Reckitt Benckiser shares jump on increased outlook, new share buyback

Reckitt Benckiser Group PLC on Thursday raised full-year guidance, lifted its dividend and launched a new share buyback, as it said its strategic reset is bearing fruit.

‘This is a strong first-half performance with Core Reckitt growing like-for-like net revenues 4.2%, demonstrating the strength of our Powerbrands and the positive impact of the strategy we launched a year ago,’ Chief Executive Kris Licht said.

In response, shares in Reckitt Benckiser were up 9.3% to 5,506.00 pence in London on Thursday morning. It was the second best performing stock on the FTSE 100 which was up 0.5%.

The maker of Nurofen painkillers and Strepsils lozenges said pretax profit fell 14% to £1.31 billion in the six months to June 30 from £1.52 billion a year prior, as revenue slipped 2.6% to £6.98 billion from £7.17 billion.

But like-for-like sales rose 1.5% in the half-year, and by 1.9% in the second quarter, Reckitt said. Within core brands, Reckitt said LFL sales increased by 4.2%.

Sales rose by 13% in Emerging Markets, but fell 0.9% in Europe and by 1.7% in North America, in a challenging consumer environment, it said.

By product group, sales rose 14% in Intimate Wellness, by 8% in Germ Protection, and by 2% in Household Care, but fell by 2% in Self Care.

Last July, Reckitt announced plans to focus on a portfolio of high-margin, high-growth ’powerbrands’, and to sell its Essential Home business.

Last week Reckitt confirmed it had sold its Essential Home business for an enterprise value of up to $4.8 billion to Advent International LP.

In the second quarter, Reckitt reported volume growth of 2.0% in its core business, accelerating from 0.3% in the first quarter, with group volume down 0.2% versus a 1.9% drop in the prior three months.

Reckitt raised the half-year dividend by 5.0% to 84.4p per share from 80.4p a year ago and announced a new £1 billion share buyback.

CEO Licht said the ’fuel for growth’ programme is ‘ahead of plan, reducing fixed costs, fuelling brand investments and expanding our platform for sustained margin and earnings growth. While there is still much work to do, the journey to fundamentally reshape Reckitt into a more efficient, world-class health and hygiene company is well underway and reflecting that we are upgrading our LFL net revenue guidance for 2025.’

Reckitt now targets LFL net revenue growth of above 4% in ’Core Reckitt’ for 2025, improved from previous guidance of 3% to 4% growth.

In the second half, the firm expects to benefit from the Mucinex sinus reformulation shelf reset in North America, the weaker cold and flu season seen in the fourth quarter of 2024, a more balanced sell in environment in Europe, and continued outsized growth in Emerging Markets.

Reckitt raised guidance for Mead Johnson Nutrition and now expects low-to-mid single digit LFL net revenue growth in 2025, improved from low single digit previously.

The company expects to deliver continued quarterly sequential improvement in Essential Home, now with low single digit decline in LFL net revenue for the full year, from low single digit growth previously.

Overall for 2025, Reckitt now expects group LFL net revenue growth of 3% to 4%.

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