- Emerging Markets Growth: Core Reckitt sales in Emerging Markets surged 14.6% in 2025, driven by double-digit growth in China and India.
- Margin Expansion: Adjusted operating profit rose 5.3%, with Core Reckitt margins widening 90 bps to 26.7% in 2025.
- Shareholder Returns: GBP 2.3 billion returned to shareholders via dividends and buybacks in 2025, including a GBP 1.6 billion special dividend.
- 2026 Guidance: Revenue growth projected at 4-5%, with EPS growth aligned to medium-term targets despite Essential Home divestment dilution.
- Cost Efficiency: Fuel for Growth program delivered 150 bps of savings in 2025, enabling 120 bps increase in brand investment and targeting fixed costs below 19% by 2027.
Segmental Performance
In 2025, Emerging Markets grew 14.6%, led by China and India, while Europe declined 1.4% and North America grew 0.2%. Self Care net revenue increased 3%, Germ Protection grew 8.4%, Household Care declined 0.4%, and Intimate Wellness grew 12.5%. The company's Fuel for Growth program drove meaningful simplification and improved effectiveness, delivering 150 basis points of savings in 2025.
Guidance and Outlook
Reckitt expects to deliver 4-5% net revenue growth in 2026, led by Emerging Markets, and low single-digit growth in Mead Johnson Nutrition. The company aims to exit 2027 with a fixed cost base below 19%. EPS growth is expected to align with the medium-term ambition, despite a dilution headwind from the divestment of Essential Home. The company's guidance for 2026 includes a net revenue growth of 4-5%, which is slightly above analyst estimates of 4.0% revenue growth.
Valuation Metrics
Reckitt's current valuation metrics indicate a P/E Ratio of 50.87, P/B Ratio of 6.15, and EV/EBITDA of 22.21. The Dividend Yield is 8.06%, and the Free Cash Flow Yield is 4.85%. The Net Debt/EBITDA ratio is expected to rise towards 2.5x by half-year 2026, up from 1.6x currently. These metrics suggest that the market is pricing in a certain level of growth and profitability for the company.
Operational Highlights
Reckitt's new organizational structure has benefited emerging markets, and Europe is expected to show improving performance. North America is also performing well, outpacing its categories. The company has a strong innovation pipeline, with launches such as Mucinex 12-hour Cold and Fever. Brand equity investments increased 120 bps as a percentage of sales last year, with a focus on innovations and launches.
Challenges and Risks
Russia currently accounts for about 15% of Core Reckitt's sales in Emerging Markets but is not a driver of growth. The company does not expect significant contributions from Russia. Latin America's like-for-like sales declined mid-single digits in Q4 due to a weaker seasonal OTC business and a subdued trading environment. The tax rate is expected to be around 27% in 2026, reflecting a return to a more structural tax rate.