15th Feb 2016 11:04
LONDON (Alliance News) - An improved sales mix, lower commodity prices and cost-cutting combined to help consumer goods giant Reckitt Benckiser Group PLC deliver a margin-driven growth in pretax profit in 2015, a result welcomed by investors as shares in the group pushed higher on Monday following the results announcement.
Shares in Reckitt were up 6.4% to 6,348.00 pence, one of the best performers in the FTSE 100.
The group, which makes products including painkiller Nurofen, Durex condoms and Finish dishwashing tablets, said pretax profit for the year to the end of December was GBP2.21 billion, up 3.8% from GBP2.13 billion in 2014.
Net revenue was GBP8.87 billion, up marginally from GBP8.84 billion the year earlier, but cost of sales declined enough to offset a minor uptick in its net operating costs.
Reckitt said the improvement in margins was down in part to a good sales mix, benefits from low commodity prices, and cost cutting undertaken across the business. Sales growth in constant currencies hit 5.0% in the year and 6.0% on a like-for-like basis, but this was held back on a reported basis by adverse currency translation effects.
Chief Executive Rakesh Kapoor said Reckitt remained cautious on the outlook for 2016, expecting a tough macroeconomic environment to persist, but was confident it will deliver sales growth and margin expansion for its key brands.
Reckitt is targeting like-for-like net revenue growth of 4% to 5% in 2016, in constant currencies, and expects further improvements in its operating margins as it continues to cut costs. The like-for-like growth target is slightly weaker than the 2015 figure due to the exceptionally strong performance in its consumer health unit, which Reckitt does not expect to repeat in 2016.
Reckitt said it will pay a final dividend of 88.7 pence per share, up 12% year-on-year and leaving its total dividend for the year flat at 139.00p.
Revenue from its Health arm, which covers its consumer health products such as Nurofen, the Scholl footcare range and Durex, grew well in 2015, up 14% on a like-for-like basis, helped by a good cold and flu season at the start of the year and good performances from new Durex and Scholl products.
Like-for-like growth in Reckitt's Hygiene arm, however, which includes its Dettol and Harpic cleaning ranges and Finish dishwasher tablets, was around 3.0% for the year. Dettol and Harpic both performed well, helped by increasing market shares in emerging markets, but the performance for its pest franchise was mixed, hit by a competitive environment, while the Finish business did well in the UK but struggled against stiff competition in the US.
The Home unit saw like-for-like growth of 2.0% in the year, led by Air Wick air fresheners and Vanish carpet cleaner ranges, though the latter was hit by a weak Brazilian market. The remainder of its business, including the Food unit, saw like-for-like revenue rise 1.0% in the year, as the laundry detergents and fabric softener market in Southern Europe proved both weak and competitive.
By Sam Unsted; [email protected]; @SamUAtAlliance
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