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Reckitt Benckiser Group reports 45.9% Net Income decline and 0.87 pp EBITDA Margin growth from 26.3% to 27.2%

15 Feb 2016 • About Reckitt Benckiser Group ($RB.) • By InTwits

Reckitt Benckiser Group reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
  • Reckitt Benckiser Group has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.8%. At the same time it's in pair with industry average of 2.5%.
  • CAPEX is quite volatile: 240 in 2015, 717 in 2014, 203 in 2013, 133 in 2012, 113 in 2011
  • The company has highly profitable business model: ROIC is at 20.3%
  • It operates with high leverage: Net Debt/EBITDA is 0.7x while industry average is -0.7x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

Reckitt Benckiser Group ($RB.) key annual financial indicators

mln. £201120122013201420152015/2014
P&L
Revenue9,4859,5679,2668,8368,8740.4%
Gross Profit5,4495,5385,2585,0965,2462.9%
SG&A2,8972,8284,1733,8583,8670.2%
EBITDA2,5522,5902,0422,3252,4123.7%
Net Income1,7451,8211,7393,2231,743-45.9%
Balance Sheet
Cash639887808917740-19.3%
Short Term Debt2,5053,2712,1691,9361,749-9.7%
Long Term Debt335986366715.5%
Cash flow
Capex164166199157154-1.9%
Ratios
Revenue growth12.2%0.9%-3.1%-4.6%0.4%
EBITDA growth12.2%1.5%-21.2%13.9%3.7%
Gross Margin57.4%57.9%56.7%57.7%59.1%1.4%
EBITDA Margin26.9%27.1%22.0%26.3%27.2%0.9%
Net Income Margin18.4%19.0%18.8%36.5%19.6%-16.8%
SG&A, % of revenue30.5%29.6%45.0%43.7%43.6%-0.1%
CAPEX, % of revenue1.7%1.7%2.1%1.8%1.7%-0.0%
ROIC24.8%23.3%17.3%19.7%20.3%0.5%
ROE32.4%31.3%28.4%49.0%25.4%-23.6%
Net Debt/EBITDA0.7x0.9x1.0x0.7x0.7x-0.0x

Revenue and profitability


Reckitt Benckiser Group's Revenue showed almost no change in 2015. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 0.87 pp from 26.3% to 27.2% in 2015.

Gross Margin increased slightly on 1.4 pp from 57.7% to 59.1% in 2015. SG&A as a % of Revenue showed almost no change in 2015.

Net Income marign dropped on 16.8 pp from 36.5% to 19.6% in 2015.

Capital expenditures (CAPEX) and working capital investments


The company's CAPEX/Revenue was 1.7% in 2015. Reckitt Benckiser Group's CAPEX/Revenue showed almost no change from 2012 to 2015. For the last three years the average CAPEX/Revenue was 1.9%.

Return on investment


The company operates at high and attractive ROIC (20.27%) and ROE (25.38%). ROIC increased slightly on 0.53 pp from 19.7% to 20.3% in 2015. ROE dropped on 23.6 pp from 49.0% to 25.4% in 2015.

Leverage (Debt)


Debt level is 0.7x Net Debt / EBITDA and 1.0x Debt / EBITDA. Net Debt / EBITDA decreased slightly on 0.015x from 0.7x to 0.7x in 2015. Debt decreased on 5.9% in 2015 while cash dropped on 19.3% in 2015.

Appendix 1: Peers in Household Goods & Home Construction


Below we provide Reckitt Benckiser Group benchmarking against other companies in Household Goods & Home Construction industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.

Top companies by Revenue growth, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Taylor Wimpey ($TW.)2.3%11.7%13.7%17.0%
Abbey ($ABBY)5.6%40.0%15.9%51.0%
Colefax Group ($CFX)-9.4%0.3%10.5%-1.6%
Teco Electric & Machinery Co Ltd ($TECD)3.9%4.1%16.2%-5.1%
Havelock Europa ($HVE)0.3%1.3%-11.1%-6.9%
 
Median (7 companies)1.3%4.1%13.7%-5.1%11.3%
Reckitt Benckiser Group ($RB.)0.9%-3.1%-4.6%0.4%


Top companies by Gross margin, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Colefax Group ($CFX)55.1%55.1%55.4%53.3%54.7%
Abbey ($ABBY)24.5%23.6%17.3%25.8%30.6%
Teco Electric & Machinery Co Ltd ($TECD)22.9%23.5%23.8%24.9%
Taylor Wimpey ($TW.)15.9%17.6%21.6%23.8%
Depa Ltd ($DEPS)16.6%8.1%8.1%13.4%
 
Median (6 companies)19.8%20.6%19.5%24.4%42.7%
Reckitt Benckiser Group ($RB.)57.4%57.9%56.7%57.7%59.1%


Top companies by EBITDA margin, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Abbey ($ABBY)20.7%19.4%13.3%22.6%31.2%
Taylor Wimpey ($TW.)8.5%11.2%15.6%18.6%
Teco Electric & Machinery Co Ltd ($TECD)9.7%10.8%10.7%10.7%
Colefax Group ($CFX)10.9%6.6%7.6%9.1%8.7%
Airea ($AIEA)6.9%5.9%7.4%7.0%8.0%
 
Median (7 companies)9.3%6.6%7.6%9.1%8.7%
Reckitt Benckiser Group ($RB.)26.9%27.1%22.0%26.3%27.2%


Top companies by CAPEX/Revenue, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Abbey ($ABBY)9.4%12.2%6.5%8.0%8.0%
Teco Electric & Machinery Co Ltd ($TECD)2.7%1.4%1.4%3.6%
Colefax Group ($CFX)3.7%4.9%3.1%2.0%2.9%
Depa Ltd ($DEPS)4.1%2.4%1.1%1.1%
Airea ($AIEA)2.1%2.7%1.0%0.7%1.8%
 
Median (7 companies)2.7%2.4%1.3%1.1%2.9%
Reckitt Benckiser Group ($RB.)1.7%1.7%2.1%1.8%1.7%


Top companies by ROIC, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Colefax Group ($CFX)27.6%10.7%13.5%22.0%20.6%
Taylor Wimpey ($TW.)7.5%12.2%17.7%21.7%
Abbey ($ABBY)5.8%5.4%4.7%11.2%21.1%
Teco Electric & Machinery Co Ltd ($TECD)6.3%7.1%8.3%7.3%
Airea ($AIEA)6.0%3.3%7.2%6.4%11.7%
 
Median (7 companies)6.0%5.4%7.2%7.3%20.6%
Reckitt Benckiser Group ($RB.)24.8%23.3%17.3%19.7%20.3%


Top companies by Net Debt / EBITDA

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Havelock Europa ($HVE)3.7x1.4x0.1x-0.2x
Taylor Wimpey ($TW.)0.8x0.3x-0.0x-0.2x
Colefax Group ($CFX)-0.7x-1.8x-1.4x-0.6x-1.0x
Abbey ($ABBY)-1.8x-1.5x-2.6x-1.2x-1.3x
Airea ($AIEA)-1.5x-0.9x-1.5x-1.2x-0.9x
 
Median (7 companies)-0.4x-0.4x-1.2x-1.2x-1.0x
Reckitt Benckiser Group ($RB.)0.7x0.9x1.0x0.7x0.7x


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