Reckitt Benckiser Group Plc · LSE:RKT
Reckitt Benckiser — H1 2004 Earnings Presentation
32 slides from Reckitt Benckiser's earnings presentation, Jul 26, 2004
Slide 1: 2004: Half Year Results
2004: Half Year Results 26 July 2004
Slide 2: Bart Becht, Chief Executive Officer
Bart Becht Chief Executive Officer
Slide 3: Summary - February 2004
Summary - February 2004 •• 2004: 2004: Building Building Sustained Sustained Momentum Momentum –– Exciting Exciting new new products products –– Continued Continued focus focus on on Power Power Brands Brands –– More More brand brand building building investment investment –– Continued Continued mar
Slide 4: 18 Quarters of Consistent Growth
18 Quarters of Consistent Growth Net revenues from continuing operations £m & Normalised Net Income £m Net Revenues Net income 1000 1000 150 150 900 900 100 100 800 800 50 50 700 700 00 Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 1999 1999 2000 2000 2001 2001 2002 2002 2003 2003 2004 2004 1999 1
Slide 5: Volume Driven
Volume Driven H1 H1 Like Like for for Like Like NR NR growth growth +10 +10 ...of ...of which which volume volume +8 +8 …of …of which which mix mix +2 +2 …of …of which which price price +0 +0 •• Volume Volume clearly clearly rising rising strongly strongly •• accounting accounting for for >70% >70%
Slide 6: Growth Across All Categories
Growth Across All Categories Category Analysis 2004 at constant exchange Q1 Q2 Half Year % ch % % £m Fabric Care +14 +7 517 +10 Surface Care +10 +8 365 +9 Dishwashing +4 +6 268 +5 Home Care +13 +12 264 +12 Health & Personal Care +20 +12 304 +16 Core Household +12 +9 1,718 +10 Other +18 (3) 70 +6 Foo
Slide 7: Power Brands Driven
Power Brands Driven Power brands % of Net Revenues 60 •• Power Power brands brands +14% +14% in in H1 H1 50 60 2004, 2004, well well ahead ahead of of total total 53 company company (+10%) (+10%) and and 40 51 46 market market (+2% (+2% toto +3%) +3%) 30 40 20 10 0 2001 2002 2003 H1 2004 Target 2006
Slide 8: After substantially higher investment particularly Media
After substantially higher investment particularly Media 15 15 Media % Net Revenue •• Investment Investment hashas been been +130bps substantially 13 13 substantially stepped stepped up up again again in in H1 H1 2004 2004 behind behind very very strong strong initiative initiative pipeline pipeline
Slide 9: Innovation Driven
Innovation Driven Major Contributors : H1 2004
Slide 10: Colin Day, Chief Financial Officer
Colin Day Chief Financial Officer
Slide 11: Targets Exceeded at Half Year
Targets Exceeded at Half Year 2004 Q2 & HY: Profit & Loss Account 2003 2003 2004 2004 %ch %ch %ch %ch £m £m £m £m actual actual constant constant Q2 Q2 Net Net Revenues Revenues 943 943 953 953 +1 +1 +8 +8 Operating Operating Profit Profit 163 163 174 174 +7 +7 +14 +14 Net Net Income Income 117 117
Slide 12: Exchange Rates: Q2 & H1 2004
Exchange Rates : Q2 & H1 2004 Q2 Q2 H1 H1 Constant Constant Rate Rate NR NR Growth Growth ++ 8% 8% +10% +10% US US $$ -- 3% 3% -- 3% 3% Euro Euro €€ -- 2% 2% -- 1% 1% Other Other -- 2% 2% -- 1% 1% Actual Actual GBP GBP NR NR Growth Growth ++ 1% 1% ++ 5% 5%
Slide 13: Consistent Margin Progression
Consistent Margin Progression Margins % Half Year 18 18 Half Year Gross Margin Operating Margin 56 56 54 54 +190bps +140bps 17.0 17.0 54.6 54.6 16 16 52 52 52.7 52.7 15.6 15.6 50 50 50.6 50.6 15.0 15.0 48 48 14 14 47.7 47.7 14.0 14.0 46 46 47.2 47.2 13.4 13.4 44 44 42 42 12 12 2000 2000 2001 2001 20
Slide 14: All Regions Contributing to Growth
All Regions Contributing to Growth Regional Analysis Q2 2004 at constant exchange Net Revenues Profits £m £m %ch%ch £m £m %ch %ch Europe Europe 505 505 +6% +6% 114 114 +10% +10% NA NA &&AA 288 288 +11% +11% 44 44 +16% +16% Developing Developing 160 160 +10% +10% 12 12 +71% +71% Corporate Corporate 4
Slide 15: All Regions Contributing to Growth
All Regions Contributing to Growth Regional Analysis HY 2004 at constant exchange Net Revenues Profits £m £m %ch%ch £m £m %ch %ch Europe Europe 997 997 +8% +8% 212 212 +13% +13% NA NA &&AA 564 564 +11% +11% 86 86 +19% +19% Developing Developing 312 312 +16% +16% 17 17 +143% +143% Corporate Corporate
Slide 16: Operating Margin Progress in All Regions
Operating Margin Progress in All Regions 2004: Half Year Regional Operating Margins North America Developing Europe Total & ANZ Markets 22 21.3 20 18 17.0 15.2 16 14 + 90 12 10 + 270 8 + 140 5.4 + 140 6 4 2 0 2000 2001 2002 2003 2004
Slide 17: Fixed Cost Leverage Is Working
Fixed Cost Leverage Is Working 60 Distribution of Gross Margin 55 % 50 45 Source Source bps bps % % change change 40 Gross Gross Margin Margin +190 +190 +8% +8% 35 Media Media +130 +130 +15% +15% 30 SG&A -- 80 -- 1% SG&A 80 1% 25 Op Op Margin Margin +140 +140 +14% +14% 20 15 10 H1 2003 H1 2004 Opera
Slide 18: Cost Initiatives - Examples
Cost Initiatives - Examples •• Outsourcing Outsourcing –– Gadget Gadget source source in in China: China: volume volume +60% +60% this this year year –– India: India: 22 plants plants closed closed and and production production outsourced outsourced •• Squeeze Squeeze // Xtrim Xtrim –– folding foldi
Slide 19: Strong Cash Flow
Strong Cash Flow Operating & Net Cash Flow £m 500 427 444 •• Converting Converting more more than than 100% 100% into into cash cash –– operating operating profit profit into into 327 operating operating cash cash flow flow 332 337 –– net net income income into into 250 net 230 net cash cash flow fl
Slide 20: Net Fund Position Built Up
Net Fund Position Built Up HY Net Debt position H1 1999 2000 2001 2002 2003 2004 403 292 -105 -467 -595 -795 Over £2bn generated 1999-2004 £1bn returned to shareholders by Q3 2004 > £1bn debt reduction / net funds
Slide 21: Returning Cash to Shareholders
Returning Cash to Shareholders •• Dividend Dividend increase: increase: 16 16 pence pence for for half half year year –– +14% +14% increase increase •• Rolling Rolling Share Share Buy Buy Back Back Increased Increased to to £300m £300m for for 2004/05 2004/05 –– 2003/04 2003/04 Program: Program: So
Slide 22: Bart Becht, Chief Executive Officer
Bart Becht Chief Executive Officer
Slide 23: Summary - July 2004
Summary - July 2004 •• 2004: 2004: Building Building Sustained Sustained Momentum Momentum –– Exciting Exciting new new products products –– Continued Continued focus focus on on Power Power Brands Brands –– More More brand brand building building investment investment –– Continued Continued margin
Slide 24: More New Products
More New Products Fabric Care - more Vanish Oxi Ne w Vanish Oxi Max Vanish Oxi Pre-Treater
Slide 25: More new products
More new products Surface Care - Cillit Bang Ne w
Slide 26: More New Products
More New Products Surface Care - Lysol Neutra Air Electrical N ew Lysol Neutra Air Electrical Plug-in
Slide 27: More New Products
More New Products Dishwashing - Finish/Calgonit Extra Power Ne w Calgonit / Finish Extra Power 3-in-1 Brilliant
Slide 28: More New Products
More New Products Home Care - Airwick Mobil Air Ne w Airwick Mobil’ Air
Slide 29: Margin Optimisation
Margin Optimisation Operating Margin - Total Company % % of of NR NR Reckitt Benckiser % % of of NR NR Peer Group 21.9 21.9 22 22 22 20.8 20.8 19.8 19.8 Target 2006 20 18.9 20 20 18.3 18 2001 2001 16.7 18 18 Ave Ave 15.6 16 16 14.4 16 14 14 14 11.9 12 12 12 10 10 10 1999 2000 2001 2002 2003 H1 Cloro
Slide 30: Sustained Gross Margin Expansion
Sustained Gross Margin Expansion Gross Margin % MAT 5555 2004 2004 Outlook Outlook 5353 •• Input Input Costs Costs :: No No Major Major Changes Changes expected expected 5151 •• Squeeze Squeeze // Xtrim Xtrim on on course course 4949 –– Projects Projects identified identified to to deliver deliver f
Slide 31: Targets Increased for 2004
Targets Increased for 2004 •• Net Net Revenue Revenue Growth Growth of of 7% 7% Plus Plus –– previously previously 5% 5% plus plus –– All All at at constant constant exchange exchange •• Net Net Income Income & & EPS EPS Growth: Growth: 18% 18% Plus Plus –– previously previously low low double doubl
Slide 32: 2004: Half Year Results
2004 : Half Year Results 26 July 2004