Highlights:
LFL net revenue growth +3% (+4% ex RBP) driven by excellent consumer health performance.
Q2 LFL net revenue growth +3% (+4% ex RBP).
Gross margin improvement +60bps to 59.3%.
Continued strong investment in brand equity (BEI) with improved efficiency.
Adjusted operating margin (ex RBP) +40bps to 20.8%.
Continuing operating margin expansion targeted for second half (ex RBP).
Adjusted net income -4% (+7% constant); adjusted diluted EPS of 113.4p (-4%).
Strong free cash flow generation of £729m, a conversion rate of 90% of net income.
The Board declares an interim dividend of 60p per share (2013: 60p).
RB Pharmaceuticals strategic review - pursuing a UK listed de-merger.
Commenting on these results, Rakesh Kapoor, Chief Executive Officer, said:
"Our focus and investment behind consumer health continues to deliver profitable growth, and our Hygiene category is improved after a slow start. Home performance was weak in challenging market conditions. It is early days but we have made good progress on integrating our recent K-Y acquisition.
We are renewing our focus on efficiency throughout the group and have seen efficiencies in media planning and buying benefitting the first half. We will make further structural efficiencies within our business in the second half and into next year. These and other programmes will continue to ensure an efficient platform to invest for future growth.
We believe market conditions will remain challenging in the second half of the year, particularly in the USA and certain emerging markets. Nonetheless we remain on track to achieve our full year total revenue growth target1 of 4-5% (ex RBP). Furthermore, we are gaining good traction from our planned efficiency programmes and we expect to have continuing margin expansion in the second half2 (ex RBP).
We believe that RB Pharmaceuticals has the potential to deliver significant long term value creation as a stand-alone business. We have therefore decided to pursue a demerger of RB Pharmaceuticals with a separate UK listing. We expect this to take place over the next 12 months. This will also allow RB to focus on its core strategy to be a global leader in consumer health and hygiene."
