RB is today announcing a number of important changes to the company and its strategy to fuel another decade of market outperformance and attractive shareholder returns.
Outlining the strategy, Rakesh Kapoor, Chief Executive Officer, said, “RB has delivered a decade of superior growth and shareholder value. However, with slower market growth and increased competition, we need to reshape our strategy to enable us to continue our track record of outperformance. We believe we can make a real difference by giving people innovative solutions for healthier lives and happier homes. We will therefore be intensifying our investment behind our brands in the higher growth, higher margin categories of health and hygiene. In addition to our highly successful “Powerbrand” strategy, we have identified 16 “Powermarkets” for increased focus and investment, most of which are in emerging markets. “This new category and geographic focus will be driven by a new organisation structure. We are creating two new Area organisations in emerging markets, instead of one. Additionally, we will merge the European and North American area organisations to form one Area. This will enable us to increase the speed, quality and consistency of our in-market execution and to drive cost savings. “RB’s relentless focus on building brands will continue. We will be increasing our investments in high rates of innovation and brand equity building. We aim to deliver steady operating margin* expansion. We will continue to be highly effective at converting profit into cash. I have set 3 medium term key performance indicators to monitor our progress on our strategy. “2012 will be a year of transition and investment, but still we are targeting total Company net revenue growth (ex RBP) of 200 basis points above our market growth. Our global market is expected to grow at 1-2%. While 2012 will be a year of investment, we are targeting to maintain our operating margins (ex RBP) in the year. I believe that generic versions to Suboxone tablets are a matter of when and not if, so it is impractical to set targets for RBP this year. “I firmly believe that our strong company culture of outperformance, entrepreneurship and innovation will enable us to fulfill the enormous potential of our brands and deliver on our vision and reshaped business strategy.” THE CHANGES IN BRIEF 1. NEW CATEGORY FOCUS “Core” business:
Reported separately (not “Core”) Food RB Pharmaceuticals 2. NEW GEOGRAPHIC FOCUS LAPAC is the name of this reporting Area, comprising:
In 2011 LAPAC had sales of £2,210m representing 26% of core business NR RUMEA is the name of this reporting Area, comprising:
In 2011 RUMEA had sales of £1,364m representing 16% of core business NR ENA is the name of this reporting Area, comprising:
In 2011 ENA had sales of £4,837m representing 58% of core business NR 3. MARGIN EXPANSION STRATEGY We are undertaking a number of initiatives to fuel reinvestment into brand equity and deliver operating margin* expansion:
4. MEDIUM TERM KPIs AND 2012 TARGETS All the targets are for total Company excluding RB Pharmaceuticals (RBP). 2012 Targets
Medium Term (5-year) Key Performance Indicators
5. RESTRUCTURING COSTS A one-off cost in the order of £75m will be incurred in 2012 to implement the new strategy. These costs are for implementing the new Area and category organisations, refocusing resources, and making some supply chain and manufacturing enhancements. This charge will be in addition to the remainder of the one-off restructuring charges of £50m relating to the SSL acquisition and integration due to be charged in 2012. All of these charges will be treated as exceptional and excluded from adjusted profits and earnings. The restructuring in ENA is expected to deliver £30m in annual savings from 2013. 6. REPORTING, NEW MEASURES AND SHARE REPURCHASE RB will move to reporting Interim Management Statements (IMS) in Q1 and Q3, commencing in 2012, in common with most listed UK companies. Half year and full year reporting will continue as current. A number of new, or redefined measures, will be reported to monitor RB’s progress.
Geographical analysis will be on the new Area structure (ENA, LAPAC, RUMEA). Category analysis will be on the new “core” category structure of Health, Hygiene, Home and Portfolio brands. RB Food and RB Pharmaceuticals will be reported as separate business streams. Share Repurchase: RB will undertake a programme of share repurchase into 2012 of up to 15 million shares, primarily to offset the dilutive impact of employee share schemes. This strategic announcement is also covered by a full presentation from management, which is webcast live and which will be available on our website from 9 February. For further information, please contact: Reckitt Benckiser Richard Joyce, Director, Investor Relations Tom Corran, Consultant, Investor Relations Andraea Dawson-Shepherd, SVP, Global Corporate Communication and Affairs +44 (0)1753 217800 Brunswick (Financial PR) David Litterick / Max McGahan +44 (0)20 7404 5959 *Operating margin excluding RB PharmaceuticalsFor the Full Press Release click here