Wednesday, 12 February 2014

Reckitt & Benckiser - 2013 Full Year Results

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 2013 (link via Investegate). Stripping out the pharmaceuticals arm RBP which is currently under review (announced last October) and which may be sold off, operating profits rose 7% to £2.19 billion on revenues of just over£10bn - an increase of 5% on the previous year.

Many emerging markets economies have come under pressure in recent months which, as we witnessed earlier this month with results from Diageo, is affecting margins for those companies with a significant exposure to this sector.

Reckitt chief executive Rakesh Kapoor said: “I firmly believe that the short-term story on emerging markets is overestimated as much as the long-term story is underestimated.” He added that, in the past year, India and China had put in “very strong results”, although overall, emerging markets continued to slow.

They are proposing a 1p reduction in the final dividend from 78p to 77p which is a disappointment. This will mean a full year dividend of 137p and yield of 2.8%. The dividend is covered 2x by adjusted earnings of 270p per sare.  In my post last March, I  pencilled in 145p for 2013, so quite a shortfall - I will retain the same figure as a target for the coming 12 months.

The results have been reasonably well received and at the time of posting the share price is up 1% at 4880p.

I said in my post last year “This is, in my opinion, a quality operation and one of my better investment decisions. I can imagine holding RB for quite a while - for me it would just about represent the epitome of a long term buy & hold share.”  Despite the modest dividend increase this year, I have no reason to change my opinion.

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