Reckitt Benckiser Share Price (RB.)

Reckitt Benckiser: Deutsche Bank ups target price from 4600p to 4800p and stays with its buy recommendation. Credit Suisse raises target price from 3700p to 4000p retaining a neutral rating. Nomura increases target price from 4800p to 4900p, while its buy recommendation is kept.

As for 2013, the firm is expecting net revenue growth of 5-6% at constant currency rates, up from 4.0% growth in 2012. "While much has yet to be done and markets remain challenging, we approach 2013 with the confidence that we have the right strategic focus, the right organisation and culture, and with the right innovation platforms," said Chief Executive Rakesh Kapoor. "Strong momentum" Nomura maintained its 'buy' recommendation for Reckitt on Wednesday, saying that the company has "strong momentum" going into 2013. "We expect consensus estimates for 2013 to be revised up by c4.0% this morning, reflecting RB's stronger-than-anticipated finish to the year and upbeat outlook," the broker said.

Profit before tax in 2012 totalled 2,420m, up from 2,376m previously, while adjusted earnings per share (EPS) rose 247.1p to 264.4p, some 6.0% ahead of consensus forecasts. The company raised its final dividend per share (DPS) by 11% to 78p, bringing the total 2012 dividend to 134p, up 7.0% on 2011. Net debt rose from 1,795m to 2,426m over the period, reflecting the payment of dividend and acquisitions. Looking ahead The firm's medium-term target for Health and Hygiene to be 72% of core net revenues has now been brought forward to 2015, from 2016 previously. The contribution of LAPAC and RUMEA revenues to group revenues is expected to rise to 50% by 2015 also, also a year earlier than planned.

Consumer products giant Reckitt Benckiser managed to narrowly beat consensus expectations with its 2012 results, as a strong performance in the Health & Hygiene division - responsible for brands such as Durex, Gaviscon and Dettol - helped drive growth. As such, the company said it is now bringing forward two medium-term key performance indicator (KPI) targets to 2015, a year earlier than planned. Net revenue in the 12 months to December 31st totalled �9,567m, up 1.0% from �9,485m in 2011. The consensus estimate was for a flat reading year-on-year. Meanwhile, group like-for-like (LFL) revenue rose by 5.0% (consensus: +4.3%) which the firm said was well ahead of its market growth. The Health & Hygiene divisions, which together accounted for 69% of core net revenue in the fourth quarter, both delivered LFL growth of 6.0%. The Health unit in particular was helped by higher bouts of cold and flu in the fourth quarter, which boosted sales of seasonal brands Mucinex and Strepsils. Results were also driven by the LAPAC (Latin America, Pacific and Asian countries) and RUMEA (Russia, the Middle East and Africa) regions and an improved result from (ENA) Europe and North America in spite of "challenging market conditions".

Positive Points: Fourth quarter like-for-like sales growth materialized at the upper end of analyst forecasts. The relatively new Chief Executive's plans to rebalance the company towards Health & Hygiene categories continue to be pursed. A US vitamin manufacturer has recently been acquired, a licensing deal with Bristol Myers-Squibb for Latin American health brands such as painkiller Tempra, with an option to buy after three years, has recently been signed. Management guidance appeared to broadly reassure investors. It noted that "we remain committed to our goal of net revenue growth on average +2.0% per annum above our market growth, and moderate operating margin expansion (ex its pharmaceutical business). For 2013, we are targeting net revenue growth of +5-6% including acquisitions and disposals announced to date. Given the early achievement of cost savings in 2012, we expect to maintain operating margins in 2013." Sales to the Emerging Markets are growing. Its LAPAC division (comprising: Latin America, North Asia, South and South East Asia, Australia New Zealand) reported annual like-for-like growth of 11%, with expansion coming from Latin America, North Asia and South East Asia, driven by distribution expansion, innovation and increasing penetration. Its RUMEA division (comprising: Russia & CIS, Middle East, North Africa and Turkey, Africa-Sub-Sahara) reported annual like-for-like growth of 8%, driven by strong growth in Russia & the CIS (Commonwealth of Independent States - former Soviet Union states). Management previously confirmed that the group's new organisational structure was fully in place and that they were seeing early benefits of increased operational focus, in particular, speed, scale and consistency in execution. Cost savings from acquisitions continue to be pursued. Many of the group's products e.g. Nurofen painkillers, continue to prove defensive in difficult economic times. The group's dividend policy remains progressive. The total dividend for 2012 was increased by 7% compared to 2011.

Negative Points: For its Europe and North American (ENA) region, unadjusted reported sales declined by 3%. Consumers remain pressured, particularly in Southern Europe. Competition from rivals remains intense, particularly in the group's home European market. Furthermore, other household goods companies are also looking to the Emerging Markets to provide future growth. Concerns regarding potential rival drugs impacting on the group's Pharmaceutical business remain. The company's heroin substitute drug Suboxone lost its US tablet patent in October 2009. The company has received a civil claim for damages from the Department of Health and others in the United Kingdom, regarding alleged anti-competitive activity involving its Gaviscon (heartburn) brand. The claim is under review and at the time of the results the Directors do not believe that any potential impact would be material to the Group financial statements. Volatile input and packaging costs remain a threat with regards to its profit margins. Largely due to its acquisition of US vitamin business Schiff Nutrition, group net debt has risen to £2.42 billion compared to £1.79 billion at the end of 2011.