Summary

  • The company posted a very strong revenue for the third quarter of 2020, registering a growth of 6.9 per cent on a y-o-y basis
  • Of the three business segments of the company, the hygiene segment has been the best performer
  • Hygiene, health and nutrition – all the segments saw tremendous growth during the pandemic period

 

It is proving to be a good year so far for British health and wellness major Reckitt Benckiser Group plc. The outbreak of the coronavirus pandemic actually turned out to be a revenue accelerator for the company as compared to the other sectors in the country, which suffered massive revenue downfalls. 

The need for enhanced safety and well-being has brought about positive habitual changes in the lifestyle, which provided an increased impetus to the demand for the company's products.  The hygiene business segment was the best performer, and its revenue grew at 12.4 per cent for Q3 2020. Given the fact that the pandemic is still not over, it is plausible that the fortunes of the company would continue to be bright for some more time. 

A closer look

The company came out with its third-quarter results on 20 October 2020. The total revenue generated by the company for the period was £3.513 billion, whereas on a year to date basis the revenue generated by the company was £10.424 billion. 

The hygiene business segment was the top performer for the quarterly period having recorded a sale of £1.49 billion on a y-o-y basis, (year to date sales are at £4.227 billion). The health business segment was the second best, having generated a yoy revenue of £1.217 billion, (yod revenue: £3.719 billion). 

The nutrition business segment, however, did not perform up to the mark for the period having generated a y-o-y revenue of £806 million (y-o-d revenue: £2.478 billion). This segment’s revenue dropped by 1.8 per cent as compared to the same period in the previous year. 

Geographical segment-wise, the North American segment registered a revenue of £1.068 billion for the third quarter of 2020, displaying an annual growth of 22.6 per cent. 

The European/ ANZ market segment recorded a revenue of £1.142 billion for the quarterly period, growing by 5.4 per cent as compared to Q3 2019. The developing markets segment generated a revenue of £1.303 billion for the quarterly period, with a growth of 6.7 per cent.

For the rest of the year, the company expects to perform as per the guidance previously given except for the like- for- like net revenues, which is expected to fall a little short of expectations.

Pandemic’s impact

The coronavirus outbreak brought the importance of hygiene to the forefront. The government and health authorities have been advising people to use face masks, frequently sanitize their hands, keeping their surroundings clean and disinfect to minimise the chances of catching the Covid-19 infection.

People have also become more conscious than before and have started investing more in health safety and well-being products. Besides, government and business establishments are increasingly becoming big consumers of these products since the pandemic broke out in March. 

After the lockdown, there was an increased need to keep workplaces adequately sanitised, while the government also issued advisories to keep employees and customers safe in establishment premises. Hospitals and nursing homes too increased their consumption as they had to be extra cautious to restrict the virus from spreading from infected people to other patients and healthcare staff. 

Experts feel even if Covid-19 slows down significantly in the next few months, the demand for these products will continue to be strong as safety protocols would still need to be followed till the cases see a decline.

Share price performance

Reckitt Benckiser Group plc (LON: RB) is a UK-based healthcare company that manufactures and sells products catering to the people’s needs for hygiene, nutrition, wellness as well as digital health. The company’s primary objective is to challenge public systems and cater to the underlying demand for self-care, STI prevention and good hygiene practices across the globe.

Source- Thomson Reuters

As on 21 October, the shares of Reckitt Benckiser Group plc have been trading at GBX 7038.00 per share (4.36 PM GMT+1) losing 2.14 per cent over the previous day’s close.

Outlook

Reckitt Benckiser Group plc, like other healthcare and wellness companies, has performed well during this year due to the increased demand for its products. Though the company's hygiene and healthcare business segments have done well this quarter, its nutrition division might require more attention to come out stronger in the forthcoming quarters.  

 

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