Reckitt Benckiser Reports Mixed 2024 Results with Improved Adjusted Profits and Margins
Why we think this is neutral
Reckitt Benckiser's 2024 results present a mixed picture. On the positive side, the company reported improved adjusted operating profit, rising 3.0% to £3,475m, and an increase in adjusted EPS of 7.9% to 349.0p. The adjusted operating profit margin also expanded by 140bps to 24.5%. However, these gains are tempered by declines in IFRS operating profit (-4.2%) and IFRS EPS (-11.1%). LFL net revenue growth was modest at 1.4%, with strong performance in Hygiene (+4.2%) offset by weakness in Nutrition (-7.3%). The increase in net debt and impairment charges for IFCN and Biofreeze are concerning, but the company's outlook for 2025 and medium-term guidance are encouraging. The balance of positive and negative factors, along with the "trading in line" statement, supports a neutral outlook.
Key Points
- LFL net revenue growth of 1.4% to £14,169m
- Adjusted operating profit up 3.0% to £3,475m
- Adjusted EPS increased 7.9% to 349.0p
- IFRS operating profit down 4.2% to £2,425m
- IFRS EPS decreased 11.1% to 203.2p
- Hygiene segment grew 4.2%, Health 2.1%, Nutrition declined 7.3%
- Net debt increased to £7,914m, with net debt/Adjusted EBITDA ratio at 2.0x
- Impairment charges of £838m for IFCN and Biofreeze
- Targeting 3-4% LFL net revenue growth for Core Reckitt in 2025
- Medium-term guidance of 4-5% LFL net revenue growth from 2026
Summary
Reckitt Benckiser's 2024 results show a mixed performance with LFL net revenue growth of 1.4% to £14,169m. The company saw improved adjusted operating profit of £3,475m (+3.0%) and adjusted EPS growth of 7.9% to 349.0p. However, IFRS figures declined, with operating profit down 4.2% and EPS down 11.1%. The Hygiene segment performed well with 4.2% growth, while Nutrition faced challenges with a 7.3% decline. Net debt increased to £7,914m, with the net debt/Adjusted EBITDA ratio rising to 2.0x. The company faced impairment charges of £838m related to IFCN and Biofreeze. Looking ahead, Reckitt is targeting 3-4% LFL net revenue growth for Core Reckitt in 2025 and 4-5% growth from 2026. The company maintains a strong market position with 55% of Top CMUs in Health and Hygiene holding or gaining share.