3 Factors Ready To Propel Reckitt Benckiser Group plc Through The Roof

Royston Wild looks at the key elements ready to boost Reckitt Benckiser Group plc (LON: RB).

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.


Today I am looking at why I believe Reckitt Benckiser Group (LSE: RB) (NASDAQOTH: RBGLY.US) is a terrific stock selection.

Revenues rising in the West

Needless to say, the impact of enduring macroeconomic issues in Europe and patchy financial recovery in the US has weighed heavily on consumer spending power in these traditional retail strongholds. But while retailers and manufacturers alike have failed to shake free from the heavy sales pressure of recent years, generally speaking, Reckitt Benckiser has suffered no such problems.

Indeed, the firm announced this month that group revenues from Europe and North America — regions which account for 57% of core net turnover — advanced 7% during 2013, to £5.07bn, and 3% on a like-for-like basis.

With the company reporting signs of “growth returning to most parts of Europe,” and electing to combine its European and North American operations to improve the speed and scale of new product innovations, the future looks good for these key territories.

Brilliant brands underpin solid growth

Reckitt Benckiser can thank the strength of its bursting portfolio of market-leading labels in keeping group sales ticking relentlessly skywards. From Vanish stain remover through to its Gaviscon indigestion remedy, the company has enviable finesse in developing its reputation across a multitude of product sectors, and ploughed a cool £100m into building these Powerbrands last year alone.

The company boasts a reliable conveyor belt of product and sales innovations to boost revenues, and solidified its pole position in the Chinese contraception market, for example — Durex is the country’s most popular condom brand — last year by rolling out a raft of new variations that it promoted heavily through social and digital media.

Despite having to endure wider market difficulties, particularly in developing territories, Reckitt Benckiser remains confident that its “pipeline of innovations, Powerbrand roll-outs and brand investments will deliver another year of high quality growth” in 2014.

Emerging market fears overplayed

But while the company noted that “emerging markets continue to slow,” Reckitt Benckiser continues to punch growth rates which its rivals can only dream of. In Latin America and Asia Pacific — source of 28% of core net revenue — sales rose 8% during 2013, to £2.51bn, with like-for-like growth of 10%.

Undoubtedly the firm is having to work hard to battle headwinds in some of these regions, with an intensifying slowdown in Russia, Middle East and Africa prompting revenues here to advance just 1% last year, or 5% on an underlying basis, to £1.36bn.

But with momentum in the emerging market engine rooms of India and China rattling along at a steady pace, and measures in place to turnaround sales lag in other areas — from management shake-ups to hefty brand investment — I expect Reckitt Benckiser to extend its success in these regions.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

> Royston does not own shares in Reckitt Benckiser.

More on Investing Articles

Businessman use electronic pen writing rising colorful graph from 2023 to 2024 year of business planning and stock investment growth concept.
Investing Articles

Buying 8,617 Legal & General shares would give me a stunning income of £1,840 a year

Legal & General shares offer one of the highest dividend yields on the entire FTSE 100. Harvey Jones wants to…

Read more »

Man writing 'now' having crossed out 'later', 'tomorrow' and 'next week'
Investing Articles

£25k to invest? Here’s how I’d try to turn that into a second income of £12,578 a year!

If Harvey Jones had a lump sum to invest today he'd go flat out buying top FTSE 100 second income…

Read more »

Union Jack flag in a castle shaped sandcastle on a beautiful beach in brilliant sunshine
Investing Articles

2 lesser-known dividend stocks to consider this summer

Summer is here and global markets could be heading for a period of subdued trading. But our writer thinks there…

Read more »

pensive bearded business man sitting on chair looking out of the window
Investing Articles

Here’s how I’d aim to build a £50K SIPP into a £250K retirement fund

Our writer outlines the approach he would take to try and increase the value of his SIPP multiple times in…

Read more »

Investing Articles

9.4%+ yields! 3 proven FTSE 100 dividend payers I’d buy for my Stocks and Shares ISA

Our writer highlights a trio of FTSE 100 shares with yields close to 10%. He'd happily pop them into his…

Read more »

Mixed-race female couple enjoying themselves on a walk
Investing Articles

Are Raspberry Pi shares a once-in-a-lifetime chance to get rich?

With Raspberry Pi shares surging after a successful IPO, could this UK tech startup offer a long-term wealth creation opportunity…

Read more »

Newspaper and direction sign with investment options
Investing Articles

Huge gains and 9% yields: why now’s an amazing time to be a stock market investor

The stock market’s generating fantastic returns in 2024. Whether you're looking for gains or income, it’s a great time to…

Read more »

Hand of person putting wood cube block with word VALUE on wooden table
Investing Articles

This steady dividend payer looks like one of the best bargain stocks in the FTSE 100

A yield of 4.7% and a consistent dividend record make this FTSE 100 company look like good value in an…

Read more »