Reckitt Benckiser(RBGLY) - 2022 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a like-for-like growth of 7.4% in Q3 and 8.2% year-to-date, with 63% of core CMUs either growing or holding market share [11][12] - Price and mix contributed 12% to growth in Q3, while volume decreased by 4.6%, with overall volumes down 1% when excluding Lysol [12][13] - The company raised its full-year net revenue growth expectation to between 6% and 8% [23] Business Line Data and Key Metrics Changes - Hygiene segment saw a like-for-like net revenue decline of 1.2%, but excluding Lysol, it grew by 3.3% [15] - Health segment delivered around 20% growth in Q3, with Dettol's revenue remaining well above pre-pandemic levels [18] - Nutrition business experienced over 40% revenue growth in the U.S., aided by competitor supply issues [20] Market Data and Key Metrics Changes - The company noted that high inflation and energy costs would impact consumer behavior, particularly in discretionary categories like air care [22] - In Europe, there were slight market share losses to private label brands, particularly in hygiene categories [54] Company Strategy and Development Direction - The CEO emphasized a focus on executing the existing strategy, aiming for mid-single-digit growth and mid-20s margins by the mid-2020s [6][26] - The company plans to invest in innovations and improve execution in markets to drive sustainable growth [7][8] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenging market conditions but expressed confidence in the company's resilience and ability to meet revenue and margin targets for 2022 [26] - The CEO search process is ongoing, with no specific timeline provided, but it is expected to take 9 to 12 months [9][45] Other Important Information - The company is experiencing a normalization in Lysol and Dettol sales, with expectations for improved performance in the fourth quarter [15][50] - Input cost inflation is expected to be in the high teens for the year, with the second half reflecting higher inflation than the first half [62][64] Q&A Session Summary Question: Hygiene sales growth deceleration - Management noted that the slowdown in Hygiene sales, excluding Lysol, was primarily due to category performance rather than market share losses [34] Question: Strategy continuity - The CEO confirmed that the current strategy is fully endorsed by the Board and will remain unchanged for the foreseeable future [32] Question: Finish brand performance - Management acknowledged that while Finish had strong revenue growth, market share in the U.S. is not where it should be, and plans are in place to improve it [42] Question: Input cost inflation - The company reiterated that input cost inflation is expected to be in the high teens, with no change from previous guidance [62] Question: U.S. Nutrition business dynamics - Management expects to retain a significant portion of the market share gained during competitor supply issues, but competition will normalize by the end of the year [67][68] Question: Pricing strategy - The company has implemented significant pricing increases and expects to continue to manage costs effectively through productivity programs [72][74] Question: IFCN business growth - Management reported strong market share gains in Latin America and ASEAN, with mid-single-digit growth being satisfactory given the context [75][77]