24
July 2024
RECKITT TO SHARPEN ITS
PORTFOLIO & SIMPLIFY ORGANISATION
FOR ACCELERATED GROWTH & VALUE CREATION
FOCUS ON CORE HIGH-GROWTH,
HIGH-MARGIN POWERBRANDS
ASSESS ALL OPTIONS FOR
'ESSENTIAL HOME' PORTFOLIO & MEAD JOHNSON
NUTRITION
MOVE TO A SIMPLER, MORE
EFFECTIVE ORGANISATION1
THIS ANNOUNCEMENT CONTAINS INSIDE
INFORMATION
London UK, 24 July 2024: Reckitt Benckiser Group Plc ('Reckitt plc') announces actions
to reshape the company as a world-class consumer health and hygiene
organisation, with one of the strongest growth and margin profiles
among its peer group. This involves significant sharpening of its
brand portfolio and a move to a simpler, more effective
organisation1 to maximise long-term value for
shareholders.
Reckitt plc will focus on a
portfolio of market-leading Powerbrands, in line with the criteria
set out in its October 2023 strategy update. These high-growth,
high-margin Powerbrands are beloved by consumers and hold leading
market shares in categories with significant headroom for long-term
growth. These actions are the result of a thorough review conducted
over the last nine months. This sharpened portfolio creates the
opportunity to move to a simpler, faster and more efficient
organisation.
Reckitt plc will seek to exit its
portfolio of leading home care brands that are no longer core
('Essential Home') including Air Wick, Mortein, Calgon and Cillit
Bang, with FY2023 net revenue of £1.9bn, by the end of 2025 and
will consider all options to maximise shareholder
value.
The Mead Johnson Nutrition business,
with its market-leading brands of Enfamil and Nutramigen, is now
non-core and Reckitt will consider all strategic options to
maximise shareholder value.
Reckitt plc's allocation framework
remains constant, and these actions allow the company to focus
capital against brands that offer the best long-term opportunity
for growth. Reckitt plc will continue to pay a progressive
dividend and return surplus cash to shareholders, including excess
proceeds from future transactions.
All proposals are subject to relevant
employee representative and/or works council information and
consultation, where applicable.
A
sharper, simpler Reckitt
The core Reckitt portfolio will be a
uniquely attractive consumer
health and hygiene business, with premium, high-growth and
high-margin Powerbrands, including Mucinex, Strepsils, Gaviscon,
Nurofen, Lysol, Dettol, Harpic, Finish, Vanish, Durex and Veet.
Over the last five years this portfolio has delivered strong growth and high margins,
generating a 7% net revenue CAGR between FY2018 and FY2023, and a
gross margin of 61% in FY2023. The portfolio will also include
likely future Powerbrands including Move Free and Biofreeze, and
important local hero brands such as Lemsip, Airborne, KY, Veja,
Jik, Tempra and Jontex.
Reckitt will1 move
to a simpler and more effective
organisation with fewer management layers and reduced
duplication to accelerate speed of decision making and improve
efficiency. This means a move to a unified category structure operated through
three geographies, North America, Europe and Emerging
Markets, and removing the Global Business Unit structure.
The global category organisation will deliver consumer insight,
category expertise and innovation, with the geographic areas
focusing on execution excellence for consumers and
customers.
Fuel
for Growth
Reckitt plc will1
expand and accelerate its existing
fixed cost optimisation initiative to drive improved
effectiveness and efficiency of the organisation. This program will
deliver a step change in organisational effectiveness with fewer
management layers and greater proximity to the consumer. These
changes will unlock cost efficiencies delivering at least a 300bps
reduction in fixed costs as it exits 20272 to achieve an
end-state fixed-cost base of c.19%, from c.22% today. Reckitt plc
expects to incur estimated one-off cash restructuring and
transformation costs during this period of
c.£1.0bn3.
Savings will come from organisation
simplification, greater use of shared services, right-sizing
investments, automation, and digital and generative AI
opportunities1.
Operations from January 2025
Reckitt plc's new organisation and
revised leadership will1 be in place on 1 January 2025.
Also announced today are the designate geography and category
leaders, each of whom will be joining the Group Executive
Committee.
From 1 January 2025, Reckitt plc will
report its financials in three segments - Reckitt, Essential Home,
and Mead Johnson Nutrition.
Maximising the value of Essential Home
Reckitt plc will explore
opportunities to maximise the full potential of its portfolio of
attractive, iconic Essential Home brands. Essential Home is a
stable and resilient international portfolio in the large home care
category with attractive margins and high cash generation.
Essential Home is focused on North America, Europe and Latin
America. Essential Home will be run by a separate, dedicated team
of experienced Reckitt leaders.
Consider all strategic options for Mead Johnson
Nutrition
Reckitt plc will consider all
strategic options for Mead Johnson Nutrition to maximise
shareholder value over time. The business will continue to be led
by the same world-class management team.
Kris
Licht, Chief Executive Officer, said:
"Today we announce an important step forward to firmly
establish Reckitt as a world-class consumer health and hygiene
company, with one of the strongest growth and margin profiles in
the industry.
Our
core portfolio of market-leading Powerbrands and simpler, more
effective organisation position us to better serve our consumers
and customers. This will deliver attractive long-term value
creation for Reckitt's shareholders through our earnings model and
cash returns.
I
am pleased to announce the appointment of a number of talented,
long-term Reckitt leaders to the Group Executive Committee to
deliver this growth and value creation
opportunity."
Reckitt
· A
business with significant headroom
for long-term growth with strong cash generation
capabilities and compelling prospects for growth through greater
focus, increased innovation, category expansion and inorganic
growth opportunities.
· FY2023 net revenue of
£10.3bn and a 5-year LFL net revenue
CAGR of 7% between FY2018
and FY2023, and a gross margin of
61% in FY2023.
· A portfolio of
Powerbrands4 with clear
category leadership, including:
o Mucinex
- the #1 global cough & decongestant
brand
o Strepsils
- the #1 global medicated sore throat
brand
o Gaviscon
- the #1 global upper gastrointestinal
brand
o Nurofen
- the #1 European Systemic Analgesics (Pain
Relief) brand
o Lysol
- the #1 global disinfection brand, with the #1
market position in US
o Dettol
- the #1 global antiseptic liquid brand
o Harpic
- the #1 global lavatory care brand
o Finish
- the #1 global auto dishwash
brand
o Vanish
- the #1 global fabric additives brand
o Durex
- the #1 global condoms brand, with the #1 market
position in China
o Veet
- the #1 global depilatory brand
· A balanced and attractive
geographic profile with Europe 35%,
North America 27% and Emerging Markets 38% of FY2023 net
revenue.
· A unified category structure
operated through three geographies -
effective 1 January 2025.
o Category
- will be led by Ryan Dullea, currently SVP
Selfcare Global Category and has been at Reckitt since August
2019
o Europe
- will be led by Eric Gilliot, currently EVP North
America and has been at Reckitt since June 1998
o North America
- will be led by Jerome Lemaire, currently EVP
Category Development Hygiene and has been at Reckitt since April
1998
o Emerging
Markets - will be led by Nitish
Kapoor, currently EVP Fuel For Growth and has been at Reckitt since
June 1993
o Ryan, Eric Jerome and Nitish will be appointed to the Group
Executive Committee and will collectively be responsible with the
other Executive Committee members for ensuring the successful
delivery of this overall programme
· An efficient, agile
organisation - significant cost
savings targeted by expanding and accelerating the existing fixed
cost optimisation initiative.
· A virtuous earnings
model - high margins, brand equity
investment and innovation. Sustainable revenue growth and high
operating leverage.
Essential
Home
· A
highly attractive portfolio, focussed on North America, Europe and
Latin America, with FY2023 net revenue of £1.9bn containing iconic
brands with market-leading positions4, consumer
recognition and loyalty, including:
o Air
Wick - the #1 air care brand in Europe, #2 market position in Latin
America and # 3 market position in US
o SBP
- the #1 pest control brand in Brazil
o Calgon - the #1 European brand in water softeners
o Cillit Bang - the #4 brand in surface cleaning in
Europe
· A
stable and resilient business with strong cash-generation
capabilities.
· One of
the few scaled, international branded players in the large and
attractive home care category.
· Essential Home will be led by Paolo D'Orso, currently EVP
Europe Hygiene and has been at Reckitt since July 2011.
Mead Johnson
Nutrition
· A
leading nutrition business
with a portfolio of strong global and local brands4
including:
o Enfamil
- the #1 global infant formula brand and the #1
infant formula brand recommended by paediatricians in the
US
o Nutramigen
- the #1 allergy brand in the US
· This
business will continue to be led by the same world-class management
team.
This announcement contains inside
information for the purposes of Article 7 of the Market Abuse
Regulation (EU) 596/2014 as it forms part of United Kingdom
domestic law by virtue of the European Union (Withdrawal) Act
2018. This announcement is made by Catheryn O'Rourke, Company
Secretary, for Reckitt Benckiser Group plc.
H1 2024 RESULTS PRESENTATION
TODAY
There will be a results presentation
for analysts and investors today at 08:30 BST which will be held at
the London Stock Exchange, 10 Paternoster Square, London, EC4M
7LS.
To attend in person, please email
your details to ir@reckitt.com
to register.
For those wishing to follow the
webcast (listen-only), please click on the link below:
https://www.reckitt.com/investors/results-and-presentations/
Alternatively, dial in details
(listen-only) are as follows:
United
Kingdom:
0800 358 1035
All other
locations:
+44 20 3936 2999
Participant access code:
011264
FURTHER INFORMATION AND
CONTACTS
Richard Joyce & Andrew
Orchard
+44 (0)7807 418516 / +44 (0)7408 852753
Investor Relations
Patty O'Hayer
+44 (0)7825 755688
External Relations & Government
Affairs
FGS
Faeth Birch
+44 (0)7768
943171