Reckitt Benckiser Group Plc · LSE:RKT
Reckitt Benckiser — H1 2024 Earnings Presentation
45 slides from Reckitt Benckiser's earnings presentation, Jul 24, 2024
Slide 1: H1 2024 Results & Strategic Update
reckitt Hi 2024 RESULTS & STRATEGIC UPDATE 24 JULY 2024
Slide 2: Disclaimer
12024 RESULTS DISCLAIMER Cautionary note concerning forward-looking statements This presentation contains statements with respect to the financial condition, results of operations and business of Reckitt Benckiser Group plc and the Reckitt group of companies (the “Group") and certain of the plans an
Slide 3: Kris Licht
KRIS LICHT
Slide 4: Agenda
12024 RESULTS AGENDA & I @ Key H1 Financial Strategic messages review and update outlook
Slide 5: Key H1 Messages
12024 RESULTS KEY H1 MESSAGES @ @©O OD © H1 broadly in line with our expectations Updated full year guidance Positive underlying momentum Increased dividend Next share buyback programme
Slide 6: Shannon Eisenhardt
SHANNON EISENHARDT
Slide 7: Group Summary: H1 in line with our expectations
H12024 RESULTS GROUP SUMMARY: H1 IN LINE WITH OUR EXPECTATIONS EE ee Cs ep Net revenue Gross profit margin LFL NR growth 0 aL a 9 0.0% +0.8% ' “070 10 IFRS net revenue decline of (3.7)% +120bps vs PY Volume Adjusted operating profit (AOP) IFRS operating profit Volume (1.3)% 23.5% £1,678M (2.2)% (30)
Slide 8: Volume Trends - Continued Sequential Improvement
12024 RESULTS VOLUME TRENDS - CONTINUED SEQUENTIAL IMPROVEMENT “ll Sequential improvement, back | | | Broad-based growth offset by [ws Normalising from ongoing to growth seasonal OTC rebasing of US +0.9% xsl (9.0)% (14.8)% H2 23 H124 H2 23 H124 H2 23 H124
Slide 9: Group Market Share Impacted by Nutrition
12024 RESULTS GROUP MARKET SHARE IMPACTED BY NUTRITION % Core CMUs gaining / holding share YTD HYGIENE (44) HEALTH (43%) — nuTRITiON( 14% (FY23: 47%) (FY23: 46%) (FY23: 37%) * Holding total value market * Holding total value market * US market shares share YTD share YTD stabilising at c.39% * Compet
Slide 10: Adjusted Operating Margin - GM Expansion Funds Increased BEI
12024 RESULTS ADJUSTED OPERATING MARGIN - GM EXPANSION FUNDS INCREASED BEI 60.6% —_ (15.2)%! +120bps BEI (13.3)% (21.9)% 23.8% (100)bps | | 23.5% (50)bps tid H12023 Gross Margin Marketing Fixed costs H12024 NOSE AOP% Calculations of adjusted measures are Includes 1.9% of Non-BEI Marketing presented
Slide 11: Fixed Costs - Mitigating Inflation with Cost Optimisation
12024 RESULTS FIXED COSTS - MITIGATING INFLATION WITH COST OPTIMISATION 2023 Cost Inflation FX Cost Savings H1 2024 Fixed Costs Optimisation Fixed Costs % of NR % of NR
Slide 12: Hygiene - Growing Volumes & Revenue
H12024 RESULTS HYGIENE - GROWING VOLUMES & REVENUE D> STD LFL NR growth 0 Net +45 % revenue Volume Adjusted 0 operating +U.d/o profit (AOP) Price/Mix 3 6% AOP + . 0 margin Calculations of adjusted measures are presented within the H1 2024 results announcement PY: 1 £3,057m £654M OVW, seve +18.6% vs
Slide 13: Health - Offsetting Seasonal OTC with Strong Volume
H12024 RESULTS HEALTH - OFFSETTING SEASONAL OTC WITH STRONG VOLUME a eee OD LFL NR growth LFL NR growth 13%) tm £2, 941M = tl.0/ revenue ' £3,073m +1.7% Volume Volume Adjusted 0 2 % operating F815M (0.8)% vs PY 0 4 % e 0 profit (AOP) at constant FX ° 0 Price/Mix Price/Mix +1.5% arin 21.8% (90)bps vs
Slide 14: Nutrition - Continued Rebasing of US Business
H12024 RESULTS NUTRITION - CONTINUED REBASING OF US BUSINESS A ee OD LFL NR growth LFL NR growth (9.0) 0 revenue ! £1,316m ° 0 Volume Volume Adjusted 0 ] 0 % operating F?10M (29.4)% vs PY (8 6) % e 0 profit (AOP) at constant FX ° Price/Mix Price/Mix 0 0.0% arin 18.0 % (510)bps vs PY +0.5% Calculatio
Slide 15: Adjusted Diluted EPS - Broadly Flat Earnings Reduced by FX
12024 RESULTS ADJUSTED DILUTED EPS - BROADLY FLAT EARNINGS REDUCED BY FX + +1.0p 2.0p _ H12023 Interest AOP SBB H1 2024 FX H1 2024 & Tax! (before FX) Impact (before Actual FX) Calculations of adjusted measures are presented within the H1 2024 results announcement Includes 1p impact from NCI
Slide 16: +100% Increase in Cash Returns
12024 RESULTS +100% INCREASE IN CASH RETURNS FREE CASH FLOW NET DEBT DIVIDEND SHARE BUYBACK Strong free cash Target single-A Progressive generation credit rating dividend policy £0.8bn purchased in H1 _ _ _ Second £1bn 12-month +8% Leverage 2.2x +5% programme to start (vs PY) (vs 2x PY) (vs PY) imme
Slide 17: Mount Vernon - Tornado Update
12024 RESULTS MOUNT VERNON - TORNADO UPDATE Operational Update Financial Estimates + MJN 3'¢ party warehouse located in Mount Vernon sustained significant tornado damage on July 9% + All employees safe * Held finished goods and raw materials * Short-term impact on sales as lost inventory needs to be
Slide 18: 2024 Outlook and Guidance
12024 RESULTS 2024 OUTLOOK AND GUIDANCE + gore ana AOP GROWTH AHEAD +1% 10 +3% Hygiene and Health (Previously +2%10+4%) ~ xeritior ne” OF NR GROWTH Adjusted net finance expense ~ Capex as % of net revenue “A Adjusted tax rate @e30om-£320m G)a%-35% «= @) 25% - 26%
Slide 19: Kris Licht
KRIS LICHT
Slide 20: H1 2024 Results
H12024 RESULTS air 1 aa? _” &** GAVISCON 20
Slide 21: In October We Set Out Our Strategic Priorities
12024 RESULTS IN OCTOBER WE SET OUT OUR STRATEGIC PRIORITIES NZ v x ru o @ Portfolio value Product Win in Fixed cost creation superiority market optimisation applying three clear to delight consumers by more consistently to fuel growth executing with and earnings excellence and grow our rinciples f
Slide 22: Today's Update Focused on Portfolio & Organisation Actions
12024 RESULTS TODAY'S UPDATE FOCUSED ON PORTFOLIO & ORGANISATION ACTIONS sls V Portfolio value creation applying three clear principles © Fixed cost optimisation to fuel growth and earnings jon, where applicable
Slide 23: Our Three Principles of Portfolio Value Creation
12024 RESULTS OUR THREE PRINCIPLES OF PORTFOLIO VALUE CREATION aa “> Long-term Attractive Enduring runway for earnings competitive growth model advantage Governs our organic and inorganic capital allocation priorities Every brand needs to earn its place in our portfolio
Slide 24: Moving to a Sharper Core Portfolio
12024 RESULTS MOVING T0 A SHARPER CORE PORTFOLIO World-class portfolio of high-growth & high-margin Powerbrands sg laos ee Ne’ © MEAD JOHNSON ESSENTIAL HOME NUTRITION * A stable and resilient international portfolio + Leading Nutrition business + Large and attractive + Portfolio of strong Home Care
Slide 25: Self-Care - 34% of the Sharpened Portfolio
12024 RESULTS SELF-CARE - 34% OF THE SHARPENED PORTFOLIO Mucinex Strepsils© GAVISCON NUROFEN #1 #1 #1 #1 Global Cough & Decongestants Global Medicated Sore Throat Global Upper Gastrointestinal European Pain Relief! a ; cal TASTE LIFE j : r bP ! 5; m= WITHOUT | 4 rs ae 7 K ve, COMEBACK stason 2 HESIT
Slide 26: Germ Protection - 31% of the Sharpened Portfolio
12024 RESULTS GERM PROTECTION - 31% OF THE SHARPENED PORTFOLIO Za = #1 #1 #1 Global Disinfection Global Antiseptic Liquid Global Lavatory Care Spread the love, not the germs Fundamentally attractive category ¢.7% NR CAGR' Advantaged portfolio High gross Branded player claims based on aggregated data
Slide 27: Household Care - 22% of the Sharpened Portfolio
12024 RESULTS HOUSEHOLD CARE - 22% OF THE SHARPENED PORTFOLIO finish (os? #1 #1 Global Auto Dishwash Global Fabric Additives TAKE THE Fundamentally attractive category c.8% NR CAGR' Advantaged portfoli igh gross Branded player claims based on aggregated data from Nielsen, in each case, for the relev
Slide 28: Intimate Wellness - 13% of the Sharpened Portfolio
12024 RESULTS INTIMATE WELLNESS - 13% OF THE SHARPENED PORTFOLIO \ ys aurex. Veée +1 +1 Global Condom Global Depilatories EXPERT Fundamentally attractive category / 7% 3YR NR CAGR (FY 2023 vs FY 2020) Advantaged portfolio igh gross Branded player claims based on aggregated data from Nielsen, in each
Slide 29: Cohesive Portfolio
12024 RESULTS (Gas Mucinex COHESIVE PORTFOLIO 29
Slide 30: We Create and Grow Powerbrands
12024 RESULTS WE CREATE AND GROW POWERBRANDS CONSUMER OBSESSED Deep consumer insights Evolving category needs Understanding demand spaces Household penetration, premiumisation, category creation The Reckitt Playbook ICONIC BRAND BUILDING Creating and growing categories Global brand building Local he
Slide 31: We Continue to Benefit from a Scaled Global Footprint
12024 RESULTS WE CONTINUE TO BENEFIT FROM A SCALED GLOBAL FOOTPRINT Fixe Net Revenue LFL Net Revenue Net Revenue LFL Net Revenue Net Revenue LFL Net Revenue (FY23) CAGR (FY18-FY23) (FY23) CAGR (FY18-FY23) (FY23) CAGR (FY18-FY23) £2.8bn c.+5% £3.6bn C.+7% £4.0bn C.4+8% oak i Top markets Top markets a
Slide 32: Simplified Organisation for Faster Decision Making
12024 RESULTS SIMPLIFIED ORGANISATION FOR FASTER DECISION MAKING FROM GP fe al All proposals are eo TO Three layers (Global, Area, Market) Five layers (Global, GBUs, Area, Region, Market) = [ Global Business-Unit led structure = aa Large central functions = Oa Unified category structure, operating t
Slide 33: We Will Run a Simpler, More Effective Organisation
12024 RESULTS WE WILL RUN A SIMPLER, MORE EFFECTIVE ORGANISATION Group Executive Committee a UNIFIED CATEGORY 3 GEOGRAPHIES > Self-care North America Germ Protection Europe Household Care Emerging Markets AR Intimate Wellness yy Delivering a step change in organisational effectiveness & greater prox
Slide 34: Category, North America, Europe, Emerging Markets leadership
12024 RESULTS CATEGORY NORTH AMERICA | EUROPE EMERGING MARKETS q | ‘a> _ & 1 fx Ne, / a Ve | | | uy ae é D> AVERAGE TENURE OF OUR LEADERS 22 YEARS 34
Slide 35: Essential Home
12024 RESULTS ESSENTIAL HOME A stable and resilient international portfolio in the large home care category with attractive margins and high-cash generation #1 #1 #1 Hdl Air Care Pest Control Water Softeners Surface Cleaning (EU) (Brazil) GEOGRAPHIES North America Europe f ; rand ; es Latin America
Slide 36: Leading Nutrition Business with Strong Global and Local Brands
12024 RESULTS Leading nutrition business with a portfolio of strong global and local brands #1 #1 This business will Global infant formula brand US Allergy continue to be led by the same world- pean . class management Recommended Brand f iNe® team FY23 Net Revenue LFL NR CAGR' £2.4bn a% Branded play
Slide 37: Shannon Eisenhardt
SHANNON EISENHARDT
Slide 38: Fuel for Growth - Enhanced Programme for Cost Optimisation
12024 RESULTS FUEL FOR GROWTH - ENHANCED PROGRAMME FOR COST OPTIMISATION Focus Areas for Fixed Cost Optimisation (As % of Net Revenue) Ge) Simplified Organisation ) Right Size Investment 3 Automation and Shared Services (] Digital and Generative Al Actual 2023 End of 2027 Estimated one-off cash rest
Slide 39: Capital Allocation Framework Remains Constant
12024 RESULTS CAPITAL ALLOCATION FRAMEWORK REMAINS CONSTANT al Investment in organic growth {0} Strong free cash conversion &> Progressive dividend policy (a) Target single-A credit rating (leverage around 2x) y= Manage the portfolio for value creation gate Return cash to shareholders We will return
Slide 40: An Attractive Earnings Model
12024 RESULTS AN ATTRACTIVE EARNINGS MODEL NET REVENUE Consumer preferred Powerbrands c.100 bps additive, MSD growth GROSS MARGIN Attractive brands and categories c.61% Invest in our brands SAL CUINE Funded by Fuel For Growth Fuel For Growth program FIXED COSTS c.300bps savings by exit 2027 with end
Slide 41: New Structure from Jan 2025
12024 RESULTS NEW STRUCTURE FROM 1 JAN 2025 THREE REPORTING SEGMENTS Reckitt Essential Home Mead Johnson Nutrition 3 GEOGRAPHIC AREAS North America Emerging | Europe | Markets
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Slide 43: Summary
12024 RESULTS SUMMARY * Reshaping the company as a world-class consumer Health and Hygiene organisation * Significant sharpening of the brand portfolio + Seek to exit Essential Home and consider all strategic options for Mead Johnson Nutrition + Move to a simpler, more effective organisation + Expan
Slide 44: What Happens Next?
12024 RESULTS WHAT HAPPENS NEXT? 03 Results FY24 Results + Further detail on portfolio and organisation * Key appointments + Update implementation + Further detail on portfolio + Other priorities and organisation Priority to deliver 2024 + 2025 guidance Plan will generate significant value but will
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Reckitt Benckiser Group — H1 2024 Earnings Presentation on 6ix