Key Takeaways:
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- Reckitt Benckiser’s adjusted operating profit for 2024 exceeded market expectations at £3.475 billion, despite a 3% decline in revenue.
- Revenue fell to £14.17 billion, missing consensus estimates, with strong growth in hygiene offset by a 7.3% decline in the nutrition segment.
- The company’s turnaround efforts are progressing, with restructuring costs and impairments impacting pretax profit, which dropped to £2.10 billion.
- Reckitt forecasts 2%-4% revenue growth in 2025, with performance expected to be stronger in the second half of the year.
What Happened?
Reckitt Benckiser, the maker of brands like Lysol, Dettol, and Durex, reported better-than-expected adjusted operating profit of £3.475 billion for 2024, surpassing market consensus of £3.31 billion. However, revenue declined by 3% to £14.17 billion, missing expectations of £14.19 billion. The hygiene segment grew 4.2% on a like-for-like basis, while the nutrition segment saw a 7.3% revenue drop. Pretax profit fell to £2.10 billion, down from £2.40 billion in 2023, due to higher one-off impairments and restructuring costs.
Why It Matters?
Reckitt’s performance highlights the company’s ability to deliver profitability despite revenue challenges, reflecting progress in its turnaround strategy. The strong growth in the hygiene segment underscores the resilience of its core brands like Lysol and Dettol, even as the nutrition segment faces headwinds. For investors, the company’s ability to beat profit expectations despite restructuring costs signals operational efficiency and cost management. However, the revenue decline and uneven segment performance indicate areas of concern, particularly in nutrition.
What’s Next?
Reckitt expects group revenue growth of 2%-4% in 2025, with performance likely to be weighted toward the second half of the year. The company plans to focus on its Essential Home and Mead Johnson Nutrition segments to drive growth. Investors should monitor the impact of restructuring efforts, potential recovery in the nutrition segment, and the company’s ability to sustain growth in its hygiene business. Reckitt’s ability to navigate cost pressures and deliver on its growth forecast will be key to its long-term success.