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Reckitt Benckiser revenue returned to growth in Q4'17

Health and hygiene company Reckitt Benckiser Group PLC said Feb. 19 that revenue returned to growth in the 2017 fourth quarter, albeit at a slower rate than expected.

The manufacturer of surface care products such as Cillit Bang, antiseptic liquids like Dettol and Durex condoms said revenue in the fourth quarter ended Dec. 31, 2017, increased 2% year over year on a like-for-like basis at constant exchange rates to £3.29 billion. The S&P Capital IQ mean consensus estimates had forecast fourth-quarter revenue of £3.36 billion and like-for-like growth of 2.5%, with three analysts reporting.

"Our base business ended the year in line with our expectations, in what was a challenging, volatile environment," CEO Rakesh Kapoor was quoted as saying.

For the year ended Dec. 31, 2017, Reckitt Benckiser posted flat growth in like-for-like net revenue of £11.51 billion.

Adjusted diluted EPS for 2017 increased to 324.6 pence from 302 pence in 2016. A mean consensus of analysts' estimates compiled by S&P Capital IQ had forecast adjusted diluted EPS at 325 pence.

Net income for 2017 ballooned to £6.17 billion from £1.83 billion in 2016, swelled by £3.02 billion from the sale of the food business and a £1.42 billion credit from U.S. tax reform. These gains were partially offset by a charge of £296 million related to an ongoing investigation by the U.S. Department of Justice into matters concerning its pharmaceuticals business prior to its demerger in 2014.

Adjusted net income rose 7%, or 1% at constant exchange rates, to £2.31 billion.

Reckitt Benckiser announced Aug. 17, 2017, the sale of its food business to McCormick & Co. Inc. for $4.2 billion as part of its transformation to a business focused on health and hygiene home.

The sale, combined with the June 15, 2017, acquisition of Mead Johnson Nutrition, means more than 50% of revenue now comes from higher-margin consumer healthcare brands. Reckitt Benckiser raised its target for synergies from the Mead Johnson deal to about $300 million over three years from a previous forecast of $250 million.

It said it expected Mead Johnson to help it arrest its decline in adjusted operating margin, which shrank by 70 basis points to 27.1% in 2017.

Reckitt Benckiser reiterated its target for moderate margin expansion over the medium term and said it was targeting 2018 revenue growth of 13% to 14%, implying like-for-like growth of 2% to 3%.