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Whether you look at its share price or its operational reports, Reckitt Benckiser LSE:RB.) simply continues to impress. It’s share price finished up today by 2.66%, a gain of 135.00 pence from Friday’s close of 5,070. Shares closed today at 5,205 after opening at 5,170 and reaching an intra-day high of 5,250, just shy of its record high closing of 5,270, which was reached on 16 June this year.
Reckitt’s share price has risen in a pattern of consistency since February 2000, when it was worth 550.50. Perhaps making a statement for packaged consumer goods, RB was relatively unaffected during the 2008-2009 financial crisis, maintaining its strength pretty much between 2,500 and 3,000 during the entire crunch. It has traded above 3,000 since 08 September 2009; above 3,500 since 02 July 2012; above 4,000 since 15 January 2013; above 4,500 since 21 October 2013; and has dipped slightly below 5,000 only once since 14 May 2014. It is worthy of note that during the period between January and October 2013, the share price was actually above the 4,500 mark consistently, but did drop below the mark occasionally.
Today’s show of confidence in the consumer goods giant followed the publication of it Q2 and H1 operational report, which carried a subtitle of “CONTINUING TO PERFORM IN CHALLENGING MARKETS.”
CEO Rakesh Kapoor noted that, “We are renewing our focus on efficiency throughout the group and have seen efficiencies in media planning and buying benefiting the first half. We will make further structural efficiencies within our business in the second half and into next year. These and other programs will continue to ensure an efficient platform to invest for future growth.”
He also revealed that, “We believe that RB Pharmaceuticals has the potential to deliver significant long term value creation as a stand-alone business. We have therefore decided to pursue a demerger of RB Pharmaceuticals with a separate UK listing. We expect this to take place over the next 12 months. This will also allow RB to focus on its core strategy to be a global leader in consumer health and hygiene.” By way of explanation, promoting the company’s 19 “powerbrands.”
Financial highlights:
- Net increase in revenue of 3.0%
- Gross margin of 59.3%
- Operating margin of 20.8%
- Net income up 7.0%
- EPS of 111.1, up 23%
- Interim dividend of 60 pps
Spin-off highlights:
- Most of the revenue stream of RB Pharma comes from one product, Suboxone.
- Although Suboxone has been a market leader, it is now exposed to generic competition that has been approved by the FDA.
- Suboxone is in a drug category that Mr. Kapoor says, “is not a space we want to be in.” That category is addiction treatment.
Trade Name Change
Get used to a new, less complicated trading name. The company has been gradually changing from the multisyllabic Reckitt Benckiser to RB or RB plc. Whichever becomes the popular nomenclature is irrelevant as the company’s legal name will remain unchanged.
