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Announcements

RB Press release - 25/07/2011
STRONG HY 2011 RESULTS FY 2011 TARGETS CONFIRMED

Results at a Glance
Q2*
£m
% change actual exchange
% change constant exchange
HY constant £m
% change actual exchange
% change constant exchange
Net Revenue
2,338
+13
+16
  4,621  +14  +15
 - Like-for-like Growth **
  +5%
     +5%    
Operating Profit  - reported
557
+11
+13
  1,049  +9  +11
 Operating Profit  - adjusted*** 573  +14  +16 1,103
 +14  +17
Net Income - reported
404
+6
+9
  759  +4  +6
Net Income - adjusted
  418  +10  +13 802
+10
+12
EPS (diluted) - reported
54.9p
+6
    103.2p +4
 
EPS (diluted) - adjusted
  56.8p  +10   109.0p
+10
 

*Q2 results were not subject to the independent review.
**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 £56m in HY 2011 (Q2 2011: £17m) mainly relating to the acquisition of SSL International plc, of which £54m (Q2: £16m) is included in reported operating profit and £2m (Q2: £1m) is an exceptional finance cost. There were no exceptional items in HY 2010 (Q2 2010: £nil).

Half Year (HY) highlights:
  • Total net revenue growth of +15% (constant exchange) to £4,621m. LFL growth +5% (+4% ex- RBP).
  • Gross margin -70bp to 59.3%: adjusted operating margin +20bp to 23.9%.
  • SSL integration on track: cost synergies of £33m delivered in the half year.
  • Adjusted net income +10% (actual exchange, +12% constant): adjusted diluted EPS of 109.0p (+10%).
  • Net working capital of minus £932m, reflecting a further improvement versus 31 December 2010.
  • Net debt of £2,195m (31 December 2010: £2,011m), with strong free cash flow generation being more than offset by the payment of the final 2010 dividend, the acquisition of Paras Pharmaceuticals Limited and cash restructuring payments.
  • The Board declares a +10% increase in the interim dividend to 55.0p per share.

Q2 highlights:
  • Total net revenue +16% (constant exchange), of which LFL growth +5% (+3% ex-RBP).
  • Gross margin -140bp to 59.1%: adjusted operating margin +10bp to 24.5%.
  • Adjusted net income +10% (actual exchange, +13% constant): adjusted diluted EPS of 56.8p (+10%).

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

“Reckitt Benckiser delivered strong first half results, with net revenue growth of +15% and adjusted net income growth of +12% (both at constant) ahead of the Group’s FY 2011 targets.

Growth in the base business was driven in particular by an excellent result in Developing Markets, and was boosted by innovations such as the continued roll out of the Dettol No Touch Hand Soap System into new markets, as well as a significant level of investment in media and promotional spend.

RBP made further progress in converting its U.S. business into the patent-protected and patient-preferred Suboxone sublingual film variant. As is well known, our Suboxone tablets can become subject to generic competition in the U.S. at any time, and moving more of our business into the film remains a key priority. At the end of June 2011, the Suboxone film had captured a 41% volume share of the U.S. market: as a result, Suboxone tablets in the U.S. now represent less than 50% of total RBP net revenue.

The integration of SSL is fully on track to deliver the targeted cost synergies and net revenue growth in 2011.

Given these strong first half results, we are well-positioned to achieve our FY 2011 targets of +12% net revenue growth and +10% adjusted net income growth (both at constant exchange), and with that to deliver another year of above industry-average growth.”