Reckitt Doesn’t Ralph

Reckitt Benckiser

Image source: SumanBhaumik, Karramba Production, urbanbuzz - Shutterstock

What's going on?

Reckitt Benckiser: you probably don’t know the company by name, but you may by its products. The British maker of Durex, Dettol, and Nurofen reported safe, clean, and pain-free annual results on Monday.

What does this mean?

The company’s “like-for-like” sales (i.e. excluding the effects of exchange rates, acquisitions, discontinued operations, etc.) grew 4% in its fourth quarter, beating expectations, and 3% across the whole of 2018. Reckitt plans to do something similar this year, aiming to grow 3-4%.

Double-digit quarterly sales growth in emerging markets (EMs) including India and Brazil helped Reckitt – which not too long ago was on struggle street – bring in annual profit ahead of expectations, too.

Why should I care?

For markets: Continuity is key.

Reckitt’s shares rose 1% on Monday – a bright spot in an otherwise gloomy UK stock market. Between the company’s earnings beat and its expectations for more of the same, investors seemed happy to buy its stock. They appear unperturbed by Reckitt’s CEO retiring halfway through the restructuring plan it embarked upon after buying baby food maker Mead Johnson for $17 billion in 2017.

The bigger picture: Emerging markets are cool again.

The biggest country in South America, Brazil, has seen its stock market soar after the election of its new president late last year – boosting EM investors’ portfolios everywhere. Brazil’s continued to battle with economic crisis since emerging from a deep recession in 2017, and its fresh far-right leader is promising tax and pension reform – the latter of which could save the country $350 billion over ten years. And in India, the country’s central bank just gave the government $4 billion that it needed to plug a hole in its budget – which eased some qualms for EM investors.

Originally posted as part of the Finimize daily email.

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