- Revenues, profits exceed management targets
- Growth led by Health and Hygiene, emerging markets
- Conditions now more challenging, sales growth to slow
Consumer products giant Reckitt Benckiser said it exceeded its targets after 'another strong year' in 2013, but warned that markets conditions have become more challenging.
Reckitt said that the trading environment is now tougher than it was at the beginning of last year, "particularly in some emerging markets", where growth continues to slow.
The company, which owns brands such as Cillit Bang, Nurofen and Durex, said that constant currency revenue growth would slow to 4-5% in 2014, while margins would also be flat to slightly higher. Both targets exclude the struggling RB Pharmaceuticals (RBP) division.
In 2013, net revenue excluding RBP increased by 7% at constant currencies to £10.04bn (Shore Capital: 6.6%), with recent acquisitions outperforming initial growth expectations. Like-for-like (LFL) sales excluding RBP improved by 5%, with growth led by the Health and Hygiene divisions after recent investments.
From a geographic perspective, the company said that over two thirds of the contribution to LFL growth came from the emerging markets of LAPAC (Latin America, the Asian Pacific, Australasia and China) and RUMEA (Russia, the Middle East and Africa). Meanwhile, tough market conditions in Europe and North America, which together account for over half of group core revenues, held back LFL growth to 3%.
Revenues at the now non-core RBP business were down 8% at constant currency at £777m due to the loss of higher-margin tablet sales in the US on the back of generic competition and the withdrawal of Suboxone tablets. Reckitt said that the strategy review of the unit, announced in October, is still ongoing.
Group pre-tax profit slipped slightly to £2.31bn, from £2.41bn in 2012, as a 150 basis-point increase in the gross margin to 59.4% was offset by a one-off charge of £271m relating to history regulatory issues, restructuring spend, and acquisition and integration costs. Increased operating expenses also weighed on the bottom line.
The board has recommended a final dividend of 77p per share (Shore Capital: 82p), bringing the total dividend to 137p, up 2% on 2012.