Financial Data and Key Metrics Changes - The company reported a 0.5% like-for-like net revenue decline for Q3 2024, primarily driven by a 17.4% decline in the Nutrition business due to the Mount Vernon tornado impact [8][11] - The combined Health and Hygiene businesses grew by 2.6% in the quarter, with Hygiene growing by 2.1% and Health by 3.2% [8][10] - Year-to-date volume growth in Hygiene was 0.9%, with Q3 volume growth at 0.7%, led by Lysol [8][9] Business Line Data and Key Metrics Changes - Health delivered a 1.9% like-for-like net revenue growth year-to-date and 3.2% in Q3, driven by Durex, Dettol, VMS, and Gaviscon [10] - The Nutrition segment experienced an 11.6% like-for-like net revenue decline year-to-date and a 17.4% decline in Q3, primarily due to supply constraints from the tornado [11][12] - Hygiene's performance was broad-based, with core Powerbrands like Finish, Vanish, and Harpic contributing to growth, despite a tougher comparison for Finish in Q3 [9][10] Market Data and Key Metrics Changes - The company noted strong market share gains in the Health business, with improvements across OTC brands, Durex, and Dettol [4][10] - The U.S. Nutrition market share is under pressure due to supply constraints, but the company expects recovery in the next 6 to 9 months [33][34] - Developing Markets delivered stable performance with low single-digit growth [12] Company Strategy and Development Direction - The company is focused on portfolio sharpening and organizational simplification, with a new operating model set to be deployed in January 2025 [5] - The share buyback program is progressing, with GBP 321 million worth of shares repurchased since July [5] - The company plans to exit the Essential Home business by the end of 2025, with a seasoned leadership team in place to manage the transition [5][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year net revenue growth targets of 1% to 3%, with expectations for acceleration in Q4 [13] - The company anticipates a strong Q4 driven by underlying brand strength and easier comparatives from the previous year [13][22] - Management remains optimistic about the Health business's competitiveness and market share gains [4][10] Other Important Information - The company is actively managing litigation related to Mead Johnson, with no significant impact on brand equity expected [6][7] - Insurance proceeds related to the Mount Vernon tornado are expected to be recognized within 2024 and will be accounted for in EBIT [58][59] Q&A Session All Questions and Answers Question: Can you dig into market share commentary and gross margins versus BEI spend in the second half? - Management noted improvements in market shares across Health and Hygiene, with Health trending above 60% [16] - Gross margins guidance was not provided, but management does not expect significant differences in the second half [18] Question: How should we think about the bridge from current growth rates to mid-single digits? - Management indicated that the current lower growth rates are not indicative of long-term trends, with expectations for a strong Q4 and recovery in 2025 [22][23] Question: Can you provide details on the Essential Home carve-out and operational risks? - The exit from Essential Home will involve signed agreements, with operational performance being closely managed during the transition [24][26] Question: What are the uncertainties heading into Q4 regarding guidance? - Management reiterated the 1% to 3% guidance range, citing strong momentum and easier comparatives for Q4 [29] Question: Can you elaborate on Nutrition market shares and cold and flu trends? - Management expects to recover market shares in Nutrition over the next 6 to 9 months, with planning for an average cold and flu season [35][36] Question: How are pricing actions impacting Health and Nutrition? - Pricing in Health was primarily price-driven, while Nutrition faced a negative price impact due to supply management [54][55] Question: What is the status of Mead Johnson and potential sale? - Management views Mead Johnson as a strong business but indicated that timing for any sale will depend on the resolution of ongoing litigation [56][57]
Reckitt Benckiser(RBGLY) - 2024 Q3 - Earnings Call Transcript