

• For 2022 we are targeting LFL net revenue growth of between 1-4%.
• We are targeting growth in adjusted operating margins in 2022, from our base of 22.9%, underpinned by multiple levers, despite significant commodity inflationary pressures.
• Transformation firmly on track. We expect to exit 2022 with mid-single-digit LFL net revenue growth and progress towards medium-term adjusted operating margin target in the mid-20s by the mid-20s.

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

“Our journey to rejuvenate sustainable growth is well on track as evidenced by strong LFL growth of 3.5% in 2021, building on the outstanding growth in 2020, for a two-year stack of 17.4%.

Over the last two years, we've significantly strengthened our business. Our innovation pipeline is 50% larger, our brands are stronger and more relevant, and our ability to serve our customers and consumers is greatly improved. We've taken Reckitt's strong performance-driven culture, with its unique sense of ownership, and are evolving it for the better. We've also been active in managing our portfolio, repositioning for faster growth.

The business is showing positive momentum with 62% of our core CMUs holding or gaining share, underpinned by the investments we have already made.  We are therefore targeting both growth in LFL net revenue and an increase in adjusted operating margin in 2022, despite an unprecedented inflationary environment and ongoing uncertainties created by COVID.

We have a unique portfolio of trusted, market-leading brands in structurally attractive categories with significant headroom for growth. This, combined with our progress to date, gives me the confidence in both our near term and medium-term prospects.”