2024-07-24 14:23:06 ET
Reckitt Benckiser Group plc (RBGPF)
Q2 2024 Results Conference Call
July 24, 2024 3:30 AM ET
Company Participants
Richard Joyce - Head of Investor Relations
Kristoffer Licht - CEO & Executive Director
Shannon Eisenhardt - CFO & Executive Director
Conference Call Participants
Guillaume Delmas - UBS
Chris Pitcher - Redbur
Jeremy Fialko - HSBC
James Edwardes Jones - RBC
Iain Simpson - Barclays
Fulvio Joh - Berenberg
Thomas Sykes - Deutsche Bank
Presentation
Richard Joyce
Good morning, everyone. Welcome to Reckitt's Half Year 2024 Results Presentation and our Strategic Update. Before we start, I'd like to draw your attention to the usual disclaimer in respect to forward-looking statements. Now presenting today is Kris Licht, our CEO; and Shannon Eisenhardt, our CFO. Following the presentation will be the normal Q&A session.
So without further ado, I'd like to introduce Kris to kick things off.
Kristoffer Licht
Good morning, everyone, and thank you for joining us. Shannon and I will kick off today's presentation with some key messages around our half 1 performance, followed by a deeper dive into our numbers and outlook for the year. I will then take you through an update on our strategic agenda, in particular the actions we are taking to reshape Reckitt through a sharper portfolio and a simpler organization. We will finish with the usual Q&A session.
I'm keen to talk to you about the actions we announced this morning to reshape Reckitt as a world-class consumer health and hygiene company, with one of the strongest growth and margin profiles in our peer group. But first, let's talk about our H1 trading.
In February, we said that our revenue and profit growth would be back half-weighted given the seasonal factors impacting our health business and the continued rebasing of U.S. Nutrition. We delivered the first half broadly in line with these expectations, and Shannon will provide further details by global business unit shortly. We are revising our group outlook for the year from 2% to 4% like-for-like net revenue to 1% to 3% growth because of the tornado that hit our Mount Vernon warehouse on July 9. This is not a structural issue, nor a long-term issue for our Mead Johnson Nutrition business.
While the event will affect our revenue results this year, we do not expect a material impact on our earnings as we hold comprehensive property damage and business interruption insurance. We see positive underlying momentum in our business as we leave the inflationary cycle of the last few years behind and move towards a more normal and balanced trading environment. Many of our brands and markets are showing good volume growth, which is very encouraging. Our markets remain competitive, particularly in the U.S. and in Europe, where we are seeing a return to a more normal promotional environment.
Our innovation platforms are driving premiumization, penetration and category creation. We saw good gross margin expansion in the first half. We increased investment behind our brands, and we are starting to see some good benefits from our cost optimization program. We also delivered strong free cash flow, which increased by 8% in the half. As we look to half 2, I expect to see an improvement in the growth rate of Health, continued broad-based growth in Hygiene and the final rebasing of our U.S. Nutrition business, which we expect to end in Q4.
The positive momentum of the business, our strong free cash flow generation and our confidence in our future have driven the Board's decision to both increase our interim dividend and announce the next tranche of our share buyback program of £1 billion over the next 12 months. Together, these actions show our commitment to increase cash returns to our shareholders.
I will now hand over to Shannon to talk in more detail about the half 1 trading and our outlook for the year....
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Reckitt Benckiser Group plc (RBGPF) Q2 2024 Earnings Call Transcript