One Consumer Goods Company To Be Looked At - Reckitt Benckiser Group Plc (RB.L)

Company Profile

Reckitt Benckiser Group Plc (RB.L) is a consumer health and hygiene company that manufactures and markets household, toiletry and health care products. These consist of air fresheners, laundry products, dishwashing detergents, disinfectant sprays, water softeners, household cleaners, and personal care products. It also sells over-the-counter (OTC) drugs, cough and congestion tablets. Sinus relief products, gastric liquids, hair removal and pest control products.

Key Brands: Air Wick, Bang, Calgon, Clearasil, Cilit Bang, Dettol, Durex, Finish, Gaviscon, Harpic, Lysol, Mortein, Mucinex, Nurofen, Scholl, Strpsils, Vanish, Veet, and Woolite.

Product Portfolio: Health, Hygiene, Home and Portfolio brands.

• Health business overview: Company is engaged in providing over-the-counter (OTC) drugs for fever, cold, pain, sore throat and flu problems. The business comprises, medicated sore throat relief products, sexual wellbeing, condoms, cough and congestion tablets, sinus relief products, acne treatment creams, facial washes and cleaning pads, analgesic products, upper gastrointestinal products, footcare products and others.

Major brands: Strepsils, Durex, Mucinex, Nurofen, Nutramigen, Gaviscon and Scholl.

• Home business overview: Provides air care, fabric treatment and garment care products, water and fabric softeners, laundry detergents and shoe care products for leather shoes.

Major brands: Air Wick, Calgon, Vanish and Woolite.

• Hygiene business overview: Provides personal hygiene and home hygiene products for residential customers. Comprise antiseptic liquids, disinfectant cleaners, lavatory and speciality cleaners, automatic dishwashing products, pest control product solutions for domestic infestations, hair removal products and depilatory products for skin care and acne treatments.

Major brands: Harpic, Dettol, Veet, Lysol, Finish, Clearasil, Cilit Bang and Mortein.

• Portfolio brand: Provides laundry detergents, fabric softeners and ironing aids.

Recent Developments:

• As per board announcement on 16^th Jan 2019, Mr Rakesh Kapoor has shown his intention to retire as CEO of the company by the end of the year 2019. Mr Kapoor’s long stint with Reckitt is from the last 32 years and active as CEO role for more than eight years.
• On 18^th Jan 19, the company reported its Q3FY18 interim result.
• In November 2018, Reckitt group exercised a direct-to-consumer deal with SCI regarding the Enfamil formula.
• On 30^th October 2018, company reported Q3 FY2018 trading update.

SWOT Analysis

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Q3 FY18 Revenue Highlights

(Source: Company Filings)

Commentary

• Like-for-like (LFL) growth in Health and Hygiene business of 4%. However, total growth was adversely affected by GBP 70 million or by -2% on account of temporary production obstructions at their Europe infant nutrition plant.
• LFL growth in Total health business was flat, including Infant nutrition of -6% and Rest of Health of 4% on account of steady increase in the OTC and improving awareness in Wellness and Health hygiene products.
• LFL growth in Hygiene business was on account of higher performance from Air Wick, Lysol and Finish in EVA and Harpic in DVM.
• Q3’18 was adversely affected on account of obstructions at European infant nutrition plant, and this happened during the period of peak market growth and before RB's new facilities in Australia were operational.

Regional Performance Overview

• Among all the major regions, DVM reported a strong quarter performance. In the third quarter, base health business reported high single-digit growth.
• North America also delivered strong quarterly results with IFCN, Mucinex and other VMS brands robust performance.
• Europe region performance was the laggard mainly because of IFCN temporary production disruption.

Key Ratios

 (Source: TR)

Stock Price Performance

On 13^th Feb 2019, Reckitt share closed at GBP 6049.00, up by 0.80 per cent from previous day closing price. Stock 52-week High/Low is GBP 7,174/5,255. Its stock that trades at a market price is 15.68% below its 52W high and 15.11% above its 52w low. The stock PE is 12.40x and has a beta of 0.93 which shows that stock is less volatile compared to its benchmark index FTSE 100. Currently, the stock is trading 54.65% below its 200 days simple moving average and 1.86% higher than its 30 days simple moving average.