3rd Quarter Results

INTERIM MANAGEMENT STATEMENT Q3 2013                      

                                               
                                                                 22 October 2013

                                                                               

                                  STRONG Q3                                    

Results at a glance                 Q3 % change % change   YTD % change % change
                                    £m   actual constant    £m   actual constant
                                       exchange exchange       exchange exchange
                                                                                
Net revenue                      2,548       +5       +5 7,542       +6       +6
- Like-for-like growth* (ex RBP)                      +5                      +5
                                                                                
- Like-for-like growth* (total)                       +3                      +4
                                                                                
                                                                                
Net Revenue by Segment                                                          
-ENA                             1,308       +9       +5 3,759       +7       +4
-LAPAC                             623       +7      +15 1,903      +10      +13
                                                                                
-RUMEA                             352       +2       +5 1,055       +4       +5
-Food                               74       +3       +1   234       +3       +0
                                                                                
Total ex RBP                     2,357       +7       +7 6,951       +7       +7
-RB Pharmaceuticals                191      -14      -16   591       -3       -5
                                                                                
Total Net Revenue                2,548       +5       +5 7,542       +6       +6
                                                                                
Net Revenue by Category                                                         
                                                                                
-Health                            707      +27     +25  1,904      +30      +28
-Hygiene                           948       +5      +6  2,941       +6       +6
-Home                              500       -1      -1  1,479       +1       +1
                                                                                
-Portfolio brands                  128      -19     -22    393      -28      -30
                                                                                

* Like-for-like ("LFL") growth excludes the impact of changes in exchange
rates, acquisitions and disposals.

 

Highlights:

  * Year to date like-for-like (LFL) net revenue growth (ex RBP) of +5%, driven
    by Emerging Markets Areas (EM) growth and continued growth in ENA.
  * Strong Q3 LFL growth of +5% (ex RBP) - ENA +2% LAPAC +10% and RUMEA +5%. 
  * Continued excellent Health & Hygiene performances, and a solid Home
    performance in challenging market conditions.
  * RBP - volume (mg) market share of Film maintained at around 68% since
    launch of generic tablets and strategic review of RBP to commence.

Commenting on these results, Rakesh Kapoor, Chief Executive Officer, said:

"Reckitt Benckiser's focus on Health and Hygiene and emerging markets, along
with our move to drive growth in ENA through increased investment behind
innovations and a streamlined organization structure is delivering good
results. 

Regarding RBP, we are commencing a strategic review of the business and will
consider all options for maximising value for our shareholders.  We expect the
review to take some time and will update shareholders during the course of
2014. 

Looking ahead, we all know that market conditions remain challenging, but I am
confident that our strategy for growth and outperformance underpinned by our
commitment to invest for the long term is the right thing to do. Our recent
acquisitions are performing strongly, ahead of in-going assumptions and
consequently, we now believe that our full year net revenue growth (ex RBP)
including the net impact of M&A will be at least 6%.   We continue to expect
to maintain full year margins (ex RBP)." 

 

                                Q3                              YTD               
                                                                                  
                  LFL   Net M&A*   FX  Reported    LFL   Net M&A*   FX  Reported  
                                                                                  
ENA**             +2%     +3%     +4%     +9%      +3%     +1%     +3%     +7%    
                                                                                  
LAPAC            +10%     +5%     -8%     +7%     +11%     +3%     -4%     +10%   
                                                                                  
RUMEA**           +5%      -      -3%     +2%      +6%     -1%     -1%     +4%    
                                                                                  
Food              +1%      -      +2%     +3%       -       -      +2%     +3%    
                                                                                  
Group ex RBP      +5%     +2%      -      +7%      +5%     +1%     +1%     +7%    
                                                                                  

* Reflects the acquisitions of Schiff and other acquisitions, withdrawal from
Propack (Private Label) and disposal / discontinuance of a number of minor
businesses.

** Scholl footwear business, previously reported as part of RUMEA, is now
reported as part of ENA.  Net revenue values and growth rates have been
restated / calculated based on this reclassification.

Note:  due to rounding, this table will not always cast.

 

ENA                                         56% of core net revenue

YTD 2013 total net revenue increased to £3,759m, with LFL growth of +3% (Q3 LFL
growth of +2%).  Market conditions remain challenging, especially in Southern
Europe.  However, the combination of innovation led growth, greater speed of
execution enabled by the ENA organization structure, and increased investment
behind our brands, have delivered revenue outperformance relative to market
growth.    

With the exception of Southern Europe, all European regions are now in growth,
driven by strong performances from our Health powerbrands.  Scholl in
particular delivered an excellent performance behind the launch of our new
Scholl Pedi product launched during the year in a number of markets across
Europe.

In the US, growth was led by Mucinex which again outperformed, with continued
product innovation, and Lysol, driven by innovation and our new "Healthing"
campaign. 

This was offset by a disappointing performance in Airwick in Q3, due to
challenging market conditions and a highly intensive competitive environment,
particularly in the US.

   

LAPAC                                    28% of core net revenue

YTD 2013 total net revenue increased to £1,903m, with LFL growth of +11% (Q3
LFL growth of +10%).  Growth was driven by strong performances in most markets
within LATAM and South East Asia, and China, behind distribution expansion,
innovation and BEI. On a category basis growth was broad based across each of
our Health, Hygiene and Home categories, against a slowing market backdrop,
with strong performances from Durex and Gaviscon, Dettol and Harpic, Woolite
and Vanish.

Our recent acquisitions are integrating well and have shown encouraging early
results.

 

RUMEA                                   16% of core net revenue

YTD 2013 total net revenue increased to £1,055m with LFL growth of +6% (Q3 LFL
growth of +5%).  As signaled with our half year numbers, RUMEA growth has been
impacted by operational and socio-political challenges in certain markets as
well as upscheduling of certain Nurofen products in Russia.   

In Q3 slowing market growth offset some strong performances from Nurofen,
Strepsils, Veet, Finish and Dettol. 

 

Food                                      

YTD 2013 total net revenue was £234m (Q3 LFL growth of +1%), behind a weak
market backdrop.  The macro conditions in the food category remain challenging,
against which our brands have proven resilient.

 

Pharmaceuticals (RBP)                   

YTD 2013 total net revenue was £591m a decrease of -5% at constant rates (Q3
LFL growth of -16%) as indicated. The underlying volume growth in prescriptions
in the US continues to be strong with low double digit growth in line with
recent market trends. 

We are pleased that volume Film share of total buprenorphine prescriptions in
the US has maintained at around 68% since the launch of generic tablets. 
Despite the clinical and patient benefits of the film, we continue to expect
erosion of Film share to increased pressure from price sensitive patients and
payors.

As we have said before, sometime following the launch of generic tablets would
be the right time to consider all options for this business.  Accordingly we
are commencing a strategic review of RBP.    

The number one priority is to maximise value for our shareholders.  We will be
considering all options, while ensuring continued focus on delivering against
our current business objectives. We expect to update shareholders during the
course of 2014.

 

                                     Category Review                   

 

                           Q3                              YTD               
                                                                             
             LFL   Net M&A*   FX  Reported    LFL   Net M&A*   FX  Reported  
                                                                             
Health       +8%     +17%    +2%     +27%    +12%     +16%    +2%     +30%   
                                                                             
Hygiene      +7%     -1%     -1%     +5%      +7%     -1%      -      +6%    
                                                                             
Home          0%     -1%      -      -1%      +1%      -       -      +1%    
                                                                             
Portfolio    -5%     -17%    +3%     -19%    -11%     -19%    +2%     -28%   
                                                                             

* Reflects the acquisitions of Schiff and other acquisitions, withdrawal from
Propack (Private Label) and disposal / discontinuance of a number of minor
businesses.

Note:  due to rounding, this table will not always cast.

Health.  YTD net revenue increased to £1,904m, with LFL growth of +12% (Q3 LFL
growth of +8%).  After an excellent start to the year driven by innovations and
assisted by a strong and long 'flu season, the Health category delivered yet
another quarter of very strong growth.  Mucinex continued to perform very well,
particularly due to its further expansion beyond cough and congestion into
sinus and cold & 'flu.  We also launched Fast Max Night Time Cold & Flu which
has been well received by the trade.

Regarding Durex, our recently launched innovations such as Real Feel and Durex
Embrace pleasure gels are helping the brand transform as a sexual wellbeing
brand.  Durex is also serving an important role as a source of "next practice"
in digital communications and new marketing.  Our other Health care brands are
also performing well, and Scholl in particular exhibited strong growth in Q3
behind our new Express Pedi and Hard Skin and Callus Express Liquids in a
number of markets throughout Europe.

Our recent consumer health acquisitions are performing strongly, ahead of
in-going expectations and additional synergies are being invested back into the
brands to fuel growth.  In the US, MegaRed and Airborne in particular have
performed well as we make further progress in the integration of the business. 
In China our Myanshuning sore throat brand has made a strong start, and we are
seeing early encouraging results from our collaboration agreement with BMS in
LATAM.
 

Hygiene.  YTD net revenue increased to £2,941m, with LFL growth of +7% (Q3 LFL
growth of +7%) largely driven by strong growth in the Dettol / Lysol franchise
in all our three areas.  Our "Healthing" campaign combined with the continued
expansion and success of the Power & Free portfolio across North America and
Europe continued to drive growth.  We expanded the "Healthing" theme in Q3 with
a successful "back to school" campaign where we visited schools across the US
teaching young children healthy habits.   In Emerging Market areas we continue
to focus on core disinfection, underpinned by brand equity driven initiatives
such as our new mums hospital visit programme in over 40 countries.  Our
successful category extension of Dettol Kitchen Gel, has driven strong growth
in India in Q3. 

 

Harpic continued its strong momentum behind penetration increase projects and
the launch of our All-in-one line extension in India.  Growth in Finish
accelerated in Q3 driven by new Quantum Power Gel tabs and our Quantum
challenge campaign.  We also continue to progress our Dishwashing machine
penetration programs run in cooperation with leading white good manufacturers,
with good results in a number of countries, including Brazil, Russia, UK, and
South Africa.

 

Mortein has experienced strong growth throughout the year, led by LAPAC, and
driven by innovation and strong in-market support.  In Q3 we launched our new
advanced liquid electrical "Peaceful Nights" system in Brazil and an extension
of our Outdoor range in Australia.

 

Home.  YTD net revenue increased to £1,479m, with LFL growth of +1% (Q3 LFL growth
of 0%).   Airwick, after a strong start to the year, was impacted by a
combination of increased competitive intensity and the lapping of the
successful launch of our Black Edition candles in the second half of last
year. 

On Vanish we have seen continued strong growth in LATAM behind penetration
programmes.  Although market conditions continue to be weak across Europe, our
new "Vanish tip exchange" campaign is resulting in improved growth and share in
a number of markets. 

Portfolio Brands.  YTD net revenue decreased to £393m, with an LFL decline of
-11% (Q3 LFL decline of -5%). This continued to be due in large part to actions
taken in the European Footwear business undertaken in Q1 and continued weakness
in Laundry Detergents and Fabric Softeners in Southern Europe, driven primarily
by competitive market conditions.   

 

                              Financial Position                               

There has been no material change to the financial position of the company
since the published 2012 Annual Report and Accounts.

 

 

                                 2013 Targets                                  

Our recent acquisitions are performing strongly, ahead of our in-going
assumptions and consequently, we now believe that our full year net revenue
growth (ex RBP) including the net impact of M&A will be at least 6%(1). We
continue to expect to maintain full year margins(2).

 

1 at constant rates including acquisitions and disposals / withdrawal from
Private Label, excluding RBP.

2 ex RBP, adjusted to exclude the impact of exceptional items.

 

 

For further information, please contact:

Reckitt Benckiser                                           [phone]

Richard Joyce                                                                 
Director, Investor Relations                                

Andraea Dawson-Shepherd                                     [phone]                  
SVP, Global Corporate Communication & Affairs                                 
                                                                              
Brunswick (Financial PR)                                    [phone]
David Litterick                                                               
                                                                              

Cautionary note concerning forward-looking statements
This document contains statements with respect to the financial condition,
results of operations and business of Reckitt Benckiser and certain of the
plans and objectives of the Group with respect to these items.  These
forward-looking statements are made pursuant to the "Safe Harbor" provisions of
the United States Private Securities Litigation Reform Act of 1995.  In
particular, all statements that express forecasts, expectations and projections
with respect to future matters, including trends in results of operations,
margins, growth rates, overall market trends, the impact of interest or
exchange rates, the availability of financing to the Company, anticipated cost
savings or synergies and the completion of strategic transactions are
forward-looking statements.  By their nature, forward-looking statements
involve risk and uncertainty because they relate to events and depend on
circumstances that will occur in the future.  There are a number of factors
discussed in this report, that could cause actual results and developments to
differ materially from those expressed or implied by these forward-looking
statements, including many factors outside Reckitt Benckiser's control.  The
principal risks and uncertainties which could have a material effect on the
Group's performance are described on pages 13 and 14 of the Annual Report and
Financial Statements for the year ended 31 December 2012.  Past performance
cannot be relied upon as a guide to future performance.

Basis of Presentation and Exceptional Items
Where appropriate, the term "like-for-like" (LFL) describes the performance of
the business on a comparable basis, excluding the impact of acquisitions,
disposals, discontinued operations and foreign exchange.

Where appropriate, the term "core business" represents the ENA (Europe and
North America), RUMEA (Russia / CIS, Africa, North Africa, Middle East and
Turkey) and LAPAC (Latin America, North Asia, South Asia and ANZ) geographic
areas, and excludes RBP and RB Food.