Reckitt Benckiser beats expectations as full-year revenue and profit surge ahead

Home and health products manufacturer Reckitt Benckiser said its full-year results exceeded expectations, thanks to a strong performance across both established and developing markets and a sharp increase in fourth-quarter revenue.

In the 12 months to the end of December, total net revenue at the FTSE 100 group grew 5% year-on-year on a constant currency basis to £8.87bn (€11.48bn, $12.87bn), while like-for-like revenue rose by a better-than-expected 6%.

Operating profit rose 7% year-on-year on a constant currency basis to £2.24bn and was up 4% when considering currency fluctuation, while adjusted operating profit excluding exceptional items grew 12% when stripping out currency movements and 9% on an actual exchange basis.

Reckitt said growth in revenue and profit was attributable to a strong display across its ENA market – which comprises Europe, Russia, Israel, North America, Australia and New Zealand, and its DVM business, which comprises Latin America, North Asia and South East Asia, North Africa, Turkey and sub-Saharan Africa. On a like-for-like basis, the former posted growth of 5% from the corresponding period in 2014, while the latter grew 9% year-on-year.

"Despite a year of mixed market conditions, we achieved broad-based growth, across both developed and developing markets," said group chief executive Rakesh Kapoor.

"This was led by an exceptional performance in consumer health, due to both a strong flu season at the beginning of the year and outstanding performances from our innovations on brands such as Scholl, Durex, Nurofen and Strepsils."

The group, which will pay a final dividend of 88.7p per share, 12% higher than in 2014, added that revenue in the final three months of 2015 grew 7% year-on-year on a like-for-like basis and not accounting for currency movements. Adjusted operating margin was up 210 basis points to 26.8%, while reported earnings per share were up 6% to 240.9p, and diluted earnings per share were up 12% to 258.6p.

However, despite the impressive performances during 2015, Reckitt warned the outlook for 2016 was more challenging, although it reiterated its earnings guidance for the 12 months ahead.

"In 2016, we expect that the macro environment will be tough, but remain confident that our strategic choices across Powerbrands and Powermarkets will enable Reckitt Benckiser to deliver another year of growth and margin expansion," said Kapoor.

"We are targeting like-for-like net revenue growth of between 4%-5% and for operating margin we reiterate our medium term target of moderate margin expansion."