Announcements

 

RB Press Release - 09/02/11

2010: A Strong Year, Further Growth Targeted in 2011
 

Results at a glance (unaudited)	Q4 £m	% change actual exchange	% change constant exchange	FY £m	% change actual exchange	% change constant exchange
Net Revenue	2,277	+10	+9	8,453	+9	+7
- Like-for-like growth*			+5%			+6%
Operating Profit - reported	602	+0	-3	2,130	+13	+10
Operating Profit - adjusted **	703	+16	+13	2,231	+18	+15
Net Income - reported	414	-8	-10	1,568	+11	+8
Net Income - adjusted **	507	+13	+11	1,661	+17	+15
EPS (diluted) - reported	56.3p	-7		213.8p	+10
EPS (diluted) - adjusted **	69.0p	+14		226.5p	+16

* Like-for-like (“LFL”) growth excludes the impact of changes in exchange rates, acquisitions and disposals.
**Adjusted results (including % change figures) exclude exceptional items (see page 2). There was an exceptional pre-tax charge of £104m in Full Year (FY) 2010 relating to the acquisition of SSL International plc (“SSL”) (Q4 2010: £104m), of which £101m is included in reported operating profit and £3m is an exceptional finance cost. There were no exceptional items in FY 2009.

FY highlights:

• Total net revenue growth of +7% (at constant), to £8,453m.
  - Group excluding SSL +6% LFL.
  - Base business (ie, excluding Reckitt Benckiser Pharmaceuticals, “RBP”) +5% LFL.
• Total gross margin +40bp to 60.6%: total adjusted operating margin +200bp to 26.4%.
• Total adjusted net income +17% (actual exchange) and adjusted diluted EPS of 226.5p (+16%): no material impact on growth from the acquisition of SSL.
• Net working capital of minus £900m, £357m adverse compared to the 31 December 2009 level, mostly due to the impact of consolidating SSL and an increase in RBP receivables following the buyback of the rights in Europe and Rest of the World from Merck & Co., Inc. (“Merck”).
• Net debt of £2,011m (2009: net cash of £220m), as a result of the acquisition of SSL International plc (“SSL”).
• The Board recommends a +14% increase in the final dividend to 65p per share, bringing the total dividend for 2010 to 115p (+15% versus 2009).

Q4 highlights:

• Total net revenue growth of +9% (at constant).
  - Group ex-SSL +5% LFL.
  - Base business +4% LFL.
• Total gross margin -80bp to 61.5%: total adjusted operating margin +160bp to 30.9%.
• Total adjusted net income +13% (actual exchange): adjusted diluted EPS of 69.0p (+14%).

Commenting on these results, Bart Becht, Chief Executive Officer, said:

“Reckitt Benckiser enjoyed another year of market-beating results, despite declining global market growth. As targeted, like-for-like net revenue growth was +6% for the Group excluding SSL and +5% for the base business, driven in particular by excellent Developing Markets growth. Total adjusted net income growth of +15% (at constant) was also strong. This is further evidence that our strategy of focusing on our Powerbrands, behind new product initiatives and high levels of marketing investment, is one that continues to deliver.

The progress we have made on the recently introduced and patented-protected Suboxone film is very encouraging. As is well known, our Suboxone tablets can become subject to generic competition at any time, and moving more of our business into the film has been a key priority. At the end of 2010, the Suboxone film had captured a 25% volume share of the U.S. market, well ahead of our ingoing expectations, and at this level it would represent approximately 23% of the total RBP U.S. net revenue.

For 2011, we are aiming for another year of above industry-average growth:

For the Group excluding SSL, our target is for +4% like-for-like net revenue growth, with profit growth ahead of that. This net revenue target compares to a global market which is currently showing no growth.

For the recently-acquired SSL business, we are also targeting around +4% net revenue growth on a like-for-like basis (base: £762m): in addition, we are aiming to add 50% of the £100m cost synergies to the current profit level.

For RBP, we continue to target further market share growth for the film variant. At this time, we have no new intelligence as to the timing of potential generic competition to the Suboxone tablets in the U.S.

Taking all of the above into consideration, the targets for the total Group are for +12% net revenue growth (base: £8,453m) and +10% adjusted net income growth (excluding exceptional charges, base: £1,661m), both at constant exchange.

These targets exclude the potential impact of generic competition to the Suboxone tablets in the U.S., and will be adjusted downwards in the event that generic competition emerges.”

To view the full press release, please click on the link below.