Reckitt Benckiser(RBGLY) - 2020 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a like-for-like growth of 13% in Q1 2020, indicating a strong start to the year despite the challenges posed by Covid-19 [15][19] - The company expects to perform better than originally anticipated for the year, although the outlook remains uncertain due to ongoing Covid-19 challenges [19][20] Business Line Data and Key Metrics Changes - Hygiene and health segments showed consistent growth, with brands like Dettol and Lysol experiencing exceptional and sustained growth due to increased usage and penetration [16][45] - The infant formula and nutrition (IFCN) business declined by 2% on a like-for-like basis, primarily due to a tough comparison with a stronger Q1 in 2019 and ongoing product transitions in China [17][39] - E-commerce sales grew over 50%, with total e-commerce sales exceeding 10% for the first time in Q1 [19] Market Data and Key Metrics Changes - North America saw strong growth driven by increased demand for hygiene products, particularly in March as consumers responded to Covid-19 [18] - Emerging markets experienced mid-single-digit growth overall, with specific challenges in India due to shutdowns and physical dislocations [50] Company Strategy and Development Direction - The company aims for mid-single-digit organic revenue growth and mid-20s margins by 2025, with a focus on executing its transformation strategy [9][20] - The organization is being restructured into three global business units: hygiene, health, and nutrition, with specific strategies for China and e-commerce [11] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the unprecedented challenges posed by Covid-19 but expressed confidence in the company's ability to adapt and respond to changing consumer needs [6][12] - The company is investing in capacity to meet growing demand and is focused on maintaining safety for employees while navigating operational challenges [20][36] Other Important Information - The company launched the RB Fight for Access Fund to support frontline health workers and communities, committing 1% of adjusted operating profit to various initiatives [14] - The company has made significant investments in supply chain agility and capacity to address the increased demand for its products [33][36] Q&A Session All Questions and Answers Question: Understanding growth numbers and new customer engagement - Management noted increased penetration and usage in hygiene categories, particularly for Dettol and Lysol, and emphasized the importance of customer engagement and service improvements [26][27] Question: Guidance on performance and margins - Management indicated that while there are uncertainties, they expect performance to be better than previously communicated, with some positive margin tailwinds from commodity costs and volume leverage [30][48] Question: Supply chain concerns and capital expenditure - Management reassured that supply chain planning has improved significantly, and while there are challenges, they are actively working to ramp up supply and manage investments [35][36] Question: Market share gains and R&D outlook - Management confirmed strong market share performance across various categories, driven by consumer trust in established brands, and emphasized the ongoing importance of R&D for future product development [72][73] Question: Infant nutrition in China and growth outlook - Management acknowledged the challenges in the infant nutrition segment but highlighted encouraging progress in premiumization and e-commerce strategies [74][75]