The sharpened focus of Reckitt Benckiser (RB) appears to have paid off after the consumer goods group revised up its full-year growth expectations from 4 per cent to 4-5 per cent. In December the company spun off its pharmaceutical division, Indivior, to focus on its core consumer goods and health products divisions. These posted 11 per cent growth in adjusted operating profits for the first half, helped by the intriguingly named 'Project Supercharge' cost-cutting programme, which management expects to achieve about £150m in annual savings.
The health division, which includes brands such as Nurofen and Durex condoms, was the standout performer. Its 13 per cent like-for-like revenue growth helped boost half-year group-wide sales by 5 per cent to £4.4bn. Developed markets saw strong sales growth thanks to the US launch of the Amopé Velvet Express Pedi - an electronic pedicure product - and a favourable flu season. In emerging markets, management cited improved consumer sentiment in India, but noted that Latin America - and Brazil in particular - remains "tough".
A pipeline of product innovations under brands including Scholl footcare and Airwick home fragrances should help the company meet its new revenue target. Analysts at Berenberg expect adjusted EPS to rise to 238p in 2015, from 230p in 2014.
| RECKITT BENCKISER (RB) | ||||
|---|---|---|---|---|
| ORD PRICE: | 6,020p | MARKET VALUE: | £43bn | |
| TOUCH: | 6,016-6,021p | 12-MONTH HIGH: | 6,130p | LOW: 4,784p |
| DIVIDEND YIELD: | 2.1% | PE RATIO: | 25 | |
| NET ASSET VALUE: | 876p* | NET DEBT: | 29% | |
| Half-year to Jun 30 | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p)** |
|---|---|---|---|---|
| 2014 | 4.32 | 838 | 91.2 | 60 |
| 2015 | 4.36 | 921 | 99.0 | 50.3 |
| % change | +1 | +10 | +9 | -16 |
Ex-div: 13 Aug Payment: 25 Sep *Includes intangible assets of £11.0bn, or 1,544p a share | ||||
