Reckitt Benckiser: Continued strong quarterly trading performance:
Group like-for-like (‘LFL’) growth of +13.3% in Q3, with LFL year-to-date (‘YTD’) growth of +12.4%: underlying operational improvements augmented by continued growth in our leading global disinfection brands
Hygiene LFL growth of +19.5%: driven by Lysol, Finish and Air Wick, with double-digit growth in most markets
Health LFL growth of +12.6%: ongoing strong demand for Dettol and improved trends in Durex, offset by lower consumer demand in OTC, following pantry loading in H1
Nutrition LFL growth of +4.1%: improved infant formula performance in Q3 and continued strong growth for Airborne
Good progress towards rejuvenating sustainable growth with improved execution and increased investment to build a better, stronger business:
Four growth drivers: Improved hygiene penetration; strong market share performance YTD in Hygiene and Health; into new places with Dettol and Lysol directly sold in 19 new markets in 2020; innovation-led growth in new spaces – Air Wick Essential Mist up 50% in the US
Innovation and marketing investment yielding results: first polyurethane Durex launched in China; Mucinex, Enfamil, Lysol and Air Wick recognised as four of the top 25 US innovations
RB’s Purpose reinforced by campaigns and commitments that underpin our pledge to be carbon neutral by 2040; Reckitt Global Hygiene Institute formally launched; new partnerships to drive better hygiene behaviour across the world New organisational structure in place since 1 July, operating with three global business units, now reflected in our reporting segments
Supply chain improvements gaining momentum, evidenced by better customer service, improved stock levels and increased on-shelf availability; continued investment into 2021
e-Commerce sales increased by over 45% in Q3 and over 50% YTD; estimated to be c.12% of YTD group net revenue
£1.3bn productivity programme on track; YTD savings of £300m, ahead of plan Outlook:
2020 like-for-like net revenue now expected to grow ‘low double digits’ (previously ‘high single-digit’); other guidance unchanged.
Commenting on these results, Laxman Narasimhan, Chief Executive Officer, said:
“Our plan to rejuvenate sustainable growth at RB is gaining momentum, and thanks to the exceptional efforts of the RB team, we are beginning to see the positive impact that the transformation is having on the business. The strong momentum in the first half has continued in Q3 and we are on track to deliver low double-digit like-for-like net revenue growth for the full year.
“Our performance has been led by an increase in Hygiene and Health volumes, led by our market-leading disinfectant brands – Dettol, Lysol, Sagrotan and Napisan. Growth has been underpinned by better customer service levels and an improved supply chain performance, together with strong momentum in eCommerce. While the revenue performance in Nutrition improved in the quarter, we remain fully focused on addressing the headwinds, such as Hong Kong, and taking the actions necessary to deliver a sustained improvement.
“With a world-class portfolio of hygiene, health and nutrition brands and a clear purpose – to protect, heal and nurture in the relentless pursuit of a cleaner and healthier world – we are uniquely placed to help tackle the challenges the world is facing. Our plan to invest over £2bn over three years is on track, supported by our expanded productivity programme which has delivered savings of £300m so far this year. We are also reinvesting our outperformance to capitalise on the strong demand for our products, particularly with Dettol and Lysol and through eCommerce and professional channels.
“In meeting the significant challenges of COVID-19, we have shown that we are becoming a stronger and more agile business. We are well on the way towards completing the first phase of our strategic plan, to ‘stabilise and perform’, as part of our journey to deliver mid-single-digit revenue growth in the medium term and mid-20s margins by the mid-2020s.
Our improved execution and the investments in capability and growth will enable us to achieve our revenue growth target a year earlier than expected, and with greater certainty.”
Strong underlying group performance
Group net revenue grew by +13.3% on a like-for-like (LFL) basis in the third quarter, driven by strong volume growth (+10.5%) and an increase in price/mix (+2.8%). As expected, volume growth was led by the strong performance of our disinfectant brands, together with broad-based growth in Hygiene and from Airborne.
At the same time, there were improved performances from Durex, where the category benefited from the recovery in some markets, and our infant formula brands, which benefited from increases in trade stock in North America.
Reported revenue growth in the quarter of 6.9% reflected a foreign exchange headwind of 6.4%, principally driven by Latin American currencies.
In addition to the overall favourable market backdrop, the strong LFL growth reflects good market share gains in a number of key categories, with consumers favouring trusted brands in times of uncertainty.
In particular, Dettol, Lysol, Finish, Durex and Gaviscon all gained share in key markets year-to-date. By geography, growth has been broad-based, with strong LFL performances across each of our three regions, and in particular, in North America, led by Lysol and Airborne.
Our eCommerce sales continue to grow strongly, up over 45% in Q3 and over 50% YTD, driven by each of our three main channels – online-only platforms, omni-channel retailers, and Direct to Consumer – and across geographies.