Highlights: Half Year (HY) unless otherwise stated
- LFL growth +5 percent (+6 percent ex RBP) driven by core areas and categories.
- Q2 LFL growth +4 percent (+6 percent ex RBP).
- Strong gross margin improvement +230bps to 58.7 percent: adjusted operating margin (ex RBP) -10bps1 to 20.4 percent.
- Increased investment in brand equity (BEI), ex RBP, of +80bps and in group capabilities.
- Adjusted net income +6 percent (+5 percent constant): adjusted diluted EPS of 118.3p (+7 percent).
- Strong free cash flow generation of £893m.
- The Board declares a +7 percent increase in the interim dividend to 60p per share.
Commenting on these results, Rakesh Kapoor, CEO, said:
"I am pleased that our strong focus on Health & Hygiene Powerbrands is working and our improved company growth rates confirm that we are making the right strategic choices. Our Health portfolio has had an excellent 1st half, with Mucinex outperforming a very strong market with excellent innovations such as Sinus-Max and the continued success of our Fast-Max line. Durex also delivered an excellent performance supported by creative digital communications across the world, particularly in China which has now become the largest Durex market in the world. In Hygiene, Dettol and Lysol are performing strongly across the world, once again confirming the vast potential of this franchise.
Our organizational focus on 16 Powermarkets, such as China, is another critical element of our growth strategy and is enabling us to sustainably outperform our markets. We have systematically increased our brand investment in all our Areas and at the same time invested in enhancing our capabilities to execute and win.
I am delighted with the progress we have made with our recent strategic M&As. The excellent early results from Schiff confirm that we have acquired very high quality brands in an exciting VMS category which we firmly believe will deliver sustainable shareholder returns.
On Suboxone, we have always been aware of the challenges of operating in a post generic environment. However, we continue to see strong patient and doctor preference for film over tablets and we are very pleased that the film has maintained its volume market share of 69 percent.
We continue to face challenging market conditions. Nonetheless these strong H1 results, our sustained investment behind the equity of our brands, together with excellent progress on the integration of our recent acquisitions, give us confidence that we can achieve full year total revenue growth at the upper end of +5-6 percent range (ex RBP) while maintaining adjusted operating margins.”