Reckitt Benckiser Group plc

So good morning, everybody, and thank you for joining us for Rekit's full year 2025 results presentation. I'm Nick Ashworth, I head investor relations here at Rekit. So before we start, can I draw your attention to the usual disclaimers in respect to forward-looking information? So presenting today, we have our CEO, Chris Licht, and our CFO, Shannon Eisenhardt. Following the presentation will be the usual Q&A session. We're going to take questions from the room first, as we always do, and then followed by the written questions via the webcast. For those of you who have joined online, please feel free to submit your questions via the questions tab, which I think is at the top of the screen, and I will read them out. And if you've got further questions after the event, please feel free to reach out to me or the team, and we'll be happy to help. So with that said, I'm going to hand over to our CEO, Chris Lick, to start the presentation.

Thank you, Nick. And good morning to everyone in the room and those who have dialed in. I'll start with an overview of our 2025 results and some of the key highlights from the year. And then Shannon will take you through our financial performance. I'll then come back and provide an update on our key priorities for 2026 and some of the elements of our winning playbook. After that, we'll both be happy to take your questions. 2025 was a year of strong financial delivery as we continue to deliver on our strategy. Core record net revenue grew 5.2% ahead of our improved half-year guidance of above 4%. Group net revenue increased 5%, including lead Johnson growth at 3.8%. This was driven by emerging markets, with China and India growing double digits in the fourth quarter. In our developed markets, a weaker season held back growth, and the consumer environment in Europe remains tough. However, this was more than offset by a strong non-seasonal performance in North America. Adjusted operating profit increased 5.3%, underpinned by the benefits of the Fuel for Growth program. Core record margins expanded 90 basis points to 26.7%, with emerging markets margins growing 210 basis points to 20.9%. We are delivering profitable growth at scale. EPS grew 1.1% and was supported by our ongoing share buyback program, offset by a higher year-on-year effective tax rate, in line with our guidance. And we delivered another year of strong cash returns, with 2.3 billion pounds returned to shareholders through dividends and our share buyback program. Looking at our non-core businesses, we completed the divestment of Essential Home to Advent in December, and we returned a further 1.6 billion pounds to shareholders via a special dividend in February. Mead Johnson Nutrition grew net revenues by 3.8% as trading normalized. we continue to consider all strategic options for that business. So we made strong progress delivering against all our strategic priorities during the year. We simplified and sharpened the portfolio supported by the divestment of essential home And this has allowed us to focus exclusively on 11 high-growth power brands with increased investment, increased accountability, faster decision-making, showing through in our results, in particular in emerging markets. We delivered superior innovation with launches across all our categories. Some were new products with the power to disrupt, such as our Durex Intensity Condom, which we've rolled out to 18 countries in 2025. And many others are extensions and improvements helping us to grow loyalty and win new consumers. They included new fragrances for Lysol air sanitizer, for Dettol antiseptic liquid, as well as Nurofen mini liquid caps and dual action cough and sore throat products from Strepsils. We've generated significant benefits from our Fuel for Growth program. This has supported increased investment in our brands to drive revenue, expand margins, and deliver our ambition of sustained earnings growth. We feel good about the program, and we believe we can go further. Shannon will come to this later. And finally, improved execution has strengthened our competitive position. In China, strong e-commerce growth has enabled us to capture more digital-first consumers. And in North America, our omni-channel partnerships and quick commerce are accelerating and widening access to our portfolio. For example, by bringing Mucinex to consumers in 30 minutes, with 68% of buyers new to the brand. Building on this final point, executional excellence can only happen with a strong supply chain. This has been a big focus of mine since becoming CEO. It's critical to have a supply chain that reflects the quality of the brands and the products that we make. Historically, modest investment in our supply chain created risk and led to inconsistent performance. We have started to address that by investing in greater levels of localization, automation, and digitization, building a supply chain that is more scalable and resilient as we continue to grow. You can see this in the actions we're taking. On the manufacturing side, there is a lot going on. For example, we're rationalizing and improving our China footprint, installing new Durex lines in our state-of-the-art Taichung factory, with a new China Science and Innovation Center due to open this summer in Shanghai. We're increasing our North America footprint with our new factory in Wilson, North Carolina, which is on track to open next year. And we've also enhanced our Lysol toilet bowl cleaner capacity and capability at our Bellmead plant. We're adding a new generation of lines at our Polish factory to support innovation behind Finnish. And we're investing in new Gaviscon capacity in Thailand, initially to support growth in Europe and Australia and ASEAN in the longer term. And as part of Fuel for Growth, digital and AI and GVS will enable greater effectiveness and efficiency right across the supply chain. We've stepped up investment in CapEx to £592 million in 2025. and this is starting to deliver results across the portfolio with a few examples shown here on the slide. Our service levels have increased across Europe and North America, and we're driving improved factory operational performance with good early results, in particular in emerging markets. There's more to do, but we have made great progress on the supply chain over the past 18 months. So in summary, I'm proud of what our teams have achieved in 2025. Our actions have repositioned Reckitt as a world-class health and hygiene company. Our focused portfolio of power brands are in the right categories, driving premiumization and benefiting from geographic diversity. We have a proven playbook for how to grow and expand our brands, and we're executing more consistently against it. Our foundations are strong, and we're making them stronger. There is much more to do, and I will come back to you to talk about our priorities for the year ahead shortly. But let me stop now and hand over to Shannon for more detail on our financial performance.

Thanks, Chris, and good morning, everyone. Let me start by running through the key financial highlights and the strong progress we made in 2025. Core record like-for-like net revenue grew 5.2%, with volume growth of 1.5% and price mix of 3.7%. Excluding seasonal OTC, core record grew 7% year-on-year. Core record's growth was led by emerging markets, up 14.6%. Group like-for-like net revenue increased 5%. We held core record gross margin flat at 62.2%, with group gross margin above 60%, expanding 10 basis points year-on-year, as productivity efficiencies more than offset the impact of tariffs. Adjusted operating profit margin for core record increased 90 basis points, helped by our Fuel for Growth program, with group adjusted operating profit margin up 40 basis points to 24.9%, At constant currency, group-adjusted operating profit grew 5.3% year-on-year, with adjusted diluted EPS up 1.1%. Looking now at volumes for the year, where core record volumes grew 1.5%. In emerging markets, we delivered broadly balanced growth, with volumes up 6.7%. led by online launches and increased penetration in China, as well as expanded distribution reach in India. In Europe, volumes declined 3.1%, reflecting category growth rates slowing throughout the year. This was compounded by a weaker cold and flu season in Q4. In North America, volumes were flat. Encouragingly, volumes improved sequentially in the second half, driven by the performance of our non-seasonal brands. Turning next to performance across each of our areas and starting with emerging markets. Growth was broad-based across all categories and all regions. China delivered its 10th sequential quarter and another year of double-digit growth, driven by strong performance in Dettol with innovations and extensions such as Active Botany. Ongoing strength in VMS and sustained market leadership in Intimate Wellness across both Durex and Intima. India delivered high single-digit growth for the year, driven by our offline execution as we continued to increase distribution points. We've also seen double-digit growth across a number of our smaller markets, including Indonesia, Colombia, and Malaysia. We're pleased that we're driving this growth while expanding our adjusted operating profit margins, 210 basis points on the prior year, to 20.9%. This has been driven by continued gross margin expansion, which includes mixed benefits from continued outperformance in self-care and intimate wellness. Moving on to Europe, where net revenue declined 1.4% for the year. During the year, category growth rates slowed to being broadly flat. We saw increasing promotional activity across the area, as well as a softer season in Q4. However, our premiumization strategy continued to deliver price-mix benefits. We continued to focus on our power brands and showing up competitively on shelf for our consumers every day, which enabled us to maintain market leadership positions. Finnish declined low single-digit but remained the category leader in Europe, supported by continued premiumization. In self-care, non-seasonal OTC grew low single-digit, led by strong performance from Gaviscon, partially offset by a mid-single-digit decline in seasonal OTC brands. Durex delivered low single-digit growth, driven by the successful launch of Durex Intensity, our new nitrile condom, enhancing our category leadership. Adjusted operating profit margin was 31.4%, up 130 basis points on the prior year, with strong delivery from cost savings and efficiencies, offsetting stable gross margins and volume declines. Now, in North America, like-for-like net revenue growth was broadly flat at 0.2%. Our non-seasonal brands, which represent around 70% of our portfolio, performed well with low single-digit growth against a soft category backdrop. Lysol grew low single digits, supported by strong core business execution, particularly in wipes, and the continued momentum of recent innovations with laundry sanitizer and air sanitizer, both growing double digits year on year. And while our seasonal OTC business declined mid-single digit, reflecting the soft season, our non-seasonal self-care business grew double digits in 2025, driven by successful innovation launches across Nereva, Mufri, and BioFreeze. Adjusted operating profit margin at 30.1% was down 30 basis points year-on-year, with cost savings partially offsetting a decrease in gross margins, driven by category mix. Now, turning to our categories. Self-care net revenue increased 3% on a like-for-like basis. Seasonal OTC declined mid-single digits, more than offset by high single-digit growth in our non-seasonal self-care business. Gaviscon grew high single digits, and we delivered double-digit VMS growth for the year. For germ protection, net revenue increased 8.4% on a like-for-like basis, This was led by double-digit growth in debtol across emerging markets, including high single-digit growth in India and double-digit growth in ASEAN and China behind the launch of new innovations. Harpic grew mid-single digits, with emerging markets offsetting a softer consumer environment in Europe. Moving on to household care, like-for-like net revenue declined 0.4%. Finish was broadly flat year-on-year with double-digit growth in emerging markets offset by softness in both Europe and North America. Vanish was flat with strength in China offsetting softness in LATAM and mid-single-digit declines in Europe. Finally, intimate wellness was our fastest-growing category with net revenue up 12.5% on a like-for-like basis. Durex delivered double-digit growth supported by ongoing product innovation, notably the successful launch of Intensity in Europe and additional Durex launches in China and India. Vite also delivered double-digit growth in 2025, and Intima's like-for-like net revenue almost doubled as brand adoption in China accelerated. Looking at our market share data, as expected, our seasonal business has some share weakness given the soft season. So 51% of Core Reckitt's top CMUs were in gain or hold territory for the year. Turning to our non-core business, Mead Johnson Nutrition delivered like-for-like net revenue growth of 3.8% in 2025, driven by our specialty brands, particularly Nutramigen in the North America business with favorable price mix. The business also benefited from rebuilding retail inventories following the Mount Vernon tornado in July of 2024. Mead Johnson Nutrition International grew low single digits. Adjusted operating profit margin increased by 150 basis points to 20.4%, reflecting favorable gross margin progression on higher-than-normal production volumes, as well as insurance proceeds. Essential home is excluded from like-for-like net revenue growth following the disposal completion before year-end. Operating profit is included until the disposal on December 31st of 2025. Our Fuel for Growth program continues to drive meaningful simplification and improved effectiveness across our business. We've made strong progress against each of our focus areas, and our actions are enabling us to deliver savings faster and more efficiently than originally planned. Our investments in digital and AI are creating value, particularly in marketing, with automation and shared services also progressing well. The larger impact from these areas will build progressively over time. In 2025, group fixed costs were 19.4% of net revenue, 150 basis point improvement year over year. As expected, this ratio will rise in 2026 before declining again in 2027, driven by two factors. First, the mitigation of stranded costs following the sale of essential home. And second, a smaller net revenue denominator resulting from the transaction. Program delivery costs in 2025 were below our 500 million pound guide due to pacing and phasing of costs and around 200 million pounds of restructuring and separation costs that were offset against essential home proceeds. With this progress and disciplined execution, we remain on track to deliver within the £1 billion investment envelope and now expect to exit 2027 with a fixed cost base below 19%. Reviewing our progress shows the benefits this program's delivering. We delivered 90 basis points of savings in 2024. 30 basis points went back into increased BEI investments. In 2025, we've driven 150 basis points of savings, which enabled 120 basis point step-up in BEI investment. We're investing more behind our brands to fuel our top-line growth, while also growing our margins. And importantly, we're enhancing our functional capabilities to enable sustainable growth going forward. In 2025, consistent with our guidance, we grew group-adjusted operating profits ahead of net revenues, up 5.3% at constant currency. Our fuel-for-growth savings enabled us to step up investment behind our brands and also drove group operating profit margins up 40 basis points to 24.9%. Turning now to earnings, EPS grew 1.1% over the year to 352.8 pence. This was driven by net revenue and profit growth and further supported by a lower share count resulting from our share buyback program. These benefits were partially offset by a higher effective tax rate and adverse foreign exchange impacts, both totaling a 7% headwind to EPS. In total, we returned £2.3 billion to shareholders through dividends and share buybacks. This included £900 million of share repurchases, and we will shortly commence the final tranche of our current buyback program, which was announced at the half-year. We delivered free cash flow of £1.7 billion, with a conversion rate of 71%, including one-off cash costs associated with transformation and restructuring. Net debt to adjusted EBITDA closed the year at 1.6 times, reflecting the proceeds received on December 31, 2025, from the essential home divestment. Adjusting for the £1.6 billion that was returned to shareholders last month via a special dividend, our net debt to EBITDA ratio would have been roughly two times at the end of 2025. As we move through 2026, we expect leverage to rise towards 2.5 times by half-year, given continued investment in the group and the lower EBITDA denominator post-investment, before starting to trend back down through 2027. The Board is proposing an increase to our full-year dividend of 5%, consistent with our aim of delivering sustainable dividend growth. Our disciplined capital allocation framework remains unchanged. Our priority continues to be investing in organic growth, as we've done in 2025, with a step up in investment behind our supply chain and R&D capabilities. We aim to continue to pay a progressive dividend, and we will manage the portfolio for value creation, continuing to return excess cash to shareholders through our share buyback program, as well as any excess proceeds from future transactions, as we look to continue to deliver attractive total shareholder returns. Now turning to guidance for 2026. First, core record. In 2026, we expect to deliver 4% to 5% net revenue growth in line with our medium-term guidance. This again will be led by emerging markets growth. We expect the challenging environment in Europe to remain, where we're taking actions that are already having an impact. And similar to the fourth quarter, Q1 will be negatively impacted by the softer season. Given these factors, in Q1, we expect core record net revenue growth to be below our full-year guide. In our non-core Mead Johnson nutrition business, we expect low single-digit like-for-like growth in 2026, with a mid-single-digit net revenue decline in Q1 as we lack retailer inventory build from Q1 2025 post the tornado. At the group-adjusted operating profit level, we aim to largely offset stranded costs associated with the essential home divestment through our Fuel for Growth program. Finally, looking at EPS, we'll receive income from our participation investancy, the essential home vehicle, in three different ways. Non-cash interest income from our $300 million U.S. dollar vendor loan note, which is part of our net interest guide. associate income from our 30% equity state, and around 25 million pounds of pre-tax income from service and other agreements we're providing. The share consolidation and ongoing share buyback will reduce share count and will provide updates on foreign exchange impacts as we progress through the year. our ambition remains to deliver long-term, sustainable EPS growth, acknowledging in 2026 the dilution headwind resulting from the divestment of essential home. I'll now hand back to Chris to talk about our strategic priorities for the year ahead.