Their range of Powerbrands include many familiar names - Cillit Bang, Durex, Dettol, Finish, Gaviscon, Strepsils & Nurofen - recession or no recession, people keep cleaning their kitchens, getting sore throats and suffering headaches.
Having been a stalwart of my sipp for several years during the build phase RB are now firmly entrenched as one of the cornerstones of my S&S ISA.
Reckitt have today reported full year results for 2014 (link via Investegate). Stripping out the pharmaceuticals arm RBP which was spun off as a separate company, Indivior at the end of last year, operating profits rose 11% (constant exchange) to £2.19bn on revenue of £8.8bn.
Reckitt chief executive Rakesh Kapoor said:
"We have achieved a lot in the past three years - but there is more to do. In true RB spirit of outperformance, we need to sharpen our organisational agility and efficiency.
I am therefore announcing our new "Supercharge" project focused on:
- Creating a simpler, more agile organisation
- Reducing cost and driving efficiencies
This will make RB a leaner, faster and more coordinated business. It will also drive cost savings that will enable us to deliver sustainable earnings growth as we enter the second half of the decade. Our strong margin expansion in 2014 provided a step up in operating margin, which our Supercharge project should make sustainable. In 2015, we continue to expect tough market conditions. Therefore, we are targeting LFL net revenue growth of +4%, which is broadly similar to 2014 "
They are proposing a 2p uplift in the final dividend from 77p to 79p which is again a little disappointing but better than the 1p reduction last year. This will mean a full year dividend of 139p and yield now falling to just 2.4%.
The balance sheet remains robust with borrowing falling to just £1.5bn.
The results have been reasonably well received and at the time of posting the share price is up 3% at £57.70. Over the past year the share price has increased by £9.00 or 18%.
There is no doubt that RB is a quality company which has provided a very good return for me over the past 4 years. However, I am just beginning to look at the falling yield and wonder whether there may be better income opportunities elsewhere. A nice problem to contemplate and currently in no hurry to make a decision.
I would be interested to hear the views of others on this one - leave a comment if you have a view on Reckitt.