At the half-year mark, a better-than-expected performance from Reckitt Benckiser's (RB.) infant formula and child nutrition (IFCN) division prompted an increase in expectations for constant currency net revenue growth of between 14 and 15 per cent. Ultimately, the group achieved the top end of the revised range for 2018, aided by a full-year contribution from Mead Johnson Nutrition (MJN), while $211m (£163m) of related cost synergies were also delivered, well on the way to the $300m target.
The acquisition was undertaken to drive Reckitt's transformation from a consumer goods group to a health and hygiene business, but self-help measures are also enhancing performance. Chicago-based MJN has been on the books for only 18 months, but has returned to growth following two years of net revenue declines.
Top-line growth for the group was more prosaic on a pro-forma/like-for-like basis, although a 3 per cent increase still represents a creditable outcome and is in line with the 2019 target rate. The growth rate accelerated through the final quarter, moving 0.7 per cent ahead of consensus, aided by a strengthening performance at the hygiene home division in North America. This is set against a 40 basis point reduction in the gross margin to 60.6 per cent as the group struggled to contain input costs, together with a difficult pricing environment in the hygiene business.
Analysts at UBS expect EPS of 348p in 2019, increasing to 379p in 2020.
| RECKITT BENCKISER (RB.) | ||||
| ORD PRICE: | 6,294p | MARKET VALUE: | £44.5bn | |
| TOUCH: | 6,292-6,295p | 12-MONTH HIGH: | 7,174p | LOW: 5,255p |
| DIVIDEND YIELD: | 1.7% | PE RATIO: | 21 | |
| NET ASSET VALUE: | 2,084p* | NET DEBT: | 70% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£bn) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 8.8 | 2.13 | 231 | 139 |
| 2015 | 8.9 | 2.21 | 244 | 139 |
| 2016 | 9.5 | 2.25 | 246 | 153 |
| 2017 | 11.4 | 2.50 | 481 | 164 |
| 2018 | 12.6 | 2.72 | 307 | 171 |
| % change | +10 | +9 | -36 | -34 |
| Ex-div: | 18 Apr | |||
| Payment: | 23 May | |||
| *Includes intangible assets of £30.3bn, or 4,280p a share | ||||
