(Alliance News) - Reckitt Benckiser swung to a first half loss on a business revaluation and warned Tuesday of cost inflation but backed annual guidance.
The consumer goods firm said revenue for the six months that ended June 30 fell 4.5% yearly to USD6.60 billion, but rose 1.5% like-for-like at constant currency. The Dettol disinfectant maker swung to a first half pretax loss of GBP1.94 billion from a GBP1.44 billion profit a year earlier.
Reckitt suffered a GBP3.00 billion hit related to the remeasurement of IFCN China, the infant nutrition business that it has agreed to sell to Beijing-based investment firm Primavera Capital Group for USD2.2 billion.
Reckitt declared a 73 pence payout, in line with a year earlier.
"Against a challenging environment, I am encouraged by the progress we have made in the first half of the year. Around 70% of our revenue, excluding IFCN China, is from brands growing by mid-single digits in the period, in line with our strategic vision. The remaining 30% includes our disinfection brands, which are structurally rebasing, as well as our cold and flu brands, which are now starting to show positive momentum," Chief Executive Laxman Narasimhan said.
"The markets are dynamic, reflecting several factors which we are closely monitoring, including the prevalence of Covid strains and government guidelines such as new lockdowns and social distancing. Although the third quarter will be slower due to strong prior year comparators, as the world gradually opens up and socialisation returns, cold and flu trends indicate a moderate season which should strengthen performance in the fourth quarter."
CEO Narasimhan expects like-for-like net revenue growth within the 0% and 2% range the company set out in February. The CEO cautioned, however, that cost inflation accelerated during the second quarter.
"It will take time to offset this headwind with productivity and pricing actions being implemented in the back half of the year and early next year," Narasimhan added.
Reckitt shares were down 8.2% early Tuesday in London.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.8% at 6,972.63
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Hang Seng: down 3.8% at 25,206.92
Nikkei 225: closed up 0.5% at 27,970.22
DJIA: closed up 82.76 points, or 0.2%, at 35,144.31
S&P 500: closed up 0.2% at 4,422.30
Nasdaq Composite: closed up 3.72 points at 14,840.71
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EUR: down at USD1.1791 (USD1.1809)
GBP: soft at USD1.3815 (USD1.3820)
USD: down at JPY110.16 (JPY110.31)
Gold: down at USD1,794.32 per ounce (USD1,799.56)
Oil (Brent): up at USD74.62 a barrel (USD73.99)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Tuesday's Key Economic Events still to come
US two-day Federal Open Market Committee meeting begins
1000 CEST EU monetary developments in euro area
1100 BST UK CBI distributive trades survey
0830 EDT US advance report on durable goods
0900 EDT US monthly house price index
1000 EDT US consumer confidence index
1630 EDT US API weekly statistical bulletin
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The number of Covid-19 cases newly reported in the UK has dropped for the sixth day in a row amid a rise in hospital admissions in England, according to official figures. The UK recorded a further 24,950 lab-confirmed Covid-19 cases as of 9am on Monday, the government said, down from the 46,558 reported on July 20. Meanwhile, NHS data showed that a total of 5,055 patients were in hospital with Covid-19 in England on Monday. This is up 33% from the previous week and the highest since March 18, but still well below levels seen in the second wave of the pandemic.
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North and South Korea have reopened their official communication channels after more than a year of suspension, both countries said. The South Korean presidential office announced the cross-border hotline between the two Koreas was reopened, while North Korea's state news agency KCNA also confirmed liaison lines were restored on Tuesday morning. The move came on the 68th anniversary of the signing of the ceasefire agreement that ended the Korean War. South Korean President Moon Jae In has been exchanging personal letters with North Korean leader Kim Jong Un since April, his office said, and the two agreed to restore communications.
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US President Joe Biden declared US relations with Iraq would enter a new phase with American troops exiting combat operations in the country by year-end as he held talks Monday with Prime Minister Mustafa al-Kadhemi. Amid the threat of an Islamic State resurgence and Iran's powerful influence in Baghdad, Biden stressed that Washington remains "committed to our security cooperation" while Kadhemi reaffirmed their "strategic partnership". US troops in Iraq will "to continue to train, to assist, to help, to deal with Islamic State as it arises," Biden said. But, in a shift that comes as the US pulls out of Afghanistan, the US leader confirmed that the 2,500 US troops still in Iraq won't be fighting.
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BROKER RATING CHANGES
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JPMORGAN RAISES FLUTTER TO 'OVERWEIGHT' (NEUTRAL) - PRICE TARGET 16,290 (15,970) PENCE
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JPMORGAN INITIATES MADE.COM WITH 'NEUTRAL' - TARGET 213 PENCE
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PEEL HUNT RAISES RYANAIR TO 'HOLD' ('REDUCE')
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COMPANIES - FTSE 100
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Specialty chemicals firm Croda International hailed "record" first half profit. Sales in the six months ended June rose 39% to GBP934.0 million from 672.9 million a year earlier. Pretax profit was 41% higher at GBP204.1 million from GBP144.9 million, while adjusted pretax profit jumped by more than 50% to a record GBP229.5 million. Croda raised its payout by 10% to 43.5p, "continuing an unbroken trend of increasing returns over nearly 30 years". It had paid a 39.5p dividend for the first half of 2020. "The first half year has seen a strong performance across the group, reflecting the global recovery in demand, the accelerated implementation of our strategic priorities and increased investment," Croda added. It said it expects adjusted profit after tax in 2021 to be "significantly ahead" of current market expectations.
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Kumba Iron Ore reported a strong first half as revenue and profit benefited from a higher iron ore prices. The iron ore miner saw pretax profit in the first half of the year almost triple to ZAR42.19 billion from last year's ZAR15.17 billion. This was on the back of doubled revenue of ZAR63.62 billion, from ZAR31.58 billion. Kumba is an arm of Anglo American, focused on iron ore mining and production in South Africa. Iron ore production increased 12% to 20.4 million tonnes from 18.2 million tonnes, while sales volumes rose 3.2% to 19.5 million tonnes from 18.9 million tonnes.
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COMPANIES - FTSE 250
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FirstGroup Chief Executive Matthew Gregory will step down at the public transport company's annual general meeting on September 13. Chair David Martin will become interim executive chair while a search for a replacement is underway. Gregory had joined FirstGroup in 2015 as chief financial officer, stepping up to CEO in 2018. "Having delivered the substantial portfolio rationalisation strategy and with FirstGroup now positioned to emerge from the pandemic as a resilient and robust business, I have decided the time is right for me to move on to new opportunities," he said. The announcement came as FirstGroup reported annual results, with adjusted pretax profit dropping to GBP39.4 million from GBP109.9 million. On a statutory basis, FirstGroup swung to pretax profit of GBP115.8m from a loss of GBP299.6 million.
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Greetings card retailer Moongpig reported an annual profit rise in its maiden set of results following its recent London listing. Moonpig said revenue in its financial year that ended April 30 more than doubled to GBP368.2 million from GBP173.1 million. Pretax profit inched up 1.1% to GBP32.9 million from GBP31.8 million. Moonpig said it does not intend to pay a dividend as it "invests in growth". It added: "The new financial year has started moderately ahead of expectations, consistent with the slower lifting of lockdown restrictions in the UK and the Netherlands. As restrictions have eased, we have seen customer purchase frequency start to normalise from elevated levels, and we expect this trend to continue until customer purchase frequency has settled at a level approximately 5% higher than before Covid-19."
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COMPANIES - GLOBAL
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Facebook said it is combining specialists from across its hardware, gaming and virtual reality units to build an immersive digital world known as the 'metaverse'. The metaverse, a term coined by sci-fi writer Neal Stephenson, refers to a shared online world in which multiple users can hang out, spend money, consume media and potentially even work. The project is seen as central to Facebook's future by Chief Executive Mark Zuckerberg. "Today we're standing up a Metaverse product group...to bring together the teams focused on responsibly building this ambitious work," Facebook executive Andrew Bosworth said in a post. "The defining quality of the Metaverse will be presence – the feeling of really being there with people." Facebook hardware such as Portal smart-screens and Oculus virtual reality head gear are already tools for making people feel close together despite being far apart, according to Bosworth.
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Tuesday's Shareholder Meetings
BMO UK High Income Trust PLC - AGM
Conduity Capital PLC - AGM
Hibernia REIT PLC - AGM
Mediclinic International PLC - AGM
MITIE Group PLC - AGM
Motorpoint Group PLC - AGM
NewRiver REIT PLC - AGM
OnTheMarket PLC - AGM
Petrel Resources PLC - AGM
Prospex Energy PLC - AGM
Record PLC - AGM
TR Property Investment Trust PLC - AGM
Vodafone Group PLC - AGM
Wizz Air Holdings PLC - AGM
Zoltav Resources Inc - AGM
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By Tom Waite; thomaslwaite@alliancenews.com
Copyright 2021 Alliance News Limited. All Rights Reserved.
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