Reckitt Benckiser Group Plc (RB) is into manufacturing and marketing of household, toiletry and health care products. The company has a spectrum of products consisting of air fresheners, laundry products, dishwashing detergents, disinfectant sprays, water softeners, household cleaners, and personal care products. The company also manufactures over the counter (OTC) drugs, cough and congestion tablets, sinus relief products, gastric liquids, hair removal and pest control products. The company has a strong brand image in the market under the names such as Durex, Nurofen, Strepsils, Mucinex, Dettol, Lysol, Veet, Harpic, Mortein, Finish and Vanish.
An additional sum of $200 million will be invested by Reckitt Benckiser Group Plc, in its UK, US and Michigan manufacturing facility. These additional funds would be used to expand the Michigan plant capacity, which was earlier bought for about $18 billion in 2017. The company has made substantial investments in both UK and the US. The company has around 4,000 employees in the U.S and in the United Kingdom together. The company is also in talks with the UK and US regulatory authorities to find ways to provide wider and easier access to healthcare. The company is offering free consulting services to retail customers with partnering with Walmart Inc and Health 4 All.
In the trading update for the first quarter of 2019, the company reported a slow start to the year with like-for-like (LFL) sales growth of 1%. Momentum in Hygiene Home continued with LFL growth of +3%, while a slow start in Health division was reported; LFL performance in Total Health was flat. The company is on track to achieve LFL net revenue growth target of 3-4% in FY19.
Financial Highlights – FY2018 (£mn)
Source: Annual Report FY2018, Company Website
In 2018, the company reported net sales of £12,597 million, up by 3.0% on both pro-forma and LFL basis; growth was broad-based and innovation-led, with 2% from volume and 1% from price/mix on a pro-forma basis. At constant currency basis, the company reported a sales growth of 15%.
Due to the combination of input cost and a tough pricing environment, gross margin declined by 40bps on a reported basis and 70bps on a pro-forma basis to 60.6%. Operating profit rose by 11% on an actual exchange rate basis to £3,047m, while on an adjusted basis, operating profit was ahead 8% (AER basis) to £3,358m.
Due to a large base in 2017, reported net income from continuing operations decreased by 36% on AER basis (33% on a constant basis) to £2,166m, while, on an adjusted basis, net income stood at £2,410m, up by 7% on AER basis (11% on a constant basis).
On a reported basis, diluted EPS from continuing operations was 305.5 pence, reflecting a decline of 36%, while on an adjusted basis, the growth was 7% to 339.9 pence. The Board of Reckitt Benckiser announced a final dividend of 100.2 pence and full-year dividend stood at 170.7 pence per share (subject to shareholders approval), reflecting a surge of 3.9 per cent against the FY17 full-year dividend of 164.3 pence per share. Free cash flow for FY18 stood at £2,029 million as compared with £2,129 million in FY17.
Share Price Performance
Daily Chart as at June-05-19, before the market close (Source: Thomson Reuters)
On June 5, 2019, at the time of writing (before the market closed, at 09:10 AM GMT), Reckitt Benckiser Group Plc shares were trading at GBX 6,342.00, up by 0.36 per cent against the previous day closing price. Stock's 52 weeks High and Low is GBX 7,174.00/GBX 5,559.00.
At the time of writing, the share was trading 11.59 per cent lower than the 52w High and 14.08 per cent higher than the 52w low.
Stock's average traded volume for 5 days was 1,182,079.40; 30 days – 1,479,979.73 and 90 days – 1,472,772.64. The average traded volume for 5 days was down by 20.13 per cent as compared to the 30 days average traded volume.
The company’s stock beta was 0.91, reflecting slightly lower volatility as compared to the benchmark index. The outstanding market capitalisation was around £44.67 billion, with a dividend yield of 2.70 per cent.
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