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28 Feb 2024
FY23 results and 15 questions for management
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FY23 results and 15 questions for management
Reckitt Benckiser Group plc (RKT:LON) | 4,472 670.9 0.3% | Mkt Cap: 31,538m
- Published:
28 Feb 2024 -
Author:
Omanadze Mikheil MO | Stent Jeff JS | Kayser Leon LK -
Pages:
15
Summary of Q4/FY23 results
An underwhelming set of results from Reckitt. Q4 LFL sales growth at -1.2% was -2.8% below co. cons. While there was a GBP55m trade spend adjustment (est.-1.5% upon Q4 LFL (price/mix) in the quarter), we note that volumes were below (VA) consensus in all three divisions. FY EBIT margins declined by -70bp (co. cons: -40bp) and this led to FY EBIT coming -2.3% below co. cons. and FY EPS coming -2.4% below co. cons. DPS at GBP1.925 was 0.8% ahead of VA cons.
News
We highlight that Q4/FY23 sales/EBIT were impacted by GBP(55)/(35)m due to an understatement of trade spend in two Middle Eastern markets in Q4 and prior FY23 quarters.
Earnings
We revise our FY24e/FY25e/FY26e EPS by c.-6% (c.3 %-points of which reflecting the lower-than-anticipated FY23 base)
Investment Thesis
We believe that Reckitt is relatively inexpensive, but that proper salvation is unlikely this year.
Rating / target price
We maintain our Neutral rating. TP to GBP56 from GBP59.
15 questions for management
Given that the trade spend issue is related to understatement of trade spend in two Middle Eastern markets (a relatively small part of Reckitt) in Q4 and prior FY23 quarters, results for Q1-Q323 must have looked exceptionally buoyant in those markets, why was it not spotted much earlier?