Interim Results
Reckitt Benckiser PLC
29 August 2001
Reckitt Benckiser
29 August 2001
Targets Increased following Strong First Half
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Results at a Glance Q2 % ch Half Year % ch
Net Revenues £879m +9 £1,696m +9
Operating Profit £134m +15 £232m +14
Net Income normalized £85m +20 £143m +23
Net Income £107m +49 £165m +40
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* Net revenues grew by 9% (7% at constant exchange) to £879m in Q2, and by
9% (6% constant) to £1,696m in H1. For continuing operations (excluding
acquisitions and disposals) net revenue growth was 8% (6% constant) in Q2
and 10% (7% constant) in H1.
* Operating profit increased by 15% to £134m in Q2 and by 14% to £232m in
H1. Half year operating margins improved 60 basis points (bps) to 13.7%
behind a 40 bps gross margin improvement.
* Normalized net income grew by 20% in Q2 to £85m and by 23% in H1 to £
143m. Including gains on disposals, H1 net income grew 40% to £165m.
* Strong cash generation and further reductions in net working capital of
£79m resulted in a £110m reduction in net borrowings, before the impact of
acquisitions. Including the £131m cost of acquisitions, net borrowings
increased £21m to £616m (£595m).
Commenting on these results, Bart Becht, Chief Executive Officer, said
'Reckitt Benckiser had a good Q2 and first half of 2001. By focusing on our
growth strategy, increasing our rate of innovation and investing heavily
behind our core brands we are gaining market share and delivering consistent
growth. At the same time, profit margins continue to expand behind our cost
optimization programs while cash generation is improving.
'We are increasing our financial targets for the full year based on the
strength of our results to date and planned programs for the balance of this
year despite market conditions becoming more challenging. Specifically, we are
now looking for net revenue growth from total operations (including the effect
of acquired and discontinued businesses) of around 6% and for net income
growth for total operations of around 18%, both at constant exchange. We are
maintaining our net working capital reduction target of £50m. Delivering these
targets will make 2001 another good year for Reckitt Benckiser, giving us
confidence as we look forward to 2002.'
Further detail on the revised targets for 2001 can be found below.
Basis of Comparatives
For clarity in evaluating the underlying performance of the business, the
following terminology is used.
* Continuing Operations. Excludes net revenues and operating profit
relating to businesses acquired in 2001 or sold during the course of 2000
and to date in 2001. These items are individually disclosed in the profit
and loss account for both Quarter 2 and Half Year.
* Normalized. This excludes non-operating items. In Q2 and year to date
2001 profit on disposal of businesses was £23m. In Q2 2000, there was £1m
profit on disposal of fixed assets, in the year to date 2000 the profit
was £2m.
* Constant Exchange. Movements of exchange rates relative to sterling
affect actual results as reported. The constant exchange rate basis
adjusts comparisons to exclude such movements and show the underlying
growth.
The detailed financial schedules attached to the release contain full details
of the results as reported and as adjusted for these factors.
Detailed Operating Review
Second Quarter 2001
Net revenues in Q2 grew by 9% (7% at constant exchange) to £879m (£807m in
2000). Net revenues from continuing operations rose 8% (6% constant) to £847m
(£783m). The two recent acquisitions, Oxy in Korea included from April and
Tiga Roda in Indonesia included from January, contributed net revenues of £31m
all of which were accounted for in the quarter.
Operating profit for Q2 grew 15% (13% constant) to £134m (£117m). Normalized
operating profit from continuing operations increased by 20% to £132m (£110m).
Gross margin excluding acquisitions was level with last year. Including the
two acquisitions, the reported gross margin was 48.6%. Marketing investment,
particularly media, increased significantly during the period. Better leverage
of fixed costs and merger savings contributed to higher margins. Operating
margins increased by 70 basis points (bps) to 15.2% and on a continuing
operations basis by 160 bps to 15.6%.
Net income increased 49% to £107m (£72m). Normalized net income grew 20% (19%
constant) to £85m (£71m).
Half Year 2001
Net revenues grew by 9% (6% constant) to £1,696m (£1,555m). Net revenues from
continuing operations grew by 10% (7% constant) to £1,658m (£1,507m).
Acquisitions contributed £31m to net revenues in the half year.
Operating profit increased 14% (12% constant) to £232m (£203m). Normalized
operating profit from continuing operations increased 19% (16% constant) to £
229m (£192m). Gross margins rose 40 bps to 48.9% (48.5%) mainly as a result of
savings from the Squeeze program. To support the Company's active new product
and roll-out program, marketing investment in the half year rose
substantially, with media investment over 20% higher. Operating margins
increased by 60 bps to 13.7% (13.1%). On a continuing operations basis,
margins increased by 110 bps to 13.8% (12.7%).
Net income for the half year was £165m (£118m). Normalized net income grew 23%
(19% constant) to £143m (£116m). Net interest expense of £28m (£34m) was lower
due to the strong cash inflow over the past year reducing the level of net
borrowings offset by the cost of the two acquisitions. The tax rate for the
period on the normalized taxable profit was 29.6%, in line with the likely
rate for the year.
Category Review at constant exchange rates
Fabric Care. H1 net revenues grew 4% to £430m. Fabric treatment benefited from
the roll-out of Vanish in Asia and Latin America and the relaunch in France.
Calgon grew strongly in Eastern Europe due to higher investment and improved
marketing execution. Resolve carpet cleaner gained share behind the success of
the steam machine product launched in 2000. Laundry detergent grew strongly in
Europe but declined due to deteriorating price conditions in China.
Q2 net revenues grew 4% to £221m.
Surface Care. H1 net revenues grew 8% to £406m. Lysol disinfectant cleaner
continues to capture share both in spray and wipes segments in North America.
The roll-out of surface care wipes into new segments is working well with the
success of the new furniture and glass wipes. Harpic lavatory care benefited
from a number of initiatives, including an in-bowl gel, Powerfoam and tablets.
Veja multipurpose cleaner grew strongly in Brazil.
Q2 net revenues grew 7% to £201m.
Dishwashing. H1 net revenues grew 2% to £220m. The launch of Calgonit 3-in-1
across Europe has been an outstanding success so far, with strong net revenue
growth and record market shares in Germany, UK, France, Belgium and
Netherlands, and market leadership gained in Ireland. In North America,
Electrasol automatic dishwashing saw stable market shares ahead of the launch
of the new 2-in-1 product. Net revenues in North America were down however in
comparison to a period of heavy promotion at the end of Q2 2000.
Q2 net revenues were down 2% to £108m due to the year-on-year comparison in
the USA.
Home Care. H1 net revenues grew 40% to £236m due to continuing outstanding
success for Air Care, further growth in Pest Control and the impact of the two
acquisitions which mainly operate in the Home Care category - on a continuing
operations basis, the category growth was 29%. Air Care has seen further
substantial growth behind the success of Wizard electrical oils in North
America where market share is close to triple its level of early 2000. Crystal
Air and the re-launch of electricals led to substantial growth in Europe and
the category was successfully launched in Eastern Europe. Mortein Pest control
benefited from market share gains in India and Australia behind recent
innovations, and the roll-out of the category in China and Eastern Europe.
Q2 net revenues grew 57% to £127m.
Health & Personal Care H1 net revenues grew 8% to £209m. The main growth
drivers were depilatories and antiseptics. Depilatories grew behind the
success of the new Veet Aqua system in Europe. The category was rolled out in
Turkey and to new markets in Asia and Latin America. Dettol antiseptic grew
strongly due to higher investment and better execution particularly in Asia
and Africa/Middle East. The Health Care business had a slow start to the year
in the absence of a major 'flu season in the UK, but performed strongly
thereafter.
Q2 net revenues grew 9% to £114m.
Geographic Analysis at constant exchange from continuing operations
Western Europe : 41% of net revenues
Net revenues grew by 6% in H1 to £696m. This strong performance was due to the
success of automatic dishwashing, air care, depilatories and lavatory care.
The successful launch of Calgonit 3-in-1 in automatic dishwashing has resulted
in record market shares in several major European markets. Air Wick Crystal
Air has been a major success across the region. The Veet Acqua system,
supported by increased marketing investment, has driven growth in
depilatories. New product launches, notably Powerfoam and in-bowl gel have
driven strong growth in lavatory care. H1 Operating margins increased by 60
bps to 19.7% behind better leveraging of fixed cost offset by increased
marketing investment. Operating profits increased by 9% to £137m (£124m).
Net revenues grew 5% to £347m in Q2 and operating profits by 15% to £70m.
North America : 30% of net revenues.
Net revenues grew 5% in H1 to £504m. The growth came from the continuing
success of air care and surface care offset by automatic dishwashing. Wizard
Electricals air care continued to substantially increase net revenues and
market share. Lysol disinfecting cleaner continued to gain share in spray and
wipes while the new Lysol fabric refresher has only just entered distribution.
Electrasol automatic dishwashing compared with a period of heavy promotion in
2000 but saw shares stable ahead of the launch of the new 2-in-1. Food was
behind 2000 due to heavy competition at the start of the year. North American
operating margins expanded 80 bps to 10.9% (10.1%) due to substantial
reductions in fixed costs partly offset by higher listing fees due to more
aggressive phasing of new initiatives in 2001. Operating profit increased 15%
to £55m (£44m).
Net revenues grew 5% to £269m in Q2 and operating profit fell 5% to £35m.
Latin America : 7% of net revenues.
Net revenues grew 8% in H1 to £115m. Growth came from the continuing success
of Veja multi purpose cleaner supported by the roll out of the pest control
and depilatory categories. Market conditions deteriorated towards the end of
the half year due to currency devaluation. Operating margin was flat after
significantly higher marketing investment. H1 operating profit was £1m (profit
of £1m).
Net revenues grew 9% to £59m in Q2 and operating profit was £5m (£2m).
Asia Pacific : 12% of net revenues.
Net revenues grew 25% in H1 to £205m (£165m) including a £31m contribution
from the acquisitions in Korea and Indonesia. On continuing operations, net
revenues grew 6%. In Australia/New Zealand growth came from strong performance
in Mortein pest control, from fabric treatment, automatic dishwashing and
surface care. In Asia, growth came from Mortein pest control and from Dettol
behind higher investment. Operating margins on continuing operations improved
by 280 bps to 4.6% (1.8%) helped by cost savings in Australia/New Zealand and
better leveraging of fixed costs. Including acquisitions, operating margins
improved 310 bps to 4.9%. Operating profits increased substantially to £10m (£
3m) of which £2m came from the acquisitions. These have traded in line with
expectations, and integration with the existing Reckitt Benckiser business is
proceeding.
Net revenues grew 39% to £117m in Q2 and operating profit was £6m (£2m).
Rest of World : 10% of net revenues.
Net revenues grew 15% in H1 to £169m. Growth came across both Eastern Europe
and Africa/Middle East. In Eastern Europe the growth was driven by the
roll-out of furniture, pest control and air care, by strong growth behind
Calgonit 2-in-1 automatic dishwashing, and by strong growth behind higher
investment for Calgon water softener. In Africa/Middle East, growth came
mainly from Dettol, due to higher investment and better execution in-market,
and from Health Care. H1 operating margins rose by 100 bps to 7.7% with higher
gross margins benefiting from Squeeze programs partly offset by increased
marketing investment and by difficult conditions in Q2 in Turkey. Operating
profit increased 30% to £13m (£10m).
Net revenues grew 12% to £86m in Q2 and operating profit was £7m (£7m).
New Initiatives 2001
New products launched since the publication of the Company's Q1 results for
2001 include Woolite Dye Magnet color protector sheets in Europe and North
America. Vanish Powershot carpet spot and stain cleaner was launched in
Europe. Harpic Power Tabs in selected markets and Harpic in-bowl gel was
launched across Europe and in the USA as Lysol Cling. Airwick Click Spray air
care has been launched in Europe.
Major 2001 initiatives continue to be rolled out. Calgonit 3-in-1 tabs are
being launched in Eastern Europe and Australia / New Zealand. Air Wick
Electrical oils has been launched in Europe (following outstanding success in
North America) while Crystal Air has been launched in North America, Australia
/New Zealand, Eastern Europe and Turkey, South Africa and Asia following
success in Western Europe.
Geographical category expansion featured the launch of Mr Sheen furniture
care, Mortein pest control and Air Wick air care across Eastern European
markets. Veet depilatories are being launched in new markets in Asia and Latin
America and re-launched in Australia/New Zealand.
Outlook for Full Year - Increased Targets
The Company has increased its targets for the full year 2001.
* Net revenues - growth from total operations of around 6% at constant
exchange against a base for 2000 of £3,202m. The previous target was for
growth of 4% plus on continuing operations at constant exchange, against a
base for 2000 of £3,137m. This previous target excluded the impact of
acquired and discontinued businesses, which combined, are expected to add
less than 1% to net revenues. Therefore the previous target equated to
growth of less than 5% from total operations.
* Net income - growth from total operations of around 18% at constant
exchange against a normalized base for 2000 of £275m. The previous target
was for growth of 18% on continuing operations at constant exchange,
against a base for 2000 of £263m. This previous target excluded the impact
of acquired and discontinued businesses, which combined, are expected to
reduce net income by around 4%. Therefore the previous target equated to
growth of around 14% from total operations.
* Net Working Capital. The previously communicated target to reduce net
working capital by £50m is maintained.
Financial Review
Non operating items. Profit on disposal of businesses of £23m (nil) relates to
the disposal of the European Firelighters business in April. There were no
profits on disposal of fixed assets (£2m in H1 2000).
Net Interest. Interest payable less receivable on the Company's outstanding
net borrowings was £28m (£34m). This reduction was due to strong operating
cash inflow over the period plus cash released from working capital and minor
disposals, offset by the investment in the two recent acquisitions. Interest
rates on average were slightly below the levels of last year.
Profit before tax was £227m (£171m). Normalized profit before tax was £204m (£
169m), an increase of 21%.
Tax on the profit for the half year was £61m, an underlying rate of around
29.6% on the normalized taxable profit of £204m compared to a rate of 30.0% in
H1 2000.
Profit after tax. After profit attributable to minority equity holders of £1m
(£2m), the profit for the period was £165m (£118m). Normalized profit for the
period was £143m (£116m) excluding non-operating items, an increase of 23%.
Cash Flow
Cash generation was strong in the half year. Operating cash flow rose by 9% to
£251m (£230m) due to increased operating profits, further release of cash from
working capital and a reduction in reorganization and integration costs. After
lower interest payments, lower tax and lower capital expenditure, net cash
flow from ordinary activities increased by 38% to £172m (£125m).
Cash conversion continued to improve. Operating cash flow to net revenues was
maintained at 14.8% (14.8%). Net cash flow from ordinary activities increased
by 210 basis points to 10.1% of net revenues (8.0%).
Balance Sheet and Financing (comparisons with 2000 year end).
At the half year the Group had shareholders funds of £1,225m (£1,116m), an
increase of 10%. Net borrowings were £616m (£595m) after funding acquisitions
of £131m. Total capital employed in the business was £1,857m (£1,727m).
This financed fixed assets of £2,355m (£2,173m) offset by net current
liabilities (excluding short term borrowings, cash and investments) of £117m
(£38m liability).
Exchange rate differences have increased net borrowings by £11m and net assets
by £34m.
Financing Ratios
The Company's financial ratios have improved over the period. Interest cover
(operating profit over net interest) for the half year was 8.3 times (H1 2000
6.0x). Net borrowings represent 33% of capital employed (H1 2000 34%) treating
convertible capital bonds as borrowings.
Earnings per share. Details of the calculation of earnings per share are
contained in the accompanying notes to the Profit & Loss Account. These take
account of the holding of JAB in 'A' shares of Reckitt Benckiser Holdings B.V.
Dividends. The Board of Directors recommends an interim dividend of 12.7 pence
(2000 12.7 pence), unchanged on last year in line with the previously
communicated policy of maintaining absolute dividend payments until cover
reaches the average of the international peer group. The interim dividend is
covered 1.6 times by normalized profit for the half year. The ex dividend date
will be 5th September, and the dividend will be paid on 18th September to
shareholders on the register at the record date of 7th September.
For Further Information
Tom Corran Reckitt Benckiser + 44 1753 446 548
Senior Vice President, Investor Relations & Corporate Communications
Lydia Wilhelm Reckitt Benckiser + 44 1753 446 550
Investor Relations Manager
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The Group at a Glance (unaudited)
Quarter Ended Half Year Ended
June 30 June 30
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2001 2000 2001 2000
£m £m £m £m
From total ordinary activities
879 807 Net revenues 1,696 1,555
9% 2% Net revenues growth 9% 3%
48.6% 49.2% Gross margin 48.9% 48.5%
152 137 EBITDA normalized* 268 242
17.3% 17.0% EBITDA margin normalized* 15.8% 15.6%
134 117 EBIT normalized* 232 203
15.2% 14.5% EBIT margin normalized* 13.7% 13.1%
122 102 Profit before tax normalized* 204 169
13.9% 12.6% PBT margin normalized* 12.0% 10.9%
85 71 Net Income normalized* 143 116
9.7% 8.8% Net Income margin normalized* 8.4% 7.5%
12.2p 10.3p EPS normalized* 20.5p 16.8p
11.9p 10.1p EPS normalized, diluted* 20.0p 16.6p
From continuing operations (excluding
acquisitions)
847 783 Net revenues 1,658 1,507
8% 3% Net revenues growth 10% 4%
149 129 EBITDA normalized* 264 230
17.6% 16.5% EBITDA margin normalized* 15.9% 15.3%
132 110 EBIT normalized* 229 192
15.6% 14.0% EBIT margin normalized* 13.8% 12.7%
* Normalized to exclude non-operating items.
Group profit and loss account
(unaudited)
Quarter Ended June 30
2001 2000 %
change
£m £m
--------------------------------------------------------------------------------
Net revenues from continuing operations excluding
acquisitions
847 783 8%
Acquisitions
31 - -
Discontinued operations
1 24 -
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879 807 9% Total net revenues
(452) (410) 10% Cost of sales
--------------------------------------------------------------------------------
427 397 8% Gross profit
(293) (280) 5% Net operating expenses
--------------------------------------------------------------------------------
Operating profit from continuing operations excluding
acquisitions
132 110 20%
Acquisitions
2 - -
Discontinued operations
0 7 -
--------------------------------------------------------------------------------
134 117 15% Total operating profit
Non-operating items:
23 - - Profit on disposal of businesses
- 1 - Profit on disposal of tangible fixed assets
--------------------------------------------------------------------------------
157 118 33% Profit on ordinary activities before interest
(12) (14) (14%) Net interest expense
--------------------------------------------------------------------------------
145 104 39% Profit on ordinary activities before taxation
(37) (31) 19% Tax on profit on ordinary activities
--------------------------------------------------------------------------------
108 73 48% Profit on ordinary activities after taxation
(1) (1) - Attributable to equity minority interests
--------------------------------------------------------------------------------
107 72 49% Profit for the period
(89) (88) 1% Ordinary Dividends
--------------------------------------------------------------------------------
18 (16) - Retained profit/(loss) for the period
--------------------------------------------------------------------------------
Earnings per ordinary share:
15.4p 10.5p On profit for the period
12.2p 10.3p On normalized profit for the period
14.8p 10.3p On profit for the period, diluted
11.9p 10.1p On normalized profit, diluted
Average common shares outstanding:
700.0 694.9 Basic
749.1 739.8 Diluted
Half Year Ended June 30
2001 2000 % change
£m £m
--------------------------------------------------------------------------------
Net revenues from continuing operations excluding
acquisitions
1,658 1,507 10%
Acquisitions
31 - -
Discontinued operations
7 48 -
--------------------------------------------------------------------------------
Total net revenues 1,696 1,555 9%
Cost of sales (867) (801) 8%
--------------------------------------------------------------------------------
Gross profit 829 754 10%
Net operating expenses (597) (551) 8%
--------------------------------------------------------------------------------
Operating profit from continuing operations excluding
acquisitions
229 192 19%
Acquisitions
2 - -
Discontinued operations
1 11 -
--------------------------------------------------------------------------------
Total operating profit 232 203 14%
Non-operating items:
Profit on disposal of businesses 23 - -
Profit on disposal of tangible fixed assets - 2 -
--------------------------------------------------------------------------------
Profit on ordinary activities before interest 255 205 24%
Net interest expense (28) (34) (18%)
--------------------------------------------------------------------------------
Profit on ordinary activities before taxation 227 171 33%
Tax on profit on ordinary activities (61) (51) 20%
--------------------------------------------------------------------------------
Profit on ordinary activities after taxation 166 120 38%
Attributable to equity minority interests (1) (2) (50%)
--------------------------------------------------------------------------------
Profit for the period 165 118 40%
Ordinary Dividends (89) (88) 1%
--------------------------------------------------------------------------------
Retained profit/(loss) for the period 76 30 153%
--------------------------------------------------------------------------------
Earnings per ordinary share:
On profit for the period 23.6p 17.1p
On normalized profit for the period 20.5p 16.8p
On profit for the period, diluted 22.9p 16.9p
On normalized profit, diluted 20.0p 16.6p
Average common shares outstanding:
Basic 699.4 694.1
Diluted 748.3 738.9
Group balance sheet
For the half year ended June 30, (unaudited)
1st Full 1st
Half Year Half
2001 2000 2000
£m £m £m
--------------------------------------------------------------------------------
Fixed assets:
Intangible assets 1,804 1,638 1,613
Tangible assets 551 535 521
--------------------------------------------------------------------------------
2,355 2,173 2,134
--------------------------------------------------------------------------------
Current assets:
Stocks 259 245 253
Debtors due within one year 637 622 667
Debtors due after more than one year 154 148 130
Investments 51 39 70
Cash at bank and in hand 76 94 56
--------------------------------------------------------------------------------
1,177 1,148 1,176
--------------------------------------------------------------------------------
Current liabilities:
Creditors due within one year:
Borrowings (242) (245) (386)
Other (1,167) (1,053) (979)
--------------------------------------------------------------------------------
(1,409) (1,298)(1,365)
--------------------------------------------------------------------------------
Net current liabilities (232) (150) (189)
--------------------------------------------------------------------------------
Total assets less current liabilities 2,123 2,023 1,945
--------------------------------------------------------------------------------
Non-current liabilities:
Creditors due after more than one year:
Borrowings (308) (290) (300)
Other (116) (129) (111)
Convertible capital bonds (193) (193) (194)
--------------------------------------------------------------------------------
(617) (612) (605)
Provisions for liabilities and charges (265) (279) (317)
Equity minority interests (16) (16) (19)
--------------------------------------------------------------------------------
Net Assets 1,225 1,116 1,004
--------------------------------------------------------------------------------
Capital and reserves:
Called up share capital (including non-equity capital of 71 71 71
£4.5m)
Shares to be issued 7 7 7
Share premium account 175 165 154
Merger reserve 142 142 148
Profit and loss account 830 731 624
--------------------------------------------------------------------------------
Total shareholders' funds (including non-equity 1,225 1,116 1,004
shareholders' funds of £4.5m)
--------------------------------------------------------------------------------
Group cash flow statement
For the half year ended June 30, (unaudited)
2001 2000
£m £m
--------------------------------------------------------------------------------
Operating activities:
Operating profit 232 203
Non-cash items:
Depreciation and amortisation 36 39
Other non-cash movements - (1)
Changes in working capital 38 36
Changes in other provisions & non current liabilities (32) 13
Reorganisation and merger integration costs paid (23) (60)
--------------------------------------------------------------------------------
Cash flow from operating activities 251 230
Return on investments and servicing of finance (25) (34)
Taxation (22) (34)
Capital expenditure and financial investment (32) (37)
Acquisitions and disposals (66) 1
Equity dividends paid (89) (88)
--------------------------------------------------------------------------------
Cash inflow before use of liquid resources and financing 17 38
Management of liquid resources (12) 41
Financing (6) (100)
--------------------------------------------------------------------------------
Decrease in cash for the period (1) (21)
--------------------------------------------------------------------------------
Reconciliation of operating cash flow to net cash flow from ordinary
operations
Operating cash flow 251 230
Returns on investments and servicing of finance (25) (34)
Taxation (22) (34)
Capital expenditure (32) (37)
--------------------------------------------------------------------------------
Net cash flow from ordinary operations 172 125
--------------------------------------------------------------------------------
Segmental Analysis (unaudited)
Analyses by geographical area and product segment of net revenues and
operating profit are set out below. The figures for each geographic area show
the net revenues and profit made by companies located in that area.
Quarter Ended June 30
--------------------------------------------------------------------------------
2001 2000 % change
£m £m exch. rates
actual const.
Net revenues - by geographical area
347 326 6% 5% Western Europe
269 236 14% 5% North America
59 56 5% 9% Latin America
117 86 36% 39% Asia Pacific
86 79 9% 12% Rest of World
--------------------------------------------------------------------------------
878 783 12% 10%
1 24 - - Discontinued operations
--------------------------------------------------------------------------------
879 807 9% 7%
--------------------------------------------------------------------------------
Operating profit - by geographical area
70 60 17% 15% Western Europe
35 34 3% (5%) North America
5 2 150% 400% Latin America
6 2 200% 200% Asia Pacific
7 7 - - Rest of World
11 5 120% 120% Corporate
--------------------------------------------------------------------------------
134 110 22% 20%
0 7 - - Discontinued operations
--------------------------------------------------------------------------------
134 117 15% 13%
--------------------------------------------------------------------------------
% Operating margin - by geographical area
20.2 18.4 Western Europe
13.0 14.4 North America
8.5 3.6 Latin America
5.1 2.3 Asia Pacific
8.2 8.9 Rest of World
- - Corporate
--------------------------------------------------------------------------------
15.3 14.0
- 29.2 Discontinued operations
--------------------------------------------------------------------------------
15.2 14.5
--------------------------------------------------------------------------------
Half Year Ended June 30
--------------------------------------------------------------------------------
2001 2000 % change
£m £m exch. Rates
actual Const.
Net revenues - by geographical area
Western Europe 696 648 7% 6%
North America 504 437 15% 5%
Latin America 115 108 6% 8%
Asia Pacific 205 165 24% 25%
Rest of World 169 149 13% 15%
--------------------------------------------------------------------------------
1,689 1,507 12% 9%
Discontinued operations 7 48 - -
--------------------------------------------------------------------------------
1,696 1,555 9% 6%
--------------------------------------------------------------------------------
Operating profit - by geographical area
Western Europe 137 124 10% 9%
North America 55 44 25% 15%
Latin America 1 1 - -
Asia Pacific 10 3 233% 150%
Rest of World 13 10 30% 30%
Corporate 15 10 50% 50%
--------------------------------------------------------------------------------
231 192 20% 16%
Discontinued operations 1 11 - -
--------------------------------------------------------------------------------
232 203 14% 12%
--------------------------------------------------------------------------------
Operating margin - by geographical area % %
Western Europe 19.7 19.1
North America 10.9 10.1
Latin America 0.9 0.9
Asia Pacific 4.9 1.8
Rest of World 7.7 6.7
Corporate - -
--------------------------------------------------------------------------------
13.7 12.7
Discontinued operations 14.3 22.9
--------------------------------------------------------------------------------
13.7 13.1
--------------------------------------------------------------------------------
Segmental Analysis (continued)
Quarter Ended June 30
--------------------------------------------------------------------------------
2001 2000 % change
£m £m exch. rates
actual const.
Net revenues - by product segment
819 731 12% 10% Household and Health & Personal Care
59 52 13% 4% Food
--------------------------------------------------------------------------------
878 783 12% 10%
1 24 - - Discontinued operations
--------------------------------------------------------------------------------
879 807 9% 7%
--------------------------------------------------------------------------------
Operating profit - by product segment
112 94 19% 17% Household and Health & Personal Care
11 11 - - Food
11 5 120% 120% Corporate
--------------------------------------------------------------------------------
134 110 22% 20%
0 7 - - Discontinued operations
--------------------------------------------------------------------------------
134 117 15% 13%
--------------------------------------------------------------------------------
% Operating margin - by product segment
13.7 12.9 Household and Health & Personal Care
18.6 21.2 Food
- - Corporate
--------------------------------------------------------------------------------
15.3 14.0
- 29.2 Discontinued operations
--------------------------------------------------------------------------------
15.2 14.5
--------------------------------------------------------------------------------
Net revenues - Household and Health
& Personal Care
221 209 6% 4% Fabric Care
201 182 10% 7% Surface Care
108 108 0% (2%) Dishwashing
127 80 59% 57% Home Care
114 109 5% 9% Health & Personal Care
--------------------------------------------------------------------------------
771 688 12% 11% Core Business
48 43 12% 2% Other Household
--------------------------------------------------------------------------------
819 731 12% 10% Net Revenues - continuing operations
--------------------------------------------------------------------------------
Half Year Ended June 30
--------------------------------------------------------------------------------
2001 2000 % change
£m £m exch. Rates
actual const.
Net revenues - by product segment
Household and Health & Personal Care 1,594 1,419 12% 9%
Food 95 88 8% (2%)
--------------------------------------------------------------------------------
1,689 1,507 12% 9%
Discontinued operations 7 48 - -
--------------------------------------------------------------------------------
1,696 1,555 9% 6%
--------------------------------------------------------------------------------
Operating profit - by product segment
Household and Health & Personal Care 207 171 21% 16%
Food 9 11 (18%) (10%)
Corporate 15 10 50% 50%
--------------------------------------------------------------------------------
231 192 20% 16%
Discontinued operations 1 11 - -
--------------------------------------------------------------------------------
232 203 14% 12%
--------------------------------------------------------------------------------
Operating margin - by product segment % %
Household and Health & Personal Care 13.0 12.1
Food 9.5 12.5
Corporate - -
--------------------------------------------------------------------------------
13.7 12.7
Discontinued operations 14.3 22.9
--------------------------------------------------------------------------------
13.7 13.1
--------------------------------------------------------------------------------
Net revenues - Household and Health
& Personal Care
Fabric Care 430 402 7% 4%
Surface Care 406 361 12% 8%
Dishwashing 220 209 5% 2%
Home Care 236 166 42% 40%
Health & Personal Care 209 197 6% 8%
--------------------------------------------------------------------------------
Core Business 1,501 1,335 12% 10%
Other Household 93 84 11% 2%
--------------------------------------------------------------------------------
Net Revenues - continuing operations 1,594 1,419 12% 9%
--------------------------------------------------------------------------------
Earnings per ordinary share
For the half year ended June 30, (unaudited)
The reconciliation between profit for the period and the weighted average
number of shares used in the calculations of the diluted earnings per share are
set out below:
2001
--------------------------------------------------------------------------------
Profit Average Earnings
for number per
the of share
period shares pence
£m
--------------------------------------------------------------------------------
Profit attributable to shareholders 165 699,364,984 23.6
Dilution for Executive options outstanding and 8,892,406
Executive Restricted Share Plan
Dilution for Employee Sharesave Scheme options
outstanding 1,067,324
Dilution for convertible capital bonds outstanding* 6 38,975,205
--------------------------------------------------------------------------------
On a diluted basis 171 748,299,919 22.9
--------------------------------------------------------------------------------
2000
--------------------------------------------------------------------------------
Profit Average Earnings
for number per
the of share
period shares pence
£m
--------------------------------------------------------------------------------
Profit attributable to shareholders 118 694,087,053 17.1
Dilution for Executive options outstanding and 5,614,278
Executive Restricted Share Plan
Dilution for Employee Sharesave Scheme options
outstanding 43,649
Dilution for convertible capital bonds outstanding* 7 39,190,899
--------------------------------------------------------------------------------
On a diluted basis 125 738,935,879 16.9
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
After the appropriate tax adjustment, the profit for the period impact
represents the coupon on the convertible capital bonds. The earnings per share
impact reflects the effect of that profit and the assumption of the issue of
shares on the conversion of the bonds.
The reconciliation of profit for the period and earnings per share on the
shares in issue between unadjusted and adjusted EPS calculation bases are as
follows:
2001
--------------------------------------------------------------------------------
Profit for Average Earnings
the period number of per share
£m shares pence
--------------------------------------------------------------------------------
Basic EPS 165 699,364,984 23.6
Non operating items (23) - (3.1)
Taxation (including deferred taxation) 1 - -
--------------------------------------------------------------------------------
Impact of dilution 143 699,364,984 20.5
6 49,934,935 (0.5)
--------------------------------------------------------------------------------
On an adjusted, diluted basis 149 748,299,919 20.0
--------------------------------------------------------------------------------
2000
--------------------------------------------------------------------------------
Profit for Average Earnings
the period number of per share
£m shares pence
--------------------------------------------------------------------------------
Basic EPS 118 694,087,053 17.1
Non operating items (2) - (0.3)
Taxation (including deferred taxation) 0 - -
--------------------------------------------------------------------------------
Impact of dilution 116 694,087,053 16.8
7 44,848,826 (0.2)
--------------------------------------------------------------------------------
On an adjusted, diluted basis 123 738,935,879 16.6
--------------------------------------------------------------------------------
The Directors believe that a diluted earnings per ordinary share, adjusted for
the distorting effects of non-operating items after the appropriate tax amount,
provides the most meaningful measure of earnings per ordinary share in
comparing the performance of the business over time.
Five time the number of Reckitt Benckiser Holdings B.V. 'A' shares have been
included in the calculations of the weighted average number of shares, in order
to present the effect of the shareholders' agreement, under the terms of which
the position of the holder of Reckitt Benckiser Holdings B.V. 'A' shares is in
substance the same as if it held five new Reckitt Benckiser shares for every
Reckitt Benckiser Holdings B.V. 'A' share held.
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