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Reckitt Benckiser Group PLC ADR RBGLY Stock Quote

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Morningstar‘s Stock Analysis RBGLY

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Reckitt Claims Early Victory in Transformation Journey but Many One-Offs Muddy the Waters

Diana Radu, CFA Equity Analyst

Business Strategy and Outlook

| Diana Radu, CFA |

Reckitt’s portfolio is well positioned in categories that benefit from secular growth drivers across consumer health and hygiene, which should translate into growth ahead of its peer group in the midterm. The acquisition of Mead Johnson has added to its portfolio a leadership position in infant nutrition--a segment with pricing power and generally sound margins. However, the timing of the transaction, ahead of a period of declining birth rates and intensified competition in China, posed significant challenges and has dampened revenue growth in the last few years. Management sold the infant nutrition business in China in 2021, and the future of the remaining core infant nutrition business remains uncertain. While we believe the segment’s reduced size presents an opportunity for management to refocus on faster-growing businesses--positioning them for longer-term success past the peaks in demand generated by the coronavirus pandemic--further secular declines in birth rates in the U.S. could continue to be a drag to the company’s mid-single-digit growth ambitions. Nonetheless, we expect the worst is behind the company.

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Company Profile RBGLY

Business Description

Reckitt Benckiser was formed in 1999 through the merger of the British firm Reckitt & Colman and Dutch-based Benckiser. Recently rebranded under the corporate name Reckitt, it sells a portfolio that includes a variety of household and consumer health brands, such as Lysol, Finish, Durex, and Mucinex, many of which hold the number-one or -two positions in their categories globally. Reckitt has repositioned its portfolio and has entered the infant formula market through the acquisition of Mead Johnson in 2017, expanded its consumer health presence by acquiring Schiff Nutrition, K-Y, and Biofreeze, and has exited the food industry. The firm operates in 60 countries and sells products in more than 200, generating around 35% of sales from emerging markets.

103-105 Bath Road
Slough, Berkshire, SL1 3UH, United Kingdom
T +44 1753217800
Industry Household & Personal Products
Most Recent Earnings Dec 31, 2011
Fiscal Year End Dec 31, 2022
Employees 52,322

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