A £225m provision mainly relating to competition law inquiries and news that an application has been filed in the US for a generic version of Reckitt Benckiser's (Rb.) opiod-dependency Suboxone film medication overshadowed a solid set of results.
Strip out £249m of exceptional items, most of which related to the legal provision, and the constant currency, underlying operating profit actually inched up 2 per cent to £1.16bn, with particularly strong performance from health and hygiene. Here, like-for-like sales grew 14 per cent and 7 per cent, respectively, helping to boost group underlying sales by 6 per cent - slightly ahead of expectations.
Across the health, hygiene, home and portfolio categories, adjusted operating profit grew 9 per cent to £899, and the gross margin improved 230 basis points to 58.7 per cent, thanks largely to a withdrawal from private label business and cost-cutting. But, in the pharmaceutical division, which accounted a fifth of first-half earnings, operating profit fell 9 per cent to £228m, as Reckitt discontinued Suboxone tablets to focus on the film version of the drug and invested in its clinical pipeline. Despite the entry of generic tablets, the film has retained its 69 per cent market share and Reckitt says it has a patent for the technology lasting to 2030.
Investec expects pre-tax profit of £2.62bn for the full year, giving EPS of 269p (from £2.56bn and 264p in 2012)
| RECKITT BENCKISER (RB.) | ||||
|---|---|---|---|---|
| ORD PRICE: | 4,682p | MARKET VALUE: | £33.6bn | |
| TOUCH: | 4,680-4,684p | 12-MONTH HIGH: | 4,986p | LOW: 3,475p |
| DIVIDEND YIELD: | 2.9% | PE RATIO: | 20 | |
| NET ASSET VALUE: | 841p* | NET DEBT: | 46% | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£bn) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 4.67 | 1.06 | 107 | 56.0 |
| 2013 | 4.99 | 0.90 | 91.9 | 60.0 |
| % change | +7 | -15 | -14 | +7 |
Ex-div: 7 Aug Payment: 26 Sep *Includes intangible assets of £11.7bn or 1,631p a share | ||||
