1st Quarter Results
26th April 2005
STRONG START TO 2005
Well positioned to achieve full year targets
Results at a Glance Q1 % change % change
£m actual exch constant exch
Net Revenues £986m +7% +7%
Operating Profit £160m +11% +10%
Net Income £124m +20% +18%
EPS (fully diluted) 16.6p +19%
* Net revenues grew by 7% (7% at constant exchange) to £986m.
* Operating profit increased by 11% at actual exchange to £160m. Operating
margin rose by 50 basis points (bps) to 16.2% following a gross margin
increase of 40 bps to 54.1% and after a substantial increase in marketing,
mainly media, investment behind recent product innovations.
* Net income increased 20% to £124m. Earnings per share increased 19% to 16.6
pence with the accretion from the buyback program offset by the year on
year impact of the Convertible Bond conversion.
* Strong cash generation saw net funds of £802m, an increase of £170m
compared to December 2004. This included £31m of bond conversion and was
after share buyback of £41m.
* These results were driven by the success of recent initiatives. Significant
contributors included Cillit Bang, Finish 4-in-1 & Power Booster, Airwick
Mobil'Air and Freshmatic.
Commenting on these results, Bart Becht, Chief Executive Officer, said
'Reckitt Benckiser started 2005 strongly, with net revenue growth of 7% due to
the success of recent product innovations, such as Cillit Bang, Finish 4-in-1
and Airwick Freshmatic. The Company more than offset the significant increase
in input costs through volume growth, mix improvement and ongoing cost
optimisation, generating strong profit growth.
'These results position us well to achieve our full year targets of net revenue
growth of 5% to 6% and net income growth of low double digits, both at constant
exchange.'
Basis of Presentation
Results for Q1 2005 are presented under International Financial Reporting
Standards (IFRS). The comparatives for Q1 2004 have been restated. The detailed
impact of adoption of IFRS was set out in a press release dated 8th March 2005.
Detailed Operating Review
Q1 Net revenues grew 7% (7% constant) to £986m.
Gross margin increased by 40 bps to 54.1%. Significantly higher costs of raw
and packaging materials in the quarter were offset by the benefits of high
volume growth, product mix and continuing savings from the Company's cost
optimisation programs, Squeeze and Xtrim.
Marketing investment was higher in total; media investment increased by 8% to a
level of 12.6% of net revenues.
Operating margins increased by 50 bps to 16.2% due to gross margin expansion
and favorable fixed cost development, offset by an increase in marketing
investment.
Operating profit grew 11% (10% constant) to £160m.
Net Interest income was £7m (2004 expense of £4m), reflecting conversion of the
Convertible Bond, mainly in July 2004, and continuing strong cash in-flow. The
tax rate is 26%.
Net income was £124m, an increase of 20% (18% constant). Earnings per share
increased 19% to 16.6 pence marginally below the net income growth rate as the
accretion from the buyback program was offset by the year on year impact of the
Convertible Bond conversion.
Category Review at constant exchange rates.
Fabric Care. Net revenues were flat at £262m. Good continued growth for Vanish
Oxi Action fabric treatment and carpet cleaners, and for Calgon water softener
has been offset by lower net revenues in laundry detergent and fabric
softeners.
Surface Care. Net revenues grew by 15% to £210m principally due to the success
of Cillit Bang in Europe and to the launch of the brand as Easy Off Bang in
Developing Markets. Harpic /Lysol Lavatory Care net revenues were lower due to
a tough comparison with last year's Ready Brush launch.
Dishwashing. Net revenues increased 6% to £150m. Finish/Calgonit automatic
dishwashing grew strongly in Europe due to the launch of 4-in-1 and Power
Booster. Sales in North America grew further. Hand dish sales were lower.
Home Care. Net revenues improved by 9% to £144m. Air Care grew strongly
following the launch of Airwick Mobil'Air and Airwick Freshmatic in Europe, and
strong growth for Airwick Decosphere, electrical oils and Mobil'Air in North
America. Pest control grew due to continuing strong growth in Developing
Markets.
Health & Personal Care. Net revenues increased 8% to £150m. Veet Depilatories
grew strongly in North America and in Developing Markets due to the success of
Veet Rasera. Dettol antiseptic was ahead in Developing Markets due to the
expansion of the personal care range and strong growth for the base business.
UK Health Care increased following the launch of Gaviscon Cool and despite a
slow 'flu season in Northern Europe. Suboxone anti-addiction treatment
continues to grow strongly in North America.
Core Household. Net revenues grew 7% to £916m. Other household net revenues
were flat. As a result, total household and health & personal care net revenues
were ahead by 7%.
Food. Net revenues grew strongly by 9% to £37m with good performance across the
portfolio, benefiting also from the national roll-out in retail of Cattleman's
BBQ sauce.
Geographical Analysis at constant exchange
Europe 55% of net revenues
Net revenues grew 7% to £538m. The major contributors to growth were surface
care, automatic dishwashing and air care. Cillit Bang grew strongly across all
markets, helped by the new de-greaser and powder products. Finish/Calgonit grew
strongly behind the introduction of 4-in-1 and Power Booster. Airwick Mobil'Air
and Freshmatic were the major growth drivers in air care. Healthcare grew
following the introduction of Gaviscon Cool and despite a slow 'flu season in
Northern Europe.
Operating margins were 20bps lower in the quarter at 19.3% with the limited
gross margin expansion following higher input costs more than offset by higher
marketing investment behind recent new product initiatives. Operating profit
increased by 6% to £104m.
North America & Australia 28% of net revenues
Net revenues grew 1% to £273m compared to a particularly strong quarter last
year resulting from the launch of Lysol Ready Brush. Q1 growth in household
came from automatic dishwashing, air care, depilatories and surface care other
than lavatory care which was down year-on-year. There was further growth for
Electrasol 2-in-1 and gelpacs in automatic dishwashing, from Airwick
Decosphere, Mobil'Air and electrical oils in air care, and from Lysol Neutra
Air and disinfectant spray in surface care. Veet Rasera grew strongly behind
significant market share gains in depilatories. Suboxone anti-addiction
treatment continues to grow strongly. Food growth was helped by the national
roll-out of Cattleman's BBQ sauce in retail.
Operating margins were 60bps lower at 14.3% due to lower gross margin as a
result of higher raw and packaging materials and higher marketing investment
not fully offset by lower fixed costs. Operating profit was 3% lower at £39m.
Developing Markets 17% of net revenues
Net revenues grew 14% to £175m with strong growth across all regions of Asia,
Latin America and Africa Middle East. The major contributors to growth were
Veet depilatories and Vanish Oxi Action which continue to be introduced into
new markets, Easy Off Bang which is being rapidly rolled out across all
regions, Mortein pest control due to strong growth for the base business and
Dettol antiseptics due to range extensions in personal care and strong growth
for the base business.
Operating margins improved by 370bps to 6.3% due to gross margin improvement,
significant volume leverage and favorable product mix. Operating profit was £
11m (2004 £4m).
Financial Review
Income Statement. Net interest moved from a £4m charge to a positive
contribution of £7m. This was due to the effect of the conversion of
Convertible Bonds in 2004 and 2005 plus strong cash inflow in 2004 and in Q1
2005 increasing the net funds position. Tax on profit for the quarter was £43m.
The tax rate for the period is 26%.
Earnings per share grew 19%, slightly below the 20% growth in Earnings. The
benefit of the buyback program of 100bps was more than offset by the conversion
of Convertible Bonds during 2004, which had a year on year impact of 200bps.
Balance Sheet. Net Funds of £802m increased by £170m during the quarter due to
the final tranche of conversion of the Convertible Bond (£31m) and cash inflow
of £180m and after the cash outlay of £41m for buying back shares. Net working
capital (inventories, short term receivables and short term liabilities
excluding borrowings, convertible bonds and provisions) reduced by £26m to
minus £547m.
During the quarter, the Company repurchased 2.5m shares at a cost of £41m.
Half Year Results.
The Company will release results for the six months to 30 June 2005 on Monday
25th July.
For further information
Reckitt Benckiser +44 (0)1753 217 800
Tom Corran SVP Investor Relations & Corporate Communications
Mark Wilson Corporate Controller & Investor Relations Manager
PR Agency
Tim Spratt Financial Dynamics +44 (0)207 837 3113
The Group at a Glance (unaudited)
Quarter Ended March 31
2005 2004#
£m £m
From total ordinary activities
Net revenues 986 920
Net revenues growth 7% 8%
Gross margin 54.1% 53.7%
EBITDA 182 166
EBITDA margin 18.5% 18.0%
EBIT 160 144
EBIT margin 16.2% 15.7%
Profit before tax 167 140
PBT margin 16.9% 15.2%
Net Income 124 103
Net Income margin 12.6% 11.2%
EPS 17.1p 14.6p
EPS, diluted 16.6p 13.9p
# Restated following the adoption of IFRS.
Group Balance Sheet Data
March 31, December 31,
2005 2004#
£m £m
Net working capital* (547) (521)
Net funds 802 632
* Defined as inventories, short term receivables and short term liabilities
excluding borrowings, convertible bonds and provisions.
# Restated following the adoption of IFRS.
Shares in Issue
First Quarter
Millions
31 December 2004 724.5
Issues on Conversion of Capital Bonds 8.1
Other Issues 1.8
Cancelled (2.5)
31 March 2005 731.9
Group Income Statement (unaudited)
Quarter Ended March 31
2005 2004# % change
£m £m
Net revenues 986 920 7%
Cost of sales (453) (426) 6%
Gross profit 533 494 8%
Net operating expenses (373) (350) 7%
Total operating profit 160 144 11%
Net interest income / (expense) 7 (4)
Profit on ordinary activities before 167 140 19%
taxation
Tax on profit on ordinary activities (43) (37) 16%
Profit on ordinary activities after taxation 124 103 20%
Attributable to equity minority interests 0 0
Profit for the period 124 103 20%
Earnings per ordinary share:
On profit for the period 17.1p 14.6p 17%
On profit for the period, diluted 16.6p 13.9p 19%
Average common shares outstanding:
Basic 724.8 707.9
Diluted 748.9 761.4
# Restated following the adoption of IFRS.
Segmental Analysis (unaudited)
Analyses by geographical area and product segment of net revenues and operating
profit are set out below. The figures for each geographical area show the net
revenues and profit made by companies located in that area.
Quarter Ended March 31
2005 2004* % change
£m £m exch. rates
actual const.
Net revenues - by geographical area
Europe 538 492 9% 7%
North America & Australia 273 276 -1% 1%
Developing Markets 175 152 15% 14%
986 920 7% 7%
Operating profit - by geographical area
Europe 104 96 8% 6%
North America & Australia 39 41 -5% -3%
Developing Markets 11 4
Corporate 6 3
160 144 11% 10%
Operating margin - by geographical area % %
Europe 19.3 19.5
North America & Australia 14.3 14.9
Developing Markets 6.3 2.6
16.2 15.7
* Restated following the adoption of IFRS.
Segmental Analysis (continued)
Quarter Ended March 31
2005 2004* % change
£m £m exch. Rates
Actual Const.
Net revenues - by product segment
Household and Health & Personal Care 949 884 7% 7%
Food 37 36 3% 9%
986 920 7% 7%
Operating profit - by product segment
Household and Health & Personal Care 151 139 9% 7%
Food 3 2 50% 50%
Corporate 6 3 - -
160 144 11% 10%
Operating margin - by product segment % %
Household and Health & Personal Care 15.9 15.7
Food 8.1 5.6
16.2 15.7
Net revenues - Household and Health &
Personal Care
Fabric Care 262 256 2% 0%
Surface Care 210 184 14% 15%
Dishwashing 150 140 7% 6%
Home Care 144 133 8% 9%
Health & Personal Care 150 138 9% 8%
Core Business 916 851 8% 7%
Other Household 33 33 0% 0%
949 884 7% 7%
* Restated following the adoption of IFRS.
Latest directors dealings
- 1 day ago Legal & General Group
- 1 day ago Legal & General Group
- 1 day ago GETECH Group
- 2 days ago Great Portland Estates
- 2 days ago Time Out Group