Release Date: March 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Reckitt Benckiser Group PLC (RBGLY, Financial) reported a solid financial performance for 2024, with group net revenue growing by 1.4% in line with guidance.
- The company achieved a 4.6% like-for-like net revenue growth in health and hygiene, excluding seasonal OTC impacts.
- Reckitt Benckiser Group PLC (RBGLY) increased its adjusted operating profit by 8.6%, supported by the fuel for growth program.
- The company returned GBP2.7 billion to shareholders through dividends and share buybacks, marking a 75% increase from the previous year.
- Reckitt Benckiser Group PLC (RBGLY) has made significant progress in organizational simplification, reducing management layers from five to three to enhance decision-making and accountability.
Negative Points
- The company's North American performance was negatively impacted by a weak cold and flu season, affecting seasonal OTC sales.
- Reckitt Benckiser Group PLC (RBGLY) reported a 7.3% decline in like-for-like net revenue for its nutrition segment, primarily due to supply disruptions from a tornado.
- The company faces ongoing litigation challenges related to Mead Johnson Nutrition, which could impact future performance.
- Reckitt Benckiser Group PLC (RBGLY) has set a cautious growth guidance for 2025, reflecting uncertainties in the macroeconomic environment.
- The company acknowledged challenges in the competitive air care market in the US, which could affect Essential Home's performance in the first half of 2025.
Q & A Highlights
Q: On the medium-term guidance of 4% to 5% growth, is there anything structural that's changed recently, or is there an element of conservatism in the guidance?
A: Kris Licht, CEO: The medium-term outlook for Core Reckitt was initially set at a 5% growth rate. However, given the uncertain macro environment, we thought it prudent to provide a range. Despite having competitive momentum and a strong innovation pipeline, we are accounting for potential headwinds in consumer confidence. The guidance is prudent, but we are confident in our portfolio's ability to deliver at the 5% level.
Q: Can you clarify the outlook for operating margins and EPS growth for the medium term?
A: Shannon Eisenhardt, CFO: We expect operating margins to grow, with profits growing ahead of revenue, maintaining our long-term financial model. While we focus on annual EPS growth, we won't specify if it will be ahead of revenue. Our aim is to deliver sustainable EPS growth annually.
Q: Regarding the 2024 A&P or BEI spend, was there a decision not to reinvest as much in the second half, and will this accelerate in 2025?
A: Kris Licht, CEO: We assess investment opportunities on a case-by-case basis. While we invested more in 2024, we aim for a steady increase in BEI investment, focusing on innovation and category creation. We have room to invest due to our fuel for growth program, and we will continue to invest strategically.
Q: Can you provide more details on the separation process of Essential Home and any potential dyssynergies?
A: Kris Licht, CEO: The separation process is on track, and we're working on setting up the business to be self-sufficient. We are sizing the financial impacts and trying to avoid redundant structures. Shannon Eisenhardt, CFO: We will provide more quantitative understanding of dyssynergies once a deal is announced.
Q: What are the specific factors leading to the 2025 guidance for Core Reckitt being below the medium-term guide?
A: Shannon Eisenhardt, CFO: The 2025 guidance reflects the current uncertain operating environment, including tariffs, consumer confidence, and inflation. While we don't expect this volatility to persist long-term, we provided a guide that reflects current conditions and our confidence in delivering it.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
