Reckitt Benckiser Exceeds 2011 Financial Targets, Announces New Growth Strategy

Reckitt Benckiser (RB), owner of the Veet and Clearasil brands, released financial results for fourth quarter 2011 and full year 2011, noting that the company exceeded its full year 2011 targets. Highlights of the full year report included total net revenue growth of 13% to £9,485 million—ahead of the 12% target—and adjusted net income of 9% actual exchange, (11% constant) ahead of the10% target. Fourth quarter highlights included total net revenue growth of 8% to £2,416 million.

Commenting on the full year results, company CEO Rakesh Kapoor said, “Reckitt Benckiser delivered another strong year, exceeding both our net revenue target (+12%) and adjusted net income target (+10%) in an increasingly tough environment. Like-for-like growth of 4% was underpinned by a robust performance in the base business, especially in Q4.

“Growth was driven in particular by excellent growth in emerging markets, and growth in [several of] our power brands. In 2012 we are targeting total company net revenue growth, excluding RBP, of 200bps above our market growth rate. We expect the market to grow at 1–2%. 2012 will be a year of higher investment but, ex RBP, we are still targeting to maintain our operating margins.”

More information on this financial report is available on the company's website.

The company also is announcing a number of important changes to itself and its strategy to fuel another decade of market outperformance and attractive shareholder returns. The company announced plans to target its health and hygiene power brands, saying its successful power brand strategy will continue, but with increased focus and investment for higher growth and higher margins from health and hygiene, in addition to home. It will also target faster growing markets, prioritizing 16 “power markets,” which are mainly emerging markets, for disproportionate investment and growth. RB will also redeploy resources to emerging markets and will increase investment in brand building, targeting annual cost savings to fuel an additional investment of £100 million in brand equity building. Through the measures, RB has set to achieve three medium-term (five-year) key performance indicators: 200bps of net revenue (NR) growth above market growth on average each year; emerging market areas to be 50% of core business NR by 2016 (up from 42%); and health and hygiene to be 72% of core business NR by 2016 (up from 67%).

Outlining the strategy, Rakesh Kapoor, RB CEO, said, “RB has delivered a decade of superior growth and shareholder value. However, with slower market growth and increased competition, we need to reshape our strategy to enable us to continue our track record of outperformance. We believe we can make a real difference by giving people innovative solutions for healthier lives and happier homes. We will therefore be intensifying our investment behind our brands in the higher growth, higher margin categories of health and hygiene. In addition to our highly successful “power brand” strategy, we have identified 16 “power markets” for increased focus and investment, most of which are in emerging markets. This new category and geographic focus will be driven by a new organization structure. We are creating two new area organizations in emerging markets, instead of one. Additionally, we will merge the European and North American area organizations to form one area. This will enable us to increase the speed, quality and consistency of our in-market execution and to drive cost savings. RB’s relentless focus on building brands will continue. We will be increasing our investments in high rates of innovation and brand equity building. We aim to deliver steady operating margin expansion. We will continue to be highly effective at converting profit into cash. I have set three medium-term key performance indicators to monitor our progress on our strategy. I firmly believe that our strong company culture of outperformance, entrepreneurship and innovation will enable us to fulfill the enormous potential of our brands and deliver on our vision and reshaped business strategy.”

More information on this new strategy and its implementation can be found here.

More in News