It's only been six months since Reckitt Benckiser's new chief executive Rakesh Kapoor unveiled his vision for the household products and personal care giant, but investors are hopeful that the new strategy will deliver a remedy for the pedestrian growth seen in the latest half-year results.
Reckitt has reorganised its business to focus investment on faster-growing emerging markets, which account for a smaller proportion of its business than peers such as Unilever. That looks sensible. The lacklustre 2 per cent operating-profit increase can largely be blamed on a relatively subdued cold and 'flu season in Europe and North America, where like-for-like sales fell by a percentage point and a lower-margin product mix combined with rising input costs conspired to shave 9 per cent from adjusted operating profits there.
Emerging markets, conversely, saw operating profits climb 6 per cent to £349m thanks to strong demand for health and hygiene products including Durex and Dettol. Reckitt is also hopeful that additional investment in marketing will boost growth - it spent an additional £40m on 'brand equity investment' in the half and remains committed to upping this to £100m over the full year.
Broker Investec expects underlying pre-tax profit of £2.42bn and EPS of 243.1p this year (from £2.47bn and EPS 247.1p in 2011).
RECKITT BENCKISER (RB.) | ||||
|---|---|---|---|---|
| ORD PRICE: | 3,490p | MARKET VALUE: | £25.2bn | |
| TOUCH: | 3,489-3,491p | 12-MONTH HIGH: | 3,688p | LOW: 2,960p |
| DIVIDEND YIELD: | 3.6% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 755p* | NET DEBT: | 34% | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£bn) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 4.62 | 1.04 | 104 | 55.0 |
| 2012 | 4.67 | 1.06 | 107 | 56.0 |
| % change | +1 | +3 | +3 | +2 |
Ex-div: 8 Aug Payment: 27 Sep *Includes intangible assets of £10.0bn, or 1,384p a share | ||||
