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1. Company Snapshot

1.a. Company Description

Reckitt Benckiser Group plc manufactures and sells health, hygiene, and nutrition products in the United Kingdom, the United States, China, India, and internationally.The company offers acne treatment creams, facial washes, and cleansing pads; disinfection, hygiene, and first aid products; condoms, sex toys, and lubricants; heartburn and indigestion solutions; and cough and chest congestion, multi-symptom, and sinus remedies for adults and children under the Clearasil, Dettol, Durex, Gaviscon, and Mucinex brands.It also provides analgesics; sore throat medications; and hair removal products under the Nurofen, Strepsils, and Veet brands.


In addition, the company offers fragrances and devices; water softeners; home cleaning products; dish washes; toilet cleaners; disinfectants; sprays, baits, and plug-ins for pest control; stain removals; fabric washing; and other hygiene products under the Air Wick, Calgon, Cillit Bang, Finish, Harpic, Lysol, Mortein, Vanish, and Woolite brands, as well as analgesics, adult nutrition products, iron-fortified hypoallergenic baby formula, products for joint issues, and infant and toddler nutrition products, as well as vitamins, minerals, and supplements under the Biofreeze, Airborne, Mead Johnson, Move Free, Enfamil, and Nutramigen brands.Further, it provides probiotics, sore throat pain relief products, Omega products, brain health support products, cleaning and carpet cleaning products, septic tank system treatment products, cough syrups, plant-based laundry products, probiotics, and lubricants under the Digestive Advantage, Cepacol, MegaRed, Neuriva, Easy-Off, RID-X, Delsym, Botanical Origin, Bodi-Ome, and K-Y brands.The company was founded in 1819 and is headquartered in Slough, the United Kingdom.

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1.b. Last Insights on RKT

Reckitt Benckiser Group plc's recent performance was driven by strong core business revenue growth, beating consensus expectations, and a guidance upgrade. The company's decision to sell a majority stake in its home-care unit to Advent International at up to $4.8 billion valuation is also seen as a positive move, allowing Reckitt to focus on its core brands. Additionally, the company's dividend payment of £0.844 per share and its upgrade to OTCQX Best Market from the Pink market are further positives.

1.c. Company Highlights

2. Reckitt's Strong First Half, But Some Challenges Ahead

Reckitt delivered a strong first half with core revenues growing 4.2%, driven by a 5.3% growth in Q2. Emerging markets saw strong growth, while developed markets navigated a challenging consumer environment. The company made progress against its financial KPIs, with adjusted operating profit increasing 7% and EPS growth of 4.4%. The company announced a 5% increase in the interim dividend and a new GBP1 billion share buyback program. Reckitt's Fuel for Growth program is delivering ahead of plan, enhancing efficiency and increasing investment behind Powerbrands.

Publication Date: Jul -27

📋 Highlights
  • Strong Revenue Growth: Core Reckitt revenues grew 4.2% in the first half, driven by 5.3% growth in Q2.
  • Profitability Improvement: Adjusted operating profit increased by 7%, with EPS growth of 4.4%, reflecting strong financial performance.
  • Shareholder Returns: Announced a 5% increase in interim dividend and a new GBP1 billion share buyback program.
  • Strategic Restructuring: Divested non-core Essential Home business and launched Fuel for Growth program, delivering efficiency gains ahead of plan.
  • Growth Outlook: Expects full-year like-for-like net revenue growth of over 4% in Core Reckitt, driven by emerging markets and Powerbrands.

Financial Performance

The company's financial performance was strong, with core Reckitt revenues growing 4.2% and adjusted operating profit increasing 7%. EPS grew 4.4% to 1.43, slightly below estimates of 1.64. The company's gross margin expanded by 40 basis points in the first half, but no further expansion is expected in the second half due to tariff headwinds.

Segment Performance

In terms of categories, Self Care was slightly down due to the Mucinex shelf reset in the U.S., while Germ Protection, Household Care, and Intimate Wellness delivered growth. Reckitt's market share improved, with 59% of CMUs in hold gain territory. The company expects to deliver over 4% like-for-like net revenue growth in Core Reckitt and group net revenue like-for-like growth in the 3% to 4% range for the full year.

Emerging Markets Growth

Reckitt saw a 270 basis point margin increase in Emerging Markets, driven by strong volume growth, price growth, and positive mix. The company expects to continue investing in brand growth, with roughly half of Fuel for Growth savings going into brand investment. China was the fastest-growing market in Emerging Markets, with high single-digit and double-digit growth in other markets such as Brazil, Colombia, Indonesia, and Malaysia.

Valuation and Outlook

Reckitt's valuation multiples are reasonable, with a P/E Ratio of 26.89, P/B Ratio of 5.72, and EV/EBITDA of 9.71. The company's dividend yield is 3.62%, and free cash flow yield is 2.26%. Analysts estimate next year's revenue growth at 3.2%. With a strong track record of growth and a solid outlook, Reckitt's stock may be attractive to investors looking for a stable and growing consumer goods company.

Risks and Challenges

The company faces some challenges, including a dynamic competitive environment, elevated promotional activity from competitors in North America, and a higher cost base in the second half. However, Reckitt's Fuel for Growth program and focus on investing in brand growth should help mitigate these risks. According to Kris Licht, Reckitt's CEO, "The company's portfolio of Powerbrands can perform well regardless of the consumer backdrop."

3. NewsRoom

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DHL Group’s CRYOPDP and Applied Blockchain Win Award for Digital Transformation in Healthcare Logistics

Dec -02

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Why Analysts See the Story Shifting for Reckitt Benckiser as Valuation and Outlook Evolve

Nov -21

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JUST Capital Strengthens Board of Directors With Six Strategic Appointments

Nov -10

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What Could Shift the Narrative for Reckitt Benckiser After Price Target Updates and Guidance Changes

Nov -07

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Tylenol trust crisis: Trump, RFK Jr. and Texas lawsuits slam Kenvue

Nov -03

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OTC Markets Group Expands European Footprint as Mega-Cap Companies Join OTCQX Market

Oct -27

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Unilever sales top forecast as US shoppers drive beauty demand

Oct -23

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How Analysts See Reckitt Benckiser’s Story Shifting With New Price Targets and Strategy Updates

Oct -23

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.50%)

6. Segments

Aerospace & Defense

Expected Growth: 4.5%

Reckitt Benckiser's aerospace and defense segment is poised for growth driven by increasing global security concerns, technological advancements in defense systems, and rising demand for aerospace products and services.

7. Detailed Products

Nurofen

Pain relief medication for headaches, back pain, and other types of pain

Lysol

Disinfectant and cleaning products for homes and institutions

Dettol

Antiseptic and disinfectant products for wound care and surface cleaning

Air Wick

Air fresheners and odor eliminators for homes and cars

Mortein

Insecticides and pest control products for homes and gardens

Veet

Hair removal creams and wax strips for men and women

Clearasil

Acne treatment products for skin care

Scholl

Foot care products for foot health and hygiene

Gaviscon

Heartburn and indigestion relief medication

Mucinex

Expectorant medication for relieving congestion and coughs

8. Reckitt Benckiser Group plc's Porter Forces

Forces Ranking

Threat Of Substitutes

Reckitt Benckiser Group plc operates in a industry where there are few substitutes for its products, however, the threat of substitutes is still present due to the increasing trend of natural and organic products.

Bargaining Power Of Customers

The bargaining power of customers is low due to the fact that Reckitt Benckiser Group plc operates in a industry where customers have limited bargaining power.

Bargaining Power Of Suppliers

The bargaining power of suppliers is medium due to the fact that Reckitt Benckiser Group plc relies on a few large suppliers for its raw materials.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the industry, including high capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry is high due to the fact that Reckitt Benckiser Group plc operates in a highly competitive industry with many established players.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 49.52%
Debt Cost 4.24%
Equity Weight 50.48%
Equity Cost 4.24%
WACC 4.24%
Leverage 98.11%

11. Quality Control: Reckitt Benckiser Group plc passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Reckitt Benckiser

A-Score: 6.0/10

Value: 1.3

Growth: 5.4

Quality: 5.2

Yield: 6.2

Momentum: 9.0

Volatility: 9.0

1-Year Total Return ->

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Stock-Card
Essity

A-Score: 5.5/10

Value: 5.1

Growth: 5.4

Quality: 5.7

Yield: 6.2

Momentum: 0.5

Volatility: 10.0

1-Year Total Return ->

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Stock-Card
L'Oréal

A-Score: 5.0/10

Value: 2.0

Growth: 5.9

Quality: 7.8

Yield: 3.1

Momentum: 3.0

Volatility: 8.0

1-Year Total Return ->

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Stock-Card
Unilever

A-Score: 4.9/10

Value: 2.0

Growth: 4.4

Quality: 5.0

Yield: 6.2

Momentum: 2.0

Volatility: 10.0

1-Year Total Return ->

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Stock-Card
Beiersdorf

A-Score: 4.1/10

Value: 2.1

Growth: 5.4

Quality: 6.4

Yield: 1.2

Momentum: 0.5

Volatility: 9.0

1-Year Total Return ->

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Stock-Card
DSM-Firmenich

A-Score: 3.8/10

Value: 4.7

Growth: 2.2

Quality: 4.6

Yield: 5.0

Momentum: 0.5

Volatility: 6.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

59.68$

Current Price

59.68$

Potential

-0.00%

Expected Cash-Flows