Front-end HBS Starter
DELIVERING OUR STRATEGY

Rejuvenating sustainable growth

In February 2020, we shared our strategy for rejuvenating sustainable growth, and our medium-term financial targets. This set out how we would:

1

Drive growth, rebuild a strong earnings model and outperform with mid-single digit organic top-line, mid 20’s margins and 7-9% EPS growth

2

Enable improved growth by investing in key capabilities to strengthen product innovation and enhance customer service, with sustainability at the heart of everything we do

3

Fund investment through delivery of an enhanced productivity programme and short-term reduction in operating margin

4

Deliver progressive improvements to our top-line growth through better product penetration, market share gains, and expansion into new places and new spaces

5

Manage capital allocation to support a strong balance sheet while actively migrating our portfolio to higher growth opportunities

'A better house in a great neighbourhood'

In Laxman’s fireside chat at the Morgan Stanley Global Consumer & Retail Conference in December 2020 he connected with international investors to outline Reckitt’s business transformation strategy and review its performance at the end of an eventful year.

Watch the conference video
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During 2020 – in the first phase of our plan – we have executed well, against a highly dynamic market backdrop, achieving financial targets ahead of expectations. As outlined, we have taken the opportunity of stronger than expected revenue growth to reinvest in incremental growth opportunities.

As a result, we have taken advantage of some positive market developments across the breadth of the portfolio. For example, COVID-19 has presented significant opportunities for our disinfectant brands, resulting in strong growth; over this period, we have worked to take Dettol and Lysol into 70 new markets, and new category adjacencies over 2020 and 2021, including to service business customers, in particular the providers of accommodation, travel services, public spaces and events, workspaces and shared facilities.

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OUR PERFORMANCE

Key highlights

Financial highlights

Net Revenue £ 14.0 bn +11.8% LFL growth4 Reported growth +8.9%
Adjusted Operating Margin4 23.6 % -260bps
Reported Operating Margin 15.4 % nm 3
Hygiene 42 % of Reckitt Total Net Revenue
Health 35 % of Reckitt Total Net Revenue
Nutrition 23 % of Reckitt Total Net Revenue
Adjusted Earnings Per Share (diluted)4 327.0 p -6.3%
Reported Earnings Per Share (diluted) 159.3 p nm 3
Total dividend for the year 174.6 p unchanged

Society

Net Revenue from more sustainable products1, 2, 4 30.4 %
Number of people informed 1.41 bn through health and hygiene messaging and campaigns since 2013
FTSE4Good Index membership 17 consecutive years, including meeting 20 additional Breast-Milk-Substitute (BMS) criteria since 2018

Environment

Greenhouse Gas emissions per unit of production1 53 % reduction since 2012
Water use per unit of production1 39 % reduction since 2012
  1. Excluding our Infant and Child Nutrition (IFCN) business – see Sustainability insights for details
  2. Calculated for 12 months ending 30 September 2020
  3. Not meaningful
  4. Non-GAAP measures are defined on page 77 of the full annual report

Divisions overview

GLOBAL BUSINESS UNIT OVERVIEW

Hygiene

Hygiene is the foundation of health and our purpose-led portfolio works to eliminate dirt, germs, pests and odours with market leading products such as Lysol, Finish, Mortein and Air Wick.

Hygiene Net Revenue

2020
£ 5,816 m
2019 £ 5,031 m

LFL Growth1

+ 19.5 %

Actual Growth

+ 15.6 %

Adjusted Operating Profit1

£ 1,505 m

Adjusted Operating Margin1

25.9 %
Non-GAAP measures are defined on page 77 of the full annual report
GLOBAL BUSINESS UNIT OVERVIEW

Health

Our Health portfolio brings compelling, innovative solutions that provide pain relief, protection, hygiene, and personal care to households across the world, through brands like Dettol, Durex, Gaviscon, Nurofen, Mucinex, Strepsils and Veet.

Health Net Revenue

2020
£ 4,890 m
2019 £ 4,462 m

LFL Growth1

+ 12.1 %

Actual Growth

+ 9.6 %

Adjusted Operating Profit1

£ 1,334 m

Adjusted Operating Margin1

27.3 %
Non-GAAP measures are defined on page 77 of the full annual report
GLOBAL BUSINESS UNIT OVERVIEW

Nutrition

The Nutrition business includes our leading infant and child nutrition, adult nutrition and our range of vitamins, minerals and supplements. Brands include Airborne, Mead Johnson, Move Free and Schiff. The strength of this business is its focus on science-led innovations which underpin products catering to consumers from infant through to the elderly.

Nutrition Net Revenue

2020
£ 3,287 m
2019 £ 3,353 m

LFL Growth1

unchanged

Actual Growth

- 2.0 %

Adjusted Operating Profit1

£ 462 m

Adjusted Operating Margin1

14.1 %
Non-GAAP measures are defined on page 77 of the full annual report
1 /
megatrends

meeting the needs of society and our stakeholders

Our business is responsive to the change that is happening around us. We’re working together to keep pace and meet people’s changing needs. As part of our business transformation, our strategy focuses on our purpose in the world, clearly articulating the reason we exist and the change we want to see that drives our growth.

Reckitt works with a wide variety of stakeholders: our consumers and customers; investors and shareholders; our suppliers and partners; governments in support of a wider public health agenda; and, of course our 43,500+ strong team whose engagement drives our business. The trends we describe in our business strategy create challenges and opportunities for ourselves and all of our stakeholders.

The megatrends

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Hygiene

Urbanisation and global warming

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Health

Growing demand for self care

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Health

Sexual health crisis

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Nutrition

Growing and ageing population

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Digital and e-commerce

Technology proliferation

stakeholders

Our purpose drives our performance

Putting consumers first

Consumers buy brands they trust. They rightly expect safe, effective and sustainable products, delivered at a fair price. This is always our focus, but we are also meeting their growing expectation that products are responsibly sourced and won’t damage the environment. And that our social and environmental impacts tackle global issues for a sustainable future.

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Fostering stronger customer relationships

Our customers’ expertise brings consumer insights to strengthen our innovation pipeline. We work with our customers to build and meet joint goals, design and develop even safer and more effective products and to enable greater social and environmental impact. Collaboration with our customers enables joint activity that supports both our own purpose and our collective ambitions.

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Engaging investors

Through engaging with our investors we have support for our strategic initiatives and in return they share our success. Open, effective communication, combined with performance and clear plans for the future, builds trust and confidence in our company.

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Inspiring and supporting our people

Our highly skilled people enable our success. We want to attract, develop and retain the very best. Engaged, inclusive teams spur growth and performance. We want our teams to feel good about what they do and our contribution to the world as a whole. Our purposeful culture strengthens engagement and brings better brand offerings for consumers and more value for shareholders and investors.

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Extending our impact with like-minded partners

We join forces to build shared success with suppliers, scientists, civil society and more, that deliver practical and sustainable solutions to create a cleaner, healthier world. Our partners share our purpose and values. Through them, we build lasting solutions with real social impact.

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Investing in communities

We fight to make access to the highest quality hygiene, health and nutrition a right not a privilege. Improving that access, in communities with unmet needs, creates social impact and brings our brands to new consumers. Through our products, consumer education and skills, we empower people to make small changes in their lives for a cleaner, healthier world.

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Building a sustainable future

The world’s environmental challenges demand action on multiple fronts. Our ambition is not just to combat these challenges, but to help build forward better where we can, and especially where we can have most impact.

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q&a

TALKING TO OUR BUSINESS LEADERS

Quotes icon

In 2020, we all had to adapt to new realities.

At Reckitt, we stepped up to play our part in combatting the spread of the virus and we’ve also been hard at work to progress our business transformation plan. I wanted to take stock with the leadership team at the end of an eventful year.

Laxman Narasimhan Chief Executive Officer
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Headshot of Kris Licht, President Health & Chief Customer Officer at RB
Kris Licht President Health & Chief Customer Officer

“I’ve been so impressed by the resilience and perseverance of our Health team in a time of great need. We had to rethink and reprioritise – we dramatically increased our supply capacity for disinfectants – 37 new manufacturing locations in one year! And even though we had to work virtually, we’ve strengthened retailer partnerships. Given everything, it’s amazing to me that we executed so well in year one of our transformation.”

Headshot of Aditya Sehgal, President Nutrition RB & Greater China at RB
Aditya Sehgal President Nutrition, eRB & Greater China

“It has really demonstrated the importance of living our purpose. The strength of our brands and culture shone through. We displayed strong agility and we outperformed. The new focus on nutrition is already making a difference. And eRB’s performance was just outstanding. Digital sales were up by more than 50%. This was really the year that e-commerce came to the fore as a key engine of growth.”

Headshot of Harold Van den Broek, President Hygiene at RB
Harold van den Broek President Hygiene

“This was an incredible year for hygiene – I couldn’t be more proud of our people. The teams understood the importance of good hygiene as the foundation of good health. I saw focus, speed, sense of ownership, ramping up production, asking suppliers to help with materials and knowledge, many working 24/7 to make it all happen. We didn’t fulfil all the demand all the time, but it wasn’t for lack of trying.”

Headshot of Volker Kuhn, Chief Transformation Officer at RB
Volker Kuhn Chief Transformation Officer

“2020 brought the best out of our people and teams. I have deep respect for their tremendous achievements and how they dealt with unprecedented challenges. Importantly, we’ve made a strong start to our ambitious transformation journey. Our organisation has proved extremely agile. We overdelivered on business performance and productivity gains, and I am particularly proud of the speed and agility we demonstrated in successfully launching Global Business Solutions. In short, our people didn’t leave any stone unturned to satisfy the unprecedented demand of the pandemic, while strengthening the foundation of the business for the future.”

Headshot of Rupert Bondy, General Counsel & Company Secretary at RB
Rupert Bondy General Counsel & Company Secretary

“I agree with that. In 2020, going through a leadership, strategy and culture change while responding to COVID-19 was definitely challenging, but it was also energising. It seemed to bring out the best in our people.”

Headshot of Miguel Veiga-Pestana, Head of Corporate Affairs & Chief Sustainability Officer at RB
Miguel Veiga-Pestana Head of Corporate Affairs & Chief Sustainability Officer

“I’m proud of how we’ve collectively responded and all that we’ve achieved in these extraordinary times. I’m a particularly passionate advocate of our purpose, fight and compass. It’s inspirational and it motivates me to get up in the morning. We are a purpose-led, purposeful company with some truly amazing iconic brands that make a difference to people’s everyday lives. It was also great to see us step up in 2020 with our Climate Change commitment to be ‘net zero’ by 2040.”

Headshot of Angela Naef, Chief R&D Officer at RB
Angela Naef Chief R&D Officer

“The big transformation that was underway was the real pull for me. I wanted the chance to bring science and technology to bear on real-world problems. What’s struck me most about Reckitt people? Their sense of purpose. I’m working with a highly motivated and committed global team focusing on things that really matter.”

Headshot of Ranjay Radhakrishnan, Chief Human Resources Officer at RB
Ranjay Radhakrishnan Chief Human Resources Officer

“Before joining in March, I’d admired the Reckitt powerhouse from the outside. Now I get to see the engine. I love the pragmatic, entrepreneurial and action-oriented spirit here.”

Headshot of Sami Naffakh, Chief Supply Officer at RB
Sami Naffakh Chief Supply Officer

“I’m a bit of a special case. I arrived in July but I also used to work for Reckitt more than a decade ago. It’s a very different animal now, a much more mature organisation. But it’s also managed to keep its amazing entrepreneurial, can-do spirit. I especially relate to our purpose, fight and compass, and our clear commitment to social responsibility – sustainability, diversity – without any concession to financial performance.”

Headshot of Jeff Carr, Chief Financial Officer at RB
Jeff Carr Chief Financial Officer

“Our culture is very unique and our people are fantastic, during these challenging times I’m very proud how our teams have reacted with speed and agility to deliver such a strong performance in 2020.”

Headshot of Harold van den Broek, President Hygiene at RB
Harold van den Broek President Hygiene

“I think Reckitt’s culture has evolved significantly just in the last year. We’re become much more open, diverse and inclusive, and there’s a learning culture here, which will liberate more energy and ideas.”

Aditya Sehgal President Nutrition, eRB & Greater China

“My focus in Nutrition is on strengthening the core and creating new engines of growth. Our digital business is already doing really well. I want us to keep on overdelivering in e-commerce. And we can deepen and broaden our business in China.”

Kris Licht President Health & Chief Customer Officer

“For me, it’s about strengthening the Health business, I also think there are a lot of opportunities available to us if we put more time and resource into customer partnerships.”

Volker Kuhn Chief Transformation Officer

“My priorities are to continue to shape the growth in new places and spaces, deliver on our stepped up productivity ambitions as well as our commitments to building stronger capabilities, which are foundational for sustained outperformance.”

Angela Naef Chief R&D Officer

“My focus is on building the capabilities that will further our delivery in science, technology and innovation to create superior solutions that help to address global issues and opportunities that are safe, efficacious and impactful.”

Jeff Carr Chief Financial Officer

“Our transformation journey has started so well, the opportunity is now to build on our strong start and deliver our goal of long-term sustainable growth.”

Sami Naffakh Chief Supply Officer

“I want to develop an adaptive supply network for Reckitt that leverages the macro changes we’re now seeing in the world. There’s still a lot to do, but in time I do expect our supply chain to become much more customer and consumer-centric, agile, lean, resilient, sustainable and responsible.”

Miguel Veiga-Pestana Head of Corporate Affairs & Chief Sustainability Officer

“I couldn’t agree more. This is a critical year in so many ways. Time is running out to address the challenges facing the world today and we have to play our part. I’m excited that we’ve recently set out our ten year sustainability ambitions as an integral part of our strategy – working with our partners to build a cleaner, healthier world.”

Ranjay Radhakrishnan Chief Human Resources Officer

“The Reckitt culture is so important in all this. I confess I’m itching to connect with people face-to-face. I do hope that in 2021 I will be able to meet more colleagues, visit factories, markets so I can see, live and breathe a bit more of our frontline operations.”