Reckitt Benckiser left no marks on its whiter-than-white trading record, as the maker of such cleaning products as Cillit Bang and Vanish reported another strong set figures that took it to ten years of uninterrupted sales and profit growth.
Given the tough consumer environment in the decade's final years - chief financial officer Colin Day described 2009 as "probably the toughest year I've ever worked in" - the sparkling figures demonstrate that Reckitt has been bang on target with its strategy. In particular, its decision to focus disproportionately on 17 Powerbrands brands continues to pay-off.
Underlying sales climbed 8 per cent year-on-year on a constant currency basis, driven by Powerbrand growth - the performance in its final quarter was better still, with like-for-like sales up 10 per cent. Encouragingly, Reckitt wasn't reliant on price increases for growth, with volumes up 6 per cent over the year.
That meant the operating margin continued to improve, rising by a percentage point to 24.4 per cent in the period. Reckitt also benefited from lower media rates, which meant that it was able to reduce marketing spend by 120 basis points to 11.2 per cent of net revenue. It also saw gross margins climb 90 basis points thanks partly to changes in the sales mix and lower input costs, although Mr Day said that there might be "some more pressure on input prices in 2010."
Like many of its industry peers, developing economies have been the key growth driver as developed markets stuttered. Underlying sales in its emerging markets business climbed 19 per cent to £388m, compared to a meagre 1 per cent increase to £867m in Europe, where growth was held back by economic weakness in markets such as Spain and Italy. Its smaller pharmaceutical business also reported strong growth, with sales up 66 per cent to £194m, and the company said it expected further good growth this year despite the potential impact of generic competition to its key drug, Suboxone.
Broker Panmure Gordon expects full-year pre-tax profits of £1.9bn and EPS of 196.5p.
| ORD PRICE: | 3,199p | MARKET VALUE: | £23.0bn | |
| TOUCH: | 3,199-3,201p | 12-MONTH HIGH: | 3,390p | LOW: 2,403p |
| DIVIDEND YIELD: | 3.1% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 557p* | NET CASH: | £220m | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£bn) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2005 | 4.18 | 0.88 | 92.0 | 39.0 |
| 2006 | 4.92 | 0.87 | 93.5 | 45.5 |
| 2007 | 5.27 | 1.21 | 131 | 55.0 |
| 2008 | 6.56 | 1.47 | 158 | 80.0 |
| 2009 | 7.75 | 1.89 | 199 | 100 |
| % change | +18 | +29 | +26 | +25 |
Ex-div:24 Feb Payment:27 May *Includes intangible assets of £6.1bn or 846p a share | ||||
