Reckitt Benckiser Group plc

Good morning everybody and thank you for joining us for Rekit's half-year 2025 results presentation. I'm Nick Ashworth, I head up investor relations here at Rekit and it's great to have you here in person. I know we've also got quite a few people online today as well. So before we start, can I draw your attention to the usual disclaimer in respect of forward-looking information. So presenting today we have our CEO Chris Licht and our CFO Sharon Risenhart. Following the presentation will be the usual Q&A session. So there's going to be three parts to it. So we'll take questions in the room first. We'll then open up the phone lines and take the questions that we have coming in that way. And then if you want to write questions on the webcast into the text box, I'll come through to me and I will read them out. If you have further questions after the event, then please obviously feel free to reach out to me or the team. We'll be around all day and happy to help. So with that said, let's start the presentation. I'll hand over to Russ.

Thank you, Nick. Good morning, everyone. And welcome to those of you who have joined us online as well. A year ago, we announced a new strategy to reshape Reckitt into a world-class health and hygiene company. There's still a lot of work to do, but the progress we've made is testament to the strength of our power brands and the increased emphasis on delivery and execution right across the business. Our performance in the first half reflects this momentum. And I'm going to start with some of the highlights before handing over to Shannon to take you through our financial performance in more detail. I will then come back and talk about how our strategy is working in practice and our confidence for the rest of the year and beyond. And after that, we'll both be happy to take your questions. We delivered a strong first half with volumes improving quarter on quarter, Core record revenues grew 5.3% in Q2, and we were up by 4.2% for the half. We delivered another period of excellent growth across emerging markets, and we navigated a challenging consumer environment in our developed markets. We grew in three out of our four categories, the exception being self-care, which was slightly down due to the Mucinex shelf reset in the U.S., we are reaping the rewards of our simplified operating model, which has sharpened our focus and has enabled us to make further market share gains and increased volumes sequentially through the half. And our Fuel for Growth program is delivering ahead of plan, enhancing our efficiency, and increasing our ability to invest behind our power brands, further strengthening our platform for sustained top and bottom line growth. Turning to our performance in more detail, we've made progress against all our financial KPIs. Core record delivered 4.2% like-for-like net revenue in the first half, with the group growing at 1.5%. We delivered improved market share with 59% of CMUs in hold gain territory, broadly in line with our 60% target. Adjusted operating profit increased 7%, significantly ahead of revenue growth, reflecting improved efficiency and cost benefits from our Fuel for Growth program. This has helped us deliver first-half EPS growth of 4.4%. And we continue to deliver superior cash returns to shareholders, increasing the interim dividend by 5%, and we're announcing our next £1 billion share buyback program. Alongside this strong momentum in core record and the work we've done to reduce costs, and sharpen our organizational structure, last week we announced an agreement to divest Essential Home. This critical step in our strategy will unlock substantial value in our business. It enables us to focus on our core portfolio of high-growth, high-margin power brands. In the Johnson Nutrition, the business continues to recover well from the impacts of the Mount Vernon tornado last year. We've delivered continued recovery in North American market share and good performance across our international markets. Our stated intention for Mead Johnson remains unchanged, and we continue to consider all strategic options for the business. Overall, we've made a significant progress so far this year, and the journey to fundamentally reshape Reckitt into a more efficient, world-class health and hygiene company is now well underway. While there is a long way to go and we have much more work to do, our strategy is working and we are delivering on the steps we set out 12 months ago. More from me in a moment, but let me stop there and hand it over to Shannon.

Thanks, Chris, and good morning, everyone. We're pleased with the strong performance in the first half, which has been driven by the strategy we set out 12 months ago, starting with key financials for the group. Like-for-like net revenue saw a sequential improvement quarter-on-quarter and grew 1.5% in the period. This was driven by core record, which was up 4.2% in the half, ahead of expectations. Group growth margin was 61% and expanded 40 bps on the prior period. driven by pricing and productivity efficiencies and a more benign environment for cost inflation, with core record gross margin of 62%. Adjusted operating profit grew 7% at constant exchange rates and margin increased 110 basis points to 24.6%, with core record adjusted operating profit margin at 25.9%, helped by a strong performance from our Fuel for Growth program which I'll talk more about later. Taken together, we delivered 168.4 pence of EPS, up 4.4% on an adjusted diluted basis. Looking now at volumes, where we've achieved a sequential improvement across core record through the half and continue to drive a more balanced volume price growth algorithm. Emerging markets continue to see strong volumes, up over 7% in Q2, driven by Dettol in India and China, Intimate Wellness in China, and across Latin America as it lacked a softer comparative period. In Europe, we saw sequential improvement in volumes, helped by Finnish gaining market leadership positions across all its largest markets. In North America, while volumes declined in Q2, This was driven by the shelf reset for Mucinex PE-free finest products ahead of the upcoming season. Double-clicking in the core bracket and the performance across each of our areas. Like-for-like net revenue accelerated in Q2 to 5.3%, delivering 4.2% growth in the first half. Starting with emerging markets, the consumer is strong across all our categories and across all our regions, driving 12.8% like-for-like growth for the half year and up 14.9% in Q2, with a balanced volume and price mix algorithm. In Q2, emerging markets delivered double-digit revenue growth across all categories. This was underpinned by sustained market leadership of Directs and continued strong online momentum of Intima. Dettol delivered strong growth in germ protection, driven by innovations across home cleaning segments and extensions to antiseptic liquid, such as Active Botany, our plant-derived formula range. The VMS portfolio performed well, led by the ongoing success of MuFree and MegaRed in China. And growth in Latin America was driven by Vanish and our surface cleaner brand, Veja, in Brazil. Adjusted operating margin was 19.9%, up 270 basis points on the prior year, with gross margin expansion and delivery of cost savings more than offsetting our increased brand investments. Moving to developed markets, where we've seen our category growth stabilize post-flowdowns at the beginning of the year. Europe saw 0.9% like-for-like decline for the front half of the year, improving to flat like-for-like net revenue in Q2. We made encouraging progress in the half, with Finnish gaining market leadership across all its large markets, driven by stronger operational execution, ensuring price and promo competitiveness every day. And Durex Intensity, our first nitrile condom, successfully launched across a number of European countries, driving both volume and value share gains. This was offset by weaker seasonal self-care performance. Adjusted operating margin was 30.7%, up 70 basis points on the prior year, with cost savings more than offsetting a decrease in gross margins. Turning to North America, like for like, net revenue declined 1.7% in the half, with Q2 softer than Q1, as expected. Strength in our e-commerce and club channels, puts us in a good position heading into the second half of the year. As we flagged back in April, Q2 like-for-likes were primarily driven by the resetting of shelf for Mucinex sinus products, and this was partially offset by the strength of our VMS portfolio, as well as the continued strong share growth of our Lysol Air and Lysol laundry sanitizer products. Adjusted operating margin was 29.6%, in line with prior year, with cost savings offsetting a decline in gross margin. Moving now to our categories. All categories delivered like-for-like net revenue growth in Q2, with self-care and household care moving into positive territory. Excluding seasonal OTC, all categories also delivered volume growth in the quarter. For self-care, while revenues declined 1.7% in the half, the performance of our non-seasonal business was strong, with like-for-like growth of 4%, driven by mid-single growth of Gaviscon and double-digit growth in VMS, with new product launches in both China and the United States. For germ protection, net revenue increased 7.9% in the half, led by Dettol in India and China, and Harpic delivering high single-digit growth in our emerging markets. For household care, net revenue increased 1.7% in the half, where we continue to drive mixed improvement with finished thermoform tabs now accounting for over 75% of net revenue. And finally, intimate wellness net revenue increased 13.5% in the half, with broad-based double-digit growth across both direct and VEEP, as well as continued strong growth in China from our Intima brand, with continued innovation success on the back of a formula upgrade and a travel pack line extension. Looking at our market share data, 59% of Core Reckitt top CMUs were in gain-hold territory through the first five months of the year. This compares to 55% of CMUs across our health and hygiene GBUs that we reported at fourth full-year results in March. We've driven continued sequential improvement as we progress towards reaching and exceeding our 60% target. Looking at our non-core businesses, Need Johnson Nutrition like-for-like net revenue declined 3.3% and a half as we cycled private label outages from last year and as we rebuild market share in our core North America business following last July's tornado. We expect a strong Q3, reversing the post-tornado decline we reported in Q3 of 2024. Essential homes saw some sequential improvement in Q2 over Q1, with like-for-like net revenue decline in the half of 6.5%. We continue to expect to see improved performance in the second half. Moving now to group adjusted operating profit. Consistent with our strategic ambition and in line with our guidance, we delivered profit growth ahead of net revenue at the group level. Group adjusted operating profit was up 7% at constant currency with margins up 110 basis points year over year at 24.6%. 40 basis points came from gross margin expansion. while marketing investment increased 120 basis points as we continue to invest in our brand equities ahead of net revenue growth. This investment was made possible through continued reduction of our cost base through our Fuel for Growth program. Looking at Fuel for Growth in a little more detail, we're making very strong progress on optimizing our cost structure. We achieved 190 basis point reduction in our fixed costs in the first half of the year versus prior period. As expected, two of our four cost savings areas are driving these early reductions. The first is organizational simplification. With a focus on reducing management layers from five to three, this is where a significant portion of the upfront cost savings have materialized as we stood up core bracket in January. The second is around right-sizing legacy investments. embedding capabilities into our areas, and reducing duplication between the center and our markets. These are the savings that we've been able to execute relatively quickly. Cost savings from automation and shared services and digital and Gen AI will take longer to deliver a significant impact. Take shared services as an example. We're making progress. We've already harmonized and deployed HR services in many markets, supported by four global hubs. There's still a lot to do to set up a truly shared services capability that spans across functions and with a focus on end-to-end processes. It's important to remember that we will deliver these savings while also mitigating stranded costs as we continue to exit non-core businesses. Looking at the numbers as we set out last July, our target is to exit 2027 with a 300 basis point reduction in fixed costs, landing us at 19% versus 22% in 2023. And our goal has not changed, with group fixed costs now at 20% of net revenue at the half year. Our results to date give us even greater confidence in achieving this target. For the full year, we expect to deliver ahead of a linear cost savings trajectory. And it's important to remember that we're lapping the insurance proceeds for Mount Vernon that was recorded as a 30 basis point offset to fixed costs in 2024. And the second half of the year historically has a higher cost weighting than the first. In terms of the cost to deliver our program, we continue to expect it to be around 1 billion pounds and for this to be around 500 million pounds in 2025. Turning now to EPS, which grew ahead of net revenue at 4.4% in the period to 168.4 pence. This was primarily driven by our 110 basis point improvement in adjusted operating margin and our ongoing share buyback program. partially offset by higher net interest in the period, as well as the strength of the sterling, our reporting currency. We delivered free cash flow of £623 million. As expected, this was lower year-on-year, given the one-off costs of our Fuel for Growth program. We've increased our half-year dividend by 5%, and we continue to return excess cash to our shareholders. Having completed our last £1 billion share buyback program at the end of June, we've announced a new £1 billion program this morning. In aggregate, we've now announced or completed £3 billion of cumulative share buyback since we launched the program in 2023. We do this while maintaining a strong balance sheet, with net debt to EBITDA at 2.1 times, consistent with our capital allocation framework, which remains unchanged. Finally, turning to our expectations for the rest of 2025. Given our strong first half performance and continued confidence in the second half, we're now targeting over 4% like-for-like net revenue growth in core record, up from 3% to 4% previously. This will continue to be led by emerging markets, although its growth should moderate as we start to lap strong quarters. We now expect low to mid single-digit like-for-like growth for the year in Mead Johnson Nutrition and a reversal of last year's Q3 performance as it lapsed the impact of the tornado in 2024 July. We expect continued sequential improvement in Essential Home and for it to deliver low single-digit like-for-like decline for the full year. Taking this together, we now expect to see group net revenue, like-for-like growth in the 3% to 4% range. We expect to drive adjusted operating profit ahead of net revenue growth with fuel for growth benefits, enabling us to continue to increase investment behind our brands and to sustainably increase margins. With adjusted net finance expense of 350 to 370 million pounds and an effective tax rate of around 25%, we continue to expect to deliver another year of EPS growth. I'll now hand it back to Chris to talk about our strategic priorities.