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Newly slimmed down consumer goods giant Reckitt Benckiser (RB) released a solid set of annual results this morning – posting 4% full-year like-for-like sales growth and beating fourth quarter sales expectations.
The Durex and Strepsils owner, fresh from spinning off its pharma arm in December, reported revenues of £8.8bn in 2014 – 5% down on last year because of the impact of currency movement, but representing 4% growth on a constant currency basis.
The firm’s new concentration on consumer health seems to be paying off, with 5% like-for-like revenue growth in the fourth quarter beating expectations of a 4% sales boost.
Adjusted operating profit growth was up 11% on a constant currency basis, with margins improving by 160bps to 24.7%. Despite the progress on profitability, CEO Rakesh Kapoor wants more – announcing today a major cost efficiency drive dubbed “supercharge” project.
The new drive to make RB a “leaner, faster and more coordinated business” will cost £200m over the next three years and will concentrate on staffing, direct product spend and capital spend. The project is designed to produce a “nice” expansion in operating margins over the second half of this decade.
Morning Update
RB share jumped by 4.5% in early trading to 5,840p as investors gave a euphoric welcome to its full year numbers and new efficiency drive.
The rest of the market looked less upbeat, with the supermarkets among the early fallers (Tesco and Morrisons both down 0.6%) and giving up some of yesterday’s gains.
There’s little grocery industry news other than RB on the wires this morning, but yesterday was a busy day.
Primarily, Tesco’s return to 12-week sales growth (of 0.3%) in the Kantar Worldpanel grocery market share data yesterday has generated plenty of headlines. Also, Coca-Cola reported its full-year numbers yesterday afternoon – posting 2% volume growth for the full year and 1% in the final quarter.
Later today we’ll get fourth quarter numbers from US-listed PepsiCo and Cadbury owner Mondelez.
Yesterday in the City
Yesterday’s Kantar Worldpanel grocery market share figures sent supermarket shares soaring as the market leapt on the suggestion that the turmoil of 2014 may be easing across the sector.
Tesco (TSCO) was 3.6% up to 241.5p after Kantar found that the supermarket’s sales edged up by 0.3% for the 12 weeks ending 1 February – its first sales rise since January 2014.
Tesco wasn’t alone in enjoying improved investor sentiment yesterday. Morrisons (MRW), which Kantar found had stemmed the bleeding over the past three months with sales falling by just 0.4%, was up 3.4% to 187.8p having been as high as `189p in mid-morning before tailing off in the afternoon.
M&S (MKS) was the FTSE 100’s biggest riser overall, with share climbing 4.9% to 491.7p. However, Sainsbury’s (SBRY) – which Kantar had back in third place after a 1% sales fall – was down 1% to 264.3p.
In New York, Coca-Cola (KO) was 2.8% up to $42.40 after its full-year numbers eased market concerns over global volumes.
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