Market Analysis

British consumer goods giant, Reckitt Benckiser, records bumper annual profit

British consumer goods giant Reckitt Benckiser Group PLC posted a larger than expected pre-tax profit last year, sending the company’s share price soaring by close to five percent on the London FTSE. The earnings report also showed the company forecasting strong like-for-like revenue growth for the rest of 2019.

Reckitt Benckiser recorded a pre-tax profit of £2.72 billion during 2018, which was an increase of 8.9 percent compared to the previous year. The company also reported revenue growth, which was over ten percent higher compared to 2017.

Outgoing CEO Rakesh Kapoor said the company delivered on the upper end of their 2018 revenue growth target, and he expects the bullish momentum to continue this year, with a target of three to four percent like-for-like net revenue growth in 2019. He also said the company hopes to maintain the adjusted operating margin as Reckitt generates retail brand cost and efficiency savings and deploys them into building an even stronger business.

Reckitt Benckiser also saw revenue and constant-currency rates increase by 14 to 15 percent and like-for-like revenue growth to be at the upper end of the two to three percent range this year. The companies board also announced a final dividend of 100.2 pence per share, which gave investors another reason to cheer yesterday’s report, as it marked a dividend increase of nearly three pence per share from the previous year.

The company reported strong growth in the hygiene home business sector, which includes Durex and Dettol. Reckitt also reported strong demand in North America and China for vitamin supplements, which showed a two percent higher year-on-year increase.

Last year Reckitt Benckiser announced its intention to buy Mead Johnson which caused the companies stock to lag on the London FTSE due to uncertainties surrounding the deal and structural issues. Today’s set of stronger results and bullish forward guidance will offer reassurance to longer-term investors, who believed in the companies management and core products such as Lemsip, Air Wick and Gaviscon.


RB.UK Daily Mount Chart | Source: ActivTrader Platform

RB.UK Daily Mount Chart | Source: ActivTrader 


Looking at the technicals for Reckitt Benckiser, we can see that the stock is still trading marginally below its 200-day moving average, with an overwhelmingly bearish head and shoulders pattern is seen hovering ominously on the daily time frame chart.

Brexit is likely to weigh on stock’s upside in the medium-term, with a hard-Brexit or no-deal scenario likely to be the bearish catalyst for a strong downward move which would provoke a test neckline support.


Written by Nathan Batchelor, External Analyst


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