Resilient Reckitt warns 2016 will be tougher

Market conditions were mixed for the business in 2015, but the group still reported a robust 6 per cent improvement in like-for-like sales, with foreign exchange headwinds accounting for the flat turnover reported. This growth managed to find its way to the bottom line, as strict cost savings pushed adjusted operating margins up 210 basis points, leaving adjusted operating profits up 9 per cent at £2.4bn. Europe and North America – which account for the bulk of revenues – grew 5 per cent on an underlying basis, bringing in a total of £5.8bn in net revenue. Emerging markets actually held up pretty well, too, with a collective 9 per cent improvement in underlying revenues thanks to strong performances in India and China. However, Brazil and parts of Southeast Asia remain challenging.

Divisionally speaking, the consumer health business had a great year, reporting a 14 per cent growth rate thanks to new product innovations, strong demand during the flu season and a high-profile re-branding of an electronic nail file in the US. That said, bosses are urging the market to recognise this performance as exceptional. They believe double-digit growth in this category is unsustainable given it’s well above the 4 to 6 per cent growth rate forecast over the long term.

In 2016 Reckitt will continue with Project Supercharge, which aims to deliver £150m in cost savings over the next three years. The plan was first announced back in February 2015, but management says a "significant portion" of these savings have already been achieved.

Analysts at Canaccord Genuity will update forecasts for FY2016, but had previously expected EPS of 257p this year.