Reckitt Shareholders Should Prepare for Slower Growth

Pricing power was again evident in Reckitt Benckiser's consumer health segment in the full year results, but Reckitt's outstanding organic growth rate will slow in the future

Philip Gorham 16 February, 2016 | 8:42AM

Reckitt Benckiser's (RB.) full-year results were almost exactly in line with our above-consensus forecasts, and guidance for 2016 is consistent with our existing forecasts. Therefore, we are unlikely to make material changes to our £59 fair value estimate beyond the impact of the time value of money. Pricing power was again evident in the consumer health segment; this is one of the key sources of our retained narrow moat rating. Nevertheless, we reiterate our thesis that some of the drivers of Reckitt's short-term organic growth rate may be unsustainable in the medium term.

Several consumer product manufacturers have highlighted the rebound in Southern Europe over the past six months

Organic fourth-quarter net sales increased by 7%, significantly more than the 4%-5% growth that larger, more-diversified competitors are achieving. Developing markets, up 12% on a like-for-like basis in the fourth quarter and up 9% in the full year, and consumer health, up 14% in both the fourth quarter and full year, remain the drivers of consolidated sales growth. Several consumer product manufacturers have highlighted the rebound in Southern Europe over the past six months, but Reckitt's performance in Eastern Europe, where it delivered "strong growth", was particularly impressive.

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

To view this article, become a Morningstar Basic member.

Register For Free

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Reckitt Benckiser Group PLC7,446.00 GBX-1.09

About Author

Philip Gorham  

Audience Confirmation


By clicking 'accept' I acknowledge that this website uses cookies and other technologies to tailor my experience and understand how I and other visitors use our site. See 'Cookie Consent' for more detail.

  • Other Morningstar Websites
© Copyright 2020 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Cookies