Reckitt share price jumps on full-year profit rise

on Feb 11, 2015
Updated: Oct 21, 2019

Shares in Reckitt Benckiser Group (LON:RB) opened up this morning after the British consumer goods maker reported higher full-year profit, despite a fall in revenue. The producer of Dettol and Nurofen said that it had been helped by price increases and its cost optimisation initiatives, as well as like-for-like revenue growth in the fourth quarter.

Reckitt reported an adjusted operating profit of £2.185 billion for 2014, excluding the group’s pharmaceuticals business it had spun off, compared to £2.14 billion last year — up 11 percent at constant currency rates and two percent higher at actual rates.
Net revenue, excluding RB Pharmaceuticals (RBP), came in at £8.84 billion, compared to a restated revenue figure of £9.27 billion in 2013. The decline marked a five percent fall at actual rates, hit by the strength of sterling, however Reckitt noted that net revenue would have grown four percent if currency rates had stayed unchanged. Net revenue, excluding RBP, was £2.30 billion in the fourth quarter, with like-for-like growth of five percent.

“In 2015, we continue to expect tough market conditions,” said Reckitt CEO Rakesh Kapoor. He also revealed that the company was targeting like-for-like net revenue growth of four percent, “and moderate to ‘nice’ operating margin expansion” for the full year.
Reckitt further said that it planned a new cost-saving initiative to counter the tough market conditions. Dubbed ‘Supercharge’, the project will save £100 million to £150 million a year at a one-time cost of £200 million.

“This will make RB a leaner, faster and more coordinated business,” Kapoor remarked. “It will also drive cost savings that will enable us to deliver sustainable earnings growth as we enter the second half of the decade,” he added.
Reckitt’s share price opened almost one percent higher today. As of 08:09 GMT, the stock was trading at 5,855.00p – 4.74 percent up intraday. According to the Financial Times, the 20 analysts projecting 12 month price targets for the FTSE 100 consumer goods giant have a median target of 5,450.00p, with a high estimate of 6,110.00p and a low of 4,500.00p. As of 6 February 2015, the consensus forecast amongst 38 polled investment analysts covering Reckitt Benckiser has it that investors should hold their position in the company.
As of 08:35 GMT, Wednesday, 11 February, Reckitt Benckiser Group Plc share price is 5,837.50p.

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