Q3 Preview
16th October 2002
Q3 CONTINUES STRONG TREND
The following is the text for the Reckitt Benckiser conference call to be given
today by Bart Becht, Chief Executive Officer, and Colin Day, Chief Financial
Officer, at 1400 hrs London time. The purpose of the call is to update the
market on the progress of the business in the third quarter of 2002.
Commenting on the position, Bart Becht said
'Reckitt Benckiser had a very strong Q3, even considering last year's Q3 was a
weaker comparative. Net revenue growth was over 9% at constant exchange with
profit growth well ahead of that rate. Western Europe and North America
achieved particularly strong growth behind the success of our new products,
more than offsetting continued weak trading conditions in most emerging
markets. These results, and continuing successes for our innovation program,
give us increasing confidence in achieving our targets for the full year of net
revenue growth at the top of the 4% to 6% range and net income growth of around
18%, both at constant exchange.'
Update on Q3.
The third quarter saw further strong underlying growth for the business,
continuing recent trends. For the total Company, net revenue growth at constant
exchange in the quarter was over 9% (2001 base £843m). Exchange rates have been
particularly adverse in Q3, notably the US $ and Latin American currencies,
reducing the over 9% constant exchange rate growth in net revenues by more than
5% points to around 4% at actual exchange.
Profitability benefited from strong improvement in gross margins, driven by
product mix, by savings from Squeeze 2-50 and X-trim projects and by favorable
raw and packaging material prices. This was somewhat offset by an increase in
media support for new initiatives. Cash generation was strong resulting in
lower interest charges which with a lower tax rate contributed to net income
growth. Consequently, the Company looks for the Q3 normalized net income growth
rate to be ahead of the full year target rate of around 18% (2001 base
normalized before restatement for FRS 19 of £74m).
Year to Date
This will bring net revenue growth for the nine months to 7% at constant
exchange. Exchange rates have been increasingly adverse throughout the period,
reducing the 7% constant exchange rate growth by around 3.5% points at actual
exchange (2001 Base £2,539m). Profitability has improved significantly, due to
strong gross margin expansion, resulting in net income growth for the nine
months somewhat ahead of the indicated target range for the year of around 18%
growth (Base normalized before FRS 19 restatement of £217m).
Full Year Targets
The revised full year targets announced in late August are net revenue growth
of 4%-6%, with increased confidence of achieving the top of the range, and net
income growth of around 18%, both at constant exchange. These targets remain
unchanged.
The full results for Q3 2002 will be released on 13th November 2002.
Notes:
Restatement for FRS 19 - Accounting for Deferred Tax.
Reckitt Benckiser has adopted FRS 19 with effect from the current financial
year. As disclosed with Q1 & Q2 results, the prior year comparatives have been
restated to comply with this change in accounting policy. The effect of this
restatement is to reduce profit after tax in Q3 2001 by £7m from £74m to £67m,
and for the first nine months of 2001 by £17m from £217m to £200m.
De-consolidation of Zimbabwe
The results and net assets of the Group's subsidiary in Zimbabwe have been
excluded from the consolidated Group results with effect from 1st July 2002, on
the basis that severe long term restrictions now exist that hinder the exercise
of the Group's rights over the assets employed, in particular the remittance of
funds. The results for the first half will be treated as discontinued business
(net revenues of £13m, operating profit of £1m), and results for Zimbabwe will
be excluded from Q3 and Q4 2002. The effect of this is to reduce the net
revenue and profit growth rate in full year 2002 by less than 0.5% and is
already reflected in the full year targets confirmed above.
For further information
Tom Corran Reckitt Benckiser +44 (0)1753 217 800
SVP Investor Relations & Corporate Communications
Tim Spratt Financial Dynamics +44 (0)207 837 3113
Latest directors dealings
- 9 hours ago Savannah Energy
- 10 hours ago Buccaneer Energy PLC
- 10 hours ago Savannah Energy
- 10 hours ago Carclo
- 10 hours ago Schroder Japan Growth Fund