Reckitt Benckiser Group plc

For the first half, Core Reckitt and Mead Johnson like-for-like net revenue grew 2.6%, with Core Reckitt up 2.7% and Mead Johnson up 2.0%; in Q2, Core Reckitt grew 4.2% and Mead Johnson 7.2%. Group like-for-like net revenue grew 2.6% in the half and 4.7% in Q2. Core Reckitt and Mead Johnson gross margin was 60.5%, down 50 bps, and Core Reckitt gross margin was 60.9%, down 110 bps year on year. Adjusted operating margin was 23.6%, down 100 bps, and adjusted EPS was 152.1p, down 9.7%. Free cash flow was GBP 419 million, cash conversion was 42%, and net debt-to-EBITDA was 2.5x. Guidance for 2026 was unchanged: Core Reckitt LFL revenue growth of 4% to 5% and Core Reckitt and Mead Johnson adjusted operating margin of 24.9% to 25.6%, with a significantly stronger second half.

Kris Licht emphasized that Reckitt’s growth accelerated in Q2, with all areas and categories improving and a more balanced contribution from volume and price mix. He framed the company as simpler, sharper, and better executing, with Fuel for Growth helping offset stranded costs and free up investment behind Powerbrands. His tone was confident on innovation, especially in China, Europe, and North America, while acknowledging ongoing external headwinds in the Middle East and commodity markets.

Shannon Eisenhardt focused on the mechanics behind the numbers: gross margin at 60.5% was down 50 bps, Core Reckitt gross margin was 60.9% down 110 bps, and adjusted EPS fell 9.7% to 152.1p because of the Essential Home divestment and higher input costs. She said Fuel for Growth savings and the pacing of those savings helped offset stranded costs, fixed costs were 20.1% of net revenue, and the program remains on track to get fixed costs below 19% of net revenue by the end of 2027, with around GBP 1 billion total program cost and around GBP 350 million in 2026. She also highlighted GBP 419 million of free cash flow, 42% cash conversion, net debt-to-EBITDA of 2.5x, a 5% interim dividend increase, and a new GBP 500 million 12-month share buyback.

Analysts pressed management on the implied second-half acceleration behind the unchanged 4% to 5% growth guide, with questions on whether the Russia Hygiene exit was included, the cadence between Q3 and Q4, and what underpinned confidence in Europe and North America. Management said the guide does not assume the Russia transaction closes, Q1 was the anomaly because of a weak season, and innovation plus pricing should support a stronger back half, with North America expected to be back-end loaded toward Q4. Other questions focused on destocking in U.S. retail, Europe’s recovery, China Intimate Wellness pressures, seasonal OTC assumptions, and buyback sizing; management said U.S. destocking looked temporary, Europe should return to modest growth, China Durex weakness was driven by VAT, content restrictions and competitor promotion, and the buyback magnitude will vary over time with capital allocation priorities.