Reckitt Benckiser Gp 1st Quarter Results

 
TIDMRB. 
 
INTERIM MANAGEMENT STATEMENT Q1 2013 
 
22 April 2013 
 
                             STRONG START to 2013 
 
Results at a glance        Q1         % change        % change       % change 
 
                           GBPm          actual         constant         LFL* 
                                      exchange        exchange 
 
Total Net Revenue         2,517         +7%             +7%            +7% 
 
- Growth (ex RBP)                       +6%             +6%            +6% 
 
 
Net Revenue by Segment 
 
-ENA**                    1,260         +5%             +4%            +3% 
 
-LAPAC                     626          +8%             +12%           +11% 
 
-RUMEA**                   354          +5%             +6%            +7% 
 
-Food                      76           +4%             +3%            +3% 
 
Total ex RBP              2,316         +6%             +6%            +6% 
 
-RB Pharmaceuticals        201          +20%            +19%           +19% 
 
Total Net Revenue         2,517         +7%             +7%            +7% 
 
Net Revenue by 
Category 
 
-Health                    597          +30%            +29%           +13% 
 
-Hygiene                  1,025         +6%             +7%            +9% 
 
-Home                      488           0%             +1%            +2% 
 
-Portfolio Brands          130          -37%            -38%           -22% 
 
* Like-for-like ("LFL") growth excludes the impact of changes in exchange 
rates, acquisitions, disposals and discontinued operations. 
 
** Scholl footwear is now included within ENA. It was previously included 
within RUMEA. Net revenue values and growth rates have been restated / 
calculated based on this reclassification. 
 
Reckitt Benckiser, global Health, Hygiene and Home consumer products group, 
reports the following results highlights: 
 
Highlights: Q1 (at constant rates) 
 
  * Total net revenue growth of +7%. Ex. RBP growth +6%. 
 
  * LFL net revenue growth excluding RBP of +6%. 
 
  * Continued very strong growth in Emerging Market Areas. +3% LFL growth in 
    ENA. 
 
  * Strong underlying growth across Health & Hygiene boosted by higher 
    incidence of flu. Good performance from Mucinex, Strepsils, Nurofen, Durex, 
    Dettol / Lysol & Finish. 
 
  * Schiff integration progressing well; strong Q1 on both Schiff and Guilong 
    China. 
 
  * RBP - total US market volume film share 69%, early generic tablet impact as 
    expected. 
 
Commenting on these results, Rakesh Kapoor, Chief Executive Officer, said: 
 
"We are pleased with a strong start to the year, with our Health and Hygiene 
brands leading RB's growth across all geographies. Growth was driven from a 
combination of innovations, increased Brand Equity Investments and better in 
market executions. Mucinex and Strepsils have done particularly well, benefitting 
from a higher incidence of flu in the US and Cold, Flu and Sinus innovations. 
Nurofen and Durex also had a strong performance. In Hygiene, Dettol continues 
to grow very strongly in Emerging Market Areas through innovation and category 
expansion, and Lysol is performing well in the US. The Schiff integration is 
progressing well and our revenue growth is well ahead of the US VMS market. 
 
On Suboxone, our patient-preferred sublingual film in the US increased its market 
share to 69%. The generic version of tablets became available during March, and 
their early impact is in line with expectations. 
 
We expect continued challenging market conditions but nonetheless we remain 
confident that we can achieve our full year targets of +5-6% total net revenue 
growth 1(ex RBP)while maintaining operating margins. 2" 
 
1 ex RBP, at constant exchange rates 
 
2 ex RBP, adjusted to exclude the impact of exceptional items 
 
                    Summary Analysis: % net revenue growth 
 
Q1 2013            Like-for-like  Acquisitions &     Exchange       Reported 
                                    Disposals* 
 
ENA**                   +3%             +1%            +1%            +5% 
 
LAPAC                  +11%             +1%            -4%            +8% 
 
RUMEA**                 +7%             -1%            -1%            +5% 
 
Food                    +3%             0%             +1%            +4% 
 
TOTAL ex RBP            +6%             0%              0%            +6% 
 
RBP                    +19%             0%             +1%            +20% 
 
TOTAL GROUP             +7%             0%              0%            +7% 
 
* Reflects the acquisitions of Schiff and other minor announced acquisitions, 
withdrawal from Propack (Private Label) and disposal / discontinuance of a 
number of minor businesses. There is no impact in Q1 from the BMS collaboration 
agreement as the regulatory approvals are only expected in Q2. 
 
** Scholl footwear is now included within ENA. It was previously included 
within RUMEA. Net revenue values and growth rates have been restated / 
calculated based on this reclassification. 
 
ENA 56% of core net revenue 
 
Q1 net revenue increased to GBP1,260m with LFL growth of +3% and total growth of 
+4% (constant exchange). 
 
Growth was driven by a strong performance in the US, led by Health brands - in 
particular Mucinex Fast Max (liquids and capsules) and Sinus-Max innovations. 
Other Health powerbrands also performed well in the quarter - Strepsils, 
Nurofen and Durex, with early encouraging results from our recent innovations. 
In Hygiene Lysol / Dettol and Finish performed well, and in Home, Air Wick grew 
strongly. 
 
These were supported by increased TV and digital Brand Equity Investment (BEI) 
initiatives, and stronger in market executions as we leveraged increased cold 
and flu search volumes, created by the higher incidences of cold and flu in the 
US. 
 
We have undertaken a number of specific actions to streamline our Scholl 
Footwear business in Europe. There is a short term impact of this in both ENA 
and portfolio brands. 
 
The Schiff integration in the US is progressing well and is in line with 
expectations. LFL revenue growth is strong and is well in excess of VMS market 
growth. MegaRed in particular is achieving excellent growth due to a 
combination of new product roll out and increased BEI investment to drive 
penetration. 
 
LAPAC 28% of core net revenue 
 
Q1 2013 net revenue increased to GBP626m with LFL growth of +11% and total growth 
of +12% (constant). Growth was driven by a combination of powerbrand rollouts, 
innovation, distribution and penetration expansion, particularly in the key 
growth markets of India, Brazil and China. In Health, Durex and Gaviscon 
performed well and Vanish and Air Wick drove the growth in Home. The strong 
performance in Hygiene was driven by Dettol. Mortein also performed well in our 
larger "pest" markets of India and Australia. 
 
RUMEA 16% of core net revenue 
 
Q1 2013 net revenue increased to GBP354m, with LFL growth of +7% and total growth 
of +6% (constant). On a category basis, Health was driven by strong 
performances in Durex and Strepsils. Hygiene performed particularly well behind 
Finish, Dettol, and Veet. 
 
As signaled with our full year 2012 numbers, RUMEA growth is somewhat impacted 
by the up scheduling of certain Nurofen products in Russia and some operational 
and socio-political challenges in certain markets. However, we are pleased with 
our business performance in the Area, particularly the continued strong results 
from Russia. 
 
Food 
 
Food returned to growth with constant and LFL growth of +3%. This was driven by 
innovations in the USA, and continued growth in international markets. 
 
Pharmaceuticals 
 
Q1 2013 net revenue was GBP201m, an increase of +19% (constant). The underlying 
volume growth in prescriptions in the US continues to be strong and in line 
with recent market trends. As signaled with our 2012 full year numbers, the Q1 
2013 reported growth was increased by the sell-in to drug wholesalers of new 
4mg and 12mg film dosages, and the tail of the high Medicaid accruals in Q1 
2012. We saw further strong conversion from tablets to film as we voluntarily 
discontinued the sale of tablets in the US from 18 March. In Europe, we were 
impacted by government imposed price reductions in a number of markets. 
 
Generic tablets were launched into the US market late in the quarter following 
the approval of two generics manufacturers by the FDA in February. Since their 
launch, generic Suboxone tablets have gained a 10% mg volume market share* of 
the buprenorphine market, taken mainly from our tablet business as we expected. 
We continue to believe that increased price pressure will lead to some film 
loss over time. 
 
*source: Healthcare Analytics Retail Phast Weekly Data as at 5 April 2013 
 
                            Q1 2013 Category Review 
 
                    Summary Analysis: % net revenue growth 
 
Q1 2013            Like-for-like  Acquisitions &     Exchange       Reported 
                                    Disposals* 
 
Health                 +13%            +16%            +1%            +30% 
 
Hygiene                 +9%             -2%            -1%            +6% 
 
Home                    +2%             -1%            -1%            +0% 
 
Portfolio              -22%            -16%            +1%            -37% 
 
Food                    +3%             0%             +1%            +4% 
 
TOTAL ex RBP            +6%             0%              0%            +6% 
 
RBP                    +19%             0%             +1%            +20% 
 
TOTAL GROUP             +7%             0%              0%            +7% 
 
* Reflects the acquisitions of Schiff and other minor announced acquisitions, 
withdrawal from Propack (Private Label) and disposal / discontinuance of a 
number of minor businesses. There is no impact in Q1 from the BMS collaboration 
agreement as the regulatory approvals are only expected in Q2. 
 
Category review is at constant exchange rates. 
 
Health 27% of core net revenue 
 
Net revenue increased to GBP597m, with LFL growth of +13% and total growth of 
+29%. Growth was broad based across all powerbrands with particularly strong 
performances from the flu related brands of Mucinex, Strepsils and certain 
products of Nurofen. This was due to higher incidences of cold and flu in the 
US supported by increased TV and digital BEI initiatives as we leveraged 
increased cold & flu search volumes. Additionally we have seen encouraging 
early successes of recently launched innovations like Mucinex Sinus-Max, 
Strepsils Children 6+ lozenges, and Nurofen next generation heat patches. Other 
powerbrands also performed well, with Durex in particular benefitting from 
further penetration in China, and the roll out of our Real Feel polyisoprene 
condoms in a number of markets. 
 
Hygiene 46% of core net revenue 
 
Net revenue increased to GBP1,025m with LFL growth of +9% and total growth of 
+7%. This was largely driven by strong growth in Dettol / Lysol across both 
emerging markets and ENA, underpinned by continued success of our base 
disinfectants and also category extensions into kitchen gels, and soap and body 
washes in certain markets. Growth in Finish came from Quantum and All-in-1, 
which performed well, particularly in the US, Germany and Australia. Mortein 
delivered good growth in India and Australia aided by a good season. 
 
Home 22% of core net revenue 
 
Net revenue increased to GBP488m with LFL growth of +2% and total growth of +1%. 
Air Wick produced a strong performance behind electricals and candles. Vanish 
saw good growth in a number of our emerging market countries, particularly 
Brazil, whilst Europe continued to see share stabilization, albeit in a 
difficult consumer environment. 
 
Portfolio Brands 5% of core net revenue 
 
Net revenue decreased to GBP130m with LFL growth of -22% and total growth of 
-38%. The significant decline in LFL growth is due in large part to planned 
actions in the predominantly Southern European Footwear business noted 
earlier. We expect to see some further restructuring within Footwear going 
forward, but expect the impact to be more modest than it has been in Q1. We 
also saw further weakness in Laundry Detergents and Fabric Softeners, in 
Southern Europe, driven primarily by more competitive market conditions. On a 
total basis we saw the impact of our withdrawal from our Private Label 
business. 
 
                              Financial Position 
 
There has been no material change to the financial position of the company 
since the published 2012 Annual Report and Accounts. 
 
                                 2013 Targets 
 
The Q1 2013 results position the Group well to achieve its FY 2013 financial 
targets despite continued challenging market conditions. 
 
For the Group excluding RBP, the target is for total net revenue growth of 
+5-6% at constant rates. We also expect to maintain operating margins* (ex RBP) as we 
invest behind brand equity building initiatives. 
 
*Adjusted to exclude the impact of exceptional items 
 
For further information, please contact: 
 
Reckitt Benckiser                                       [phone] 
 
Richard Joyce 
 
Director, Investor Relations 
 
Andraea Dawson-Shepherd 
 
SVP, Global Corporate Communication & Affairs 
 
Brunswick (Financial PR)                               [phone] 
 
David Litterick 
 
Cautionary note concerning forward-looking statements 
 
This document contains statements with respect to the financial condition, 
results of operations and business of Reckitt Benckiser and certain of the 
plans and objectives of the Group with respect to these items. These 
forward-looking statements are made pursuant to the "Safe Harbor" provisions of 
the United States Private Securities Litigation Reform Act of 1995. In 
particular, all statements that express forecasts, expectations and projections 
with respect to future matters, including trends in results of operations, 
margins, growth rates, overall market trends, the impact of interest or 
exchange rates, the availability of financing to the Company, anticipated cost 
savings or synergies and the completion of strategic transactions are 
forward-looking statements. By their nature, forward-looking statements involve 
risk and uncertainty because they relate to events and depend on circumstances 
that will occur in the future. There are a number of factors discussed in this 
report, that could cause actual results and developments to differ materially 
from those expressed or implied by these forward-looking statements, including 
many factors outside Reckitt Benckiser's control. Past performance cannot be 
relied upon as a guide to future performance. 
 
Basis of Presentation and Exceptional Items 
 
Where appropriate, the term "like-for-like" (LFL) describes the performance of 
the business on a comparable basis, excluding the impact of acquisitions, 
disposals, discontinued operations and foreign exchange. 
 
Where appropriate, the term "core business" represents the ENA (Europe and 
North America), RUMEA (Russia / CIS, Africa, North Africa, Middle East and 
Turkey) and LAPAC (Latin America, North Asia, South Asia and ANZ) geographic 
areas, and excludes RBP and Food. 
 
 
 
 
END