Annual profits

Reckitt Benckiser PLC Announces Annual Profit Increase as It Prepares to Acquire Mead Johnson for US $ 17 Billion

Mead Johnson’s first full-year contribution helped push revenue up the range, while bottom line also benefited

Reckitt Benckiser PLC (LON: RB.) Reported an increase in annual sales and profits after enjoying “widespread growth” in its portfolio of consumer goods brands.

Revenue for the year ended Dec.31 increased 10% to £ 12.60 billion – the upper end of its forecast range – while net income, excluding the exceptional tax credit in 2017 , rose 7% to £ 2.41 billion.

READ: US investment bank denounces RB’s ‘weak’ workplace culture

A first full-year contribution from Mead Johnson, the infant formula giant acquired by Reckitt for US $ 17 billion (£ 13 billion) in 2017, accounted for much of that growth.

The FTSE 100 giant has already achieved £ 158million in synergies with the acquisition and remains on track to meet its target of increased synergies of £ 230million.

Reckitt also recorded solid organic growth in its two main divisions.

Both companies are doing well

Sales of its home hygiene business increased 4% like-for-like in 2018, driven by the good performance of several of its major brands, including Harpic, Air Wick and Finish dishwasher detergents.

Growth was less impressive in the healthcare industry, although like-for-like data was still up 2% year-over-year as demand for its vitamins and supplements continued to rise in North America. and China, while Durex and Dettol also performed strongly. .

Foot care brand Scholl was a “big drag”, however, especially in the first half of the year, while Mucinex also struggled due to a relatively weak cold and flu season.

More growth in 2019

“2018 has been a year of good financial progress, achieved in an environment of both significant changes within the company and difficult market conditions,” said Managing Director Rakesh Kapoor, who is due to leave later this year. .

“We have reached the upper limit of our revenue growth target for 2018 and accelerated the achievement of MJN cost synergies compared to our initial expectations. “

He added: “For 2019, we expect the momentum to continue and aim for +3% to 4% LFL net sales growth. We plan to maintain adjusted operating margin as we generate our usual cost and efficiency savings and deploy them in building two even stronger businesses. “

No hassle for investors

“Investors will not be rushing for the Nurofen this morning as Reckitt Benckiser posted a strong performance in its full year results this morning,” said Graham Spooner, investment research analyst at the Share Center.

“The overall turnover has reached the top of analysts’ expectations [and] … Stocks rose early in the session on improving sales growth in the fourth quarter.

“Growth in emerging markets has been important to Reckitt and there has been strong performance in India and Brazil, although China has been mixed.”

He added: “After a few difficult years, these results could help restore some investor confidence in the group. “

Reckitt shares rose 5% to 6,320p on Monday morning.

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