Reckitt Benckiser on Thursday posted a full-year loss but beat expectations on the revenue front, with the health and hygiene products maker looking towards a margin improvement in the year ahead despite inflationary pressures.
Shares in Reckitt were up 4.6% at 6,074.00 pence each in London early Thursday, making it the top performer in falling FTSE 100 index.
Hygiene and household goods firm Reckitt said revenue in 2021, lapping tough comparatives, fell 5.4% to £13.23 billion from £13.99 billion. At constant currency, the decline was 0.3%. However, this topped company-compiled consensus of £13.18 billion.
Excluding the contribution of its former Infant Formula & Child Nutrition business in China, Reckitt’s annual revenue fell 2.1% to £12.85 billion from £13.13 billion, though beat expectations of £12.80 billion. At constant currency rates, revenue by this measure was up 3.3%.
Reckitt back in June agreed to sell the business to Primavera Capital Group for $2.2 billion. The disposal was completed in September.
The Nurofen painkiller maker swung to a pretax loss of £260 million for the year from a £1.87 million profit in 2020, due primarily to a huge loss on disposal. The China IFCN business was one of three disposals Reckitt made in 2021. The trio of sales resulted in a pretax loss on disposal of £3.52 billion. No such costs were registered in 2020.
Excluding the China IFCN business, Reckitt made an adjusted operating profit of £2.94 billion for the year, in line with consensus, but down 8.5% on the year before. The adjusted operating margin of 22.9% was down 160 basis points on 2020 amid cost inflation.
Chief Executive Laxman Narasimhan said Reckitt’s aim to ‘rejuvenate sustainable growth’ is on track. Like-for-like net revenue in 2021 rose 3.5% at constant currency and was up 17% from 2019.
In the fourth quarter alone, like-for-like net revenue increased 3.3%.
Reckitt declared a final payout of 101.6 pence per share, unchanged from 2020. Its annual dividend was also unchanged at 174.6p per share.
Looking to 2022, the company targets like-for-like net revenue growth between 1% and 4%.
Here is what you need to know at the London market open:
----------
MARKETS
----------
FTSE 100: down 0.4% at 7,570.82
----------
Hang Seng: up 0.3% at 24,792.77
Nikkei 225: closed down 0.8% at 27,232.87
S&P/ASX 200: closed up 0.2% at 7,296.20
----------
DJIA: closed down 54.57 points, or 0.2%, at 34,934.27
S&P 500: closed up 3.94 points, or 0.1%, at 4,475.01
Nasdaq Composite: closed down 15.66 points, or 0.1%, at 14,124.10
----------
EUR: firm at $1.1372 ($1.1367)
GBP: up at $1.3593 ($1.3577)
USD: down at JP¥115.28 (JP¥115.48)
Gold: up at $1,875.65 per ounce ($1,862.20)
Oil (Brent): down at $94.14 a barrel ($96.00)
(changes since previous London equities close)
----------
ECONOMICS AND GENERAL
----------
Thursday’s key economic events still to come
1100 GMT Ireland consumer price index
1100 GMT Ireland labour force survey
0830 EST US housing starts and building permits
0830 EST US Philadelphia Fed business outlook survey
0830 EST US unemployment insurance weekly claims
0830 EST US weekly export sales report
1030 EST US EIA weekly natural gas storage report
----------
The wave of rising prices remains a ‘great concern’ for American families, but the Federal Reserve has the tools to respond, US Treasury Secretary Janet Yellen told AFP. In an interview, Yellen said she is ‘concerned’ about inflation, calling the current rates – the highest in decades – ‘not acceptable.’ However, she said she is ‘confident’ the Fed will take action in an ‘appropriate way’ that will ensure the US recovery continues, noting that the economy, including the labor market, is strong. Yellen also said ‘some global fallout’ would result if the West moves ahead with the punishing, coordinated sanctions threatened against Russia, should it attack Ukraine. If the penalties are imposed, ‘of course, we want the largest cost to fall on Russia,’ Yellen said in the interview. ‘But we recognize that there will be some global fallout from sanctions.’
----------
Russia announced a new drawdown of military forces from the Moscow-annexed Crimean peninsula Thursday, continuing a troop withdrawal that was met with scepticism from Ukraine’s Western allies. ‘Units of the southern military district that ended tactical exercises at training grounds on the Crimean peninsula are returning by rail to their permanent bases,’ the defence ministry said in a statement carried by Russian news agencies.
----------
BROKER RATING CHANGES
----------
JPMorgan reinitiates Whitbread with ’overweight’ - price target 4,000 pence
----------
JPMorgan reinitiates Intercontinental Hotels with ’overweight’ - price target 6,100 pence
----------
RBC raises FirstGroup to ’outperform’ (sector perform) - price target 115 (90) pence
----------
COMPANIES - FTSE 100
----------
Despite doubled annual profit and a bolstered payout, Standard Chartered undershot analyst expectations on both. The London-based emerging markets lender reported pretax profit for 2021 of $3.35 billion, more than doubled from $1.61 billion a year prior, but missing analyst expectations of $3.84 billion by 13%. Net interest income slipped 0.7% to $6.80 billion from $6.85 billion, beating the $6.78 billion analyst consensus, as low interest rates scuppered growth. Adjusted net interest margin narrowed to 1.21% from 1.31%. StanChart ended 2021 with a CET 1 ratio of 14.1%, edging down closer to the company’s minimum target of around 14.0% for 2021. StanChart noted that an imminent $750 million share buyback programme is expected to reduce its CET 1 ratio by around 30 base points. StanChart missed analyst forecasts for dividends, having proposed a final dividend of 9 US cents per share. This matched 2020’s final dividend, when 9 cents was the maximum allowed under regulatory guidance at the time. This brought StanChart’s total annual payout to 12 cents, up 33% on the prior year’s 9 cents.
----------
Industrial software firm Aveva said recurring revenue grew 9.6% on an annualised basis in the rolling 12 months to December 31, the conclusion of the third quarter of its financial year. ‘ARR growth in Q3 FY 2022 was broad based, with increases from key industries, including food, manufacturing, energy, pharmaceuticals and mining,’ Aveva said. However, the clean top-line figure fell. Third quarter revenue ‘declined by a low single digit rate year-on-year’, on a constant currency basis. The prior year’s third quarter ‘included the benefit of several large contract renewals with point-in-time revenue recognition’. The company added: ‘The group’s sales pipeline for the remainder of the financial year is solid, supporting management plans for good revenue growth in the final quarter, giving a revenue outlook for the full year that is in line with expectations.’
----------
Ocado has extended a partnership with French grocer Groupe Casino. The extension sees the duo birth a joint-venture that will develop customer fulfilment centres in France. ‘The joint venture will draw on the combined strengths of Ocado and Groupe Casino to provide logistics services for future CFCs. These services include project management for CFC construction and set-up, as well as the recruitment and operations management of personnel,’ Ocado said. ‘There is not expected to be any initial capital cost associated with the JV to either Ocado group or Groupe Casino. CFC-related capital costs typically associated with OSP partners will be funded in future CFCs by tenant grocery retailers in line with their capacity commitments.’
----------
Packaging firm Mondi announced it will sell its Personal Care Components business to Osaka, Japan-based Nitto Denko for an enterprise value of €615 million. Nitto is a maker of tapes, sealing materials and surface films. Mondi said the unit, charged with making components for personal and home care products, has a ‘limited overlap’ with the rest of the company.
----------
COMPANIES - FTSE 250
----------
Moneysupermarket reported a fall in annual profit and revenue, saying its Home Services arm was ‘heavily impacted by wholesale energy prices’. Pretax profit in 2021 was £70.2 million, down from £87.8 million in 2020, on revenue of £316.7 million, down 8% from £344.9 million.
----------
COMPANIES - MAIN MARKET AND AIM
----------
South32 reported a bumper first half with a 57% rise in revenue driving a surge in profit, but operational challenges remain. For the six months to December 31, the Perth-based diversified miner reported pretax profit from continuing operations of $1.46 billion, soaring from just $155 million a year prior. This was off a 57% jump in revenue to $3.65 billion from $2.32 billion. South32’s operating margin rose to 44% from 24% the year before, thanks to strong production and high operating leverage, the company said. South32 upped its interim dividend to 8.7 US cents from just 1.4 cents a year before.
----------
Unbound Group, formerly known as Electra Private Equity, updated on annual fortunes at its Hotter Shoes subsidiary. Hotter’s revenue advanced 10% annually in the fourth quarter that ended January 30. Annual revenue increased 16% to £51.9 million from £44.5 million, shaking off ‘significant challenges’ hitting the UK retail sector. In addition, Unbound said Hotter has teamed with Marks & Spencer, selling its products through the UK retailer’s ’Brands at M&S’ platform. ‘This follows agreements with other retailers including John Lewis, Next and The Very Group to sell Hotter products online,’ Unbound added.
----------
COMPANIES - GLOBAL
----------
Airbus said it swung to profit in 2021 in a year bolstered by increased order intake and revenue. The Blagnac, France-based aerospace company reported net income of €4.21 million in 2021, swinging from a net loss of €1.13 million. The company posted earnings per share of €5.36, swinging from a loss per share of €1.45 in 2020. Revenue increased 4.4% to €52.1 billion from €49.9 billion. Airbus said this mainly reflected the higher number of commercial aircraft deliveries. Commercial aircraft deliveries rose to 611 in 2021 from 566 in 2020. Gross commercial aircraft orders totalled 771, up sharply from 383 in the virus-hit 2020. The order backlog was 7,082 commercial aircraft on December 31, not far off the previous year’s figure of 7,184 aircraft. Order intake by value nearly doubled to €62.0 billion from €33.3 billion. Airbus proposed a 2021 dividend of €1.50 per share. It paid no dividend for 2020 or 2019.
----------
Swiss food maker Nestle’s net profit and sales rose in 2021 as it sold shares in cosmetic company l’Oreal and hiked prices amid soaring global inflation. Businesses have faced supply chain disruptions and decades-high inflation as the global economy recovers from the Covid pandemic and energy prices surge.Nestle – the maker of everything from coffee to pet food and plant-based meat – said net profit bounced by 3% to fr.16.9 billion, about $18.3 billion, last year. Total sales rose 3.3% to fr.87.09 billion as restaurant sales improved and price hikes accelerated in the last quarter under inflationary pressure. Its organic growth – which excludes the effects of acquisitions or divestments to focus on a company’s core operations – reached 7.5%, with coffee the largest contributor.
----------
Former UK deputy prime minister Nick Clegg has been promoted by Mark Zuckerberg to a new role at Meta Platforms focused on regulation which puts him at the same level of seniority as the firm’s founder. The 55-year-old was recruited by Facebook in 2018 to be its head of global affairs as Zuckerberg sought to repair the company’s reputation over its role in spreading misinformation during elections. Zuckerberg said he had asked Clegg to become president of global affairs at Facebook parent company Meta because ‘we need someone at the level of myself (for our products) and Sheryl (for our business) who can lead and represent us for all our policy issues globally’.
----------
Thursday’s shareholder meetings
Chrysalis Investments Ltd - AGM
Highway Capital PLC - AGM
Oilex Ltd - GM re placing
Virgin Money UK PLC - AGM
Watkin Jones PLC - AGM
----------
Copyright 2022 Alliance News Limited. All Rights Reserved.
