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Reckitt Benckiser Group PLC ADR RBGLY

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Morningstar’s Analysis

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Reckitt Benckiser Ends Good Year With Strong Q4

Analyst Note

| Philip Gorham, CFA, FRM |

Reckitt Benckiser wrapped up a good performance in 2020 with a strong fourth quarter. We expected sales in the hygiene segment to be strong as consumers have been hygiene-conscious through the pandemic, but the 26% underlying divisional growth was a surprise. It seems likely that elevated demand for the hygiene portfolio will be sustained well into 2021. Under these circumstances, we think the 25% pullback in the stock from the peak of 2020 is overdone, and there is now double-digit upside to our fair value estimate of GBX 6,800. Even if hygiene demand eventually fades as consumer behaviour normalises, RB is positioned in strong categories across the portfolios, and we expect price/mix in the nutrition and consumer health divisions to drive above-average growth in the medium term.

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Company Profile

Business Description

European firms Reckitt & Coleman and Benckiser combined in 1999 to form Reckitt Benckiser, which recently rebranded to the corporate name RB. The firm's products include a variety of household and personal-care brands, such as Calgon, Lysol, Finish, and Mucinex, many of which have the number-one or -two position in their categories. More recently, RB has repositioned its portfolio, and has entered infant formula through the acquisition of Mead Johnson, expanded its consumer health presence by acquiring SSL International, Schiff Nutrition, and K-Y, and has exited the food industry. The firm operates in 60 countries and sells products in more than 200, generating around 40% of sales from emerging markets.

Contact
103-105 Bath Road
Slough, Berkshire, SL1 3UH, United Kingdom
T +44 1753217800
Sector Consumer Defensive
Industry Household & Personal Products
Most Recent Earnings Dec 31, 2011
Fiscal Year End Dec 31, 2020
Stock Type
Employees 37,180

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