Reckitt Benckiser Group plc

Good morning and welcome to Racket's Q1 Trading Update. I'm here with our CEO, Chris Licht, and our CFO, Shannon Eisenhardt, who will take you through some prepared remarks before we then take your questions. Before we start, I would like to draw your attention to the usual disclaimer in respect to forward-looking statements contained on page five of our R&S published this morning. I'll now hand over to Chris.

Thank you, Nick. Good morning, everyone, and thank you for joining us. We have delivered a solid start to 2025. with our overall Q1 performance in line with the guidance provided in March. Core record delivered 3.1% like-for-like net revenue growth and volume growth of plus 0.3%, closer to 1% when excluding the SAP pull-forward impact in Q1 last year. Emerging markets was especially strong, reflecting improved in-market execution, double-digit growth in intimate wellness, debt hole, and VMS, and continued momentum in China and India. We've continued to execute our strategy to transform Racket into a more efficient, world-class consumer health and hygiene company. Our sharpened focus on our power brands is delivering both better results and market share gains. Innovation is continuing to drive category growth across many of our markets, with Lysol Air and laundry sanitizers, as well as Mucinex's recent launches, all delivering strong performances and share gains in North America. We have not been immune to market-wide trends within certain categories. In particular, with the timing of the peak of the cold and flu season this year, retailers held higher inventory levels in seasonal OTC as we entered the quarter, with destocking evident through Q1. As you would expect, we've been closely monitoring the evolving situation around tariffs. From what we know, and given where tariffs sit today, we are confident in our ability to mitigate the impact over the short to medium term through a number of levers, including our strong gross margins, our excellent brand equities with pricing power, our geographically diversified supply footprint, including limited Chinese imports to the U.S., and our in-flight manufacturing investments to increase local production such as our new Wilson, North Carolina facility. Despite the macroeconomic and consumer backdrop becoming more uncertain in recent weeks, we are maintaining our outlook for the year while remaining watchful of the evolving landscape. With respect to our planned exit of essential home, we are continuing to progress the separation. The new management team is focused on improving the performance and completing the separation process that is well underway. We are encouraged by the interest that we have seen in the business, and we continue to seek an exit in 2025, although we recognize that market conditions may impact this timeframe. All other elements of our strategic delivery are progressing well. Our Fuel for Growth program has continued to deliver in line with our expectations. Meat Johnson Nutrition is trading well despite a challenging comparative period, and we continue to defend ourselves against all cases in the ongoing litigation. Our new organizational structure is working effectively, and we look forward to sharing insights from our leadership team around how our category organization is driving growth and operational excellence at our investor seminar in May. Let me now pass you to Shannon to take you through our group and segmental performance in Q1 and the drivers behind that.

Thank you, Chris, and good morning. As previously outlined, from the 1st of January this year, we have moved to our new reporting segments of Core Racket, Essential Home, and Mead Johnson Nutrition. Within Core Racket, we are reporting three geographic areas, and are also providing like-for-like net revenue growth across our four global categories. In Q1, we've reported like-for-like net revenue growth of 1.1% across the group, driven by 3.1% growth in core record. As Chris highlighted, within core record, we saw very strong growth in emerging markets, up 10.7%, with 6.8% volume growth, and a 3.9% price mix impact. China continued to deliver strong results with excellent volume and share performance across key power brands in intimate wellness and germ protection, as well as in the VMS segment of self-care. India also performed well, up high single digits, driven by strength in Dettol and Harpix. Our LATAM business saw a modest year-on-year decline as it cycled a tough comparative Q1 due to the sell-in phasing ahead of an SAP implementation in Q2 of last year. Europe saw a 1.7% like-for-like net revenue decline, with volume down 4.7% and price mix of plus 3%. This performance was against a strong Q1 comp last year, which saw significant inventory restocking and a positive phasing of shipments. In the context of slowing market growth in the quarter, we did see good market share momentum, particularly in self-care. Finnish also saw market share momentum, although like-for-like net revenue was broadly flat, as we lapped a high base due to innovation launches in the prior period. Our North American business saw volume decline of 1.8% and price mix of positive 0.9%, leading to a like-for-like net sales decline of 0.9%. Sellout in the quarter remained in growth despite retailer inventory destocking impacting VMS and Mucinex performance, particularly in the drug channel. We saw improved in-market execution with good growth in mass retail and club. Lysol grew low single digits as it continued to benefit from recent innovation launches, despite a slower than expected capacity ramp up to meet strong consumer demand. Now moving on to our global categories. Across self-care, seasonal OTC brands declined mid-single digits. primarily as a result of higher retailer inventory levels at the start of the period, partially offset by strong double-digit growth across our VMS portfolio, led by Mufri in China. Germ Protection saw high single-digit like-for-like net revenue growth, led by double-digit growth in Dettol, as the brand benefited from new innovations in with growth also supported by Lysol, where emerging market adoption continues at pace. Household care saw a modest decline as a function of continued competitive dynamics across the auto dish category, particularly in North America. In Europe, we've seen improved market share performance in Finnish in Q1, as it moves back into gain territory for the quarter. Emerging markets' performance was solid as market penetration continues to drive sales growth. We saw very strong performance in Intimate Wellness, driving strong market share gains through innovation and in-market execution. We launched our first, first-to-the-world innovation, Durex Intensity Condoms in Europe, made from nitrile, and had continued success with our Intima brand in China. Now turning to our non-core segments. As anticipated, essential home like-for-like net revenue declined in Q1. Essential home includes our pest brands in Latin America, which lapped a strong pest season, and much of our business in Brazil, which lapped additional sell-in ahead of an SAP implementation in Q1 last year. We estimate that implementation had roughly a 2% impact on essential home performance. In North America and Europe, we saw market share decline, reflecting continued competitiveness, particularly in the U.S. air care category, with some improving share trends in Latin America. Mead Johnson Nutrition saw like-for-like net revenue growth of negative 0.5%. As we move through 2025, we've rebuilt our supply and availability positioning following last year's disruption from the Mount Vernon tornado. We're pleased to be rebuilding market shares as expected, noting the supply constraints in the second half of 2024 led to a missed cohort of babies when samples and supply were reduced. The quarter also saw a challenging comp with Q124 benefiting from the private label supply challenges and Nutramigen stock refill following our voluntary recall the prior year. We are continuing to progress our £1 billion share buyback program, and as of last Thursday, we had bought back £815 million of shares since this current program commenced in July 2024. Looking ahead to the remainder of the year, we are maintaining our fiscal 25 guidance as set out with our full year results, while remaining mindful of the evolving landscape. We expect group like-for-like net revenue growth of plus 2% to plus 4%, with growth in Mead Johnson and Essential Home second-half weighted. In core record, we continue to target 3% to 4% revenue like-for-like growth for the year, More specifically, for Q2, we expect Europe to deliver low single-digit growth. We expect North America to show low single-digit decline, given the weaker consumer backdrop, as well as the reset of our seasonal OTC business with PE-free reformulated products. We expect emerging markets to continue to deliver mid to high single-digit growth in Q2, and into the second half of the year. And we expect both Europe and North America to deliver growth in the back half as well. As we said previously, our Fuel for Growth program is expected to help drive adjusted operating profit ahead of net revenue growth, and we expect to deliver another year of adjusted diluted EPS growth. With that, let me hand back to Chris to wrap us up.