Reckitt Benckiser Group (LON:RKT) reported what management described as “strong financial delivery” in 2025, with growth led by emerging markets and margin expansion supported by its Fuel for Growth program. On the company’s full-year results call, CEO Kris Licht and CFO Shannon Eisenhardt also outlined priorities for 2026, including continued investment in supply chain capacity, brand equity and innovation, while acknowledging a challenging consumer backdrop in Europe and ongoing volatility in seasonal over-the-counter (OTC) categories.
2025 results: growth led by emerging markets, margins expand
Licht said Core Reckitt net revenue grew 5.2% in 2025, ahead of the company’s improved half-year guidance of “above 4%.” Group net revenue increased 5%, including 3.8% growth at Mead Johnson Nutrition, which management described as trading having normalized.
Profitability improved. Adjusted operating profit grew 5.3% at constant currency, with Core Reckitt operating margin expanding 90 basis points to 26.7% and group adjusted operating margin up 40 basis points to 24.9%. Gross margin for Core Reckitt was flat at 62.2%, while group gross margin expanded 10 basis points to above 60% as productivity efficiencies more than offset tariffs, according to Eisenhardt.
Adjusted diluted EPS increased 1.1% to 352.8 pence. Eisenhardt said EPS benefited from revenue and profit growth and a lower share count from buybacks, partly offset by a higher effective tax rate and adverse foreign exchange, which together represented a 7% headwind to EPS.
Capital returns, cash flow, and leverage
Reckitt returned GBP 2.3 billion to shareholders through dividends and share repurchases, including GBP 900 million of buybacks. The company also completed the divestment of Essential Home to Advent in December and paid a further GBP 1.6 billion special dividend in February.
Free cash flow was GBP 1.7 billion, with a 71% conversion rate that included one-off cash costs tied to transformation and restructuring. Eisenhardt said free cash flow conversion is expected to remain around similar levels in 2026 and 2027, with normalization anticipated after the restructuring program ends in 2027.
Net debt to adjusted EBITDA ended the year at 1.6x, reflecting divestment proceeds received on Dec. 31, 2025. Eisenhardt said that adjusting for the GBP 1.6 billion special dividend paid after year-end, leverage would have been roughly 2.0x. Looking into 2026, she expects leverage to rise toward 2.5x by mid-year, reflecting continued investment and a lower EBITDA base post-divestment, before trending down through 2027.
The board proposed a 5% increase to the full-year dividend, which management said is consistent with its aim of sustainable dividend growth. Eisenhardt also said Reckitt will “shortly commence” the final tranche of its current buyback program and expects buybacks to remain an ongoing element of capital allocation, with magnitude varying based on leverage and other cash uses.
Regional and category performance: Europe weak, North America steady, emerging markets broad-based
Emerging markets delivered broad-based growth across categories and regions. China recorded its 10th sequential quarter of double-digit growth, supported by Dettol innovations and extensions, continued strength in VMS (vitamins, minerals and supplements), and leadership in Intimate Wellness. India posted high single-digit growth for the year, driven by offline execution and expanded distribution points. Emerging markets margins expanded 210 basis points to 20.9%, aided by gross margin progression and mix benefits tied to outperformance in self-care and Intimate Wellness.
Europe declined 1.4% for the year. Eisenhardt pointed to slowing category growth (to broadly flat), increasing promotional activity, and a softer cold and flu season in Q4. Despite the sales decline, adjusted operating margin in Europe rose 130 basis points to 31.4% on cost savings and efficiencies. Licht said Europe remains highly competitive and promotional, calling some promotional intensity “excessive” and “probably not sustainable,” while emphasizing the need to stay competitive without sacrificing balance.
North America was broadly flat, with like-for-like net revenue growth of 0.2%. Eisenhardt said non-seasonal brands (about 70% of the regional portfolio) delivered low single-digit growth, while seasonal OTC declined mid-single digits due to a soft season. North America adjusted operating margin was 30.1%, down 30 basis points on mix-driven gross margin pressure, partially offset by cost savings.
By category, Eisenhardt said:
- Self-care net revenue increased 3% like-for-like as high single-digit growth in non-seasonal self-care offset mid-single-digit declines in seasonal OTC. Gaviscon grew high single digits and VMS was up double digits.
- Germ protection rose 8.4% like-for-like, led by double-digit Dettol growth across emerging markets; Harpic grew mid-single digits.
- Household care declined 0.4% like-for-like. Finish was broadly flat overall, with emerging market strength offsetting softness in Europe and North America.
- Intimate Wellness was the fastest-growing category, up 12.5% like-for-like. Durex grew double digits, Veet grew double digits, and Intima almost doubled as adoption accelerated in China.
Fuel for Growth, supply chain investment, and innovation pipeline
Management highlighted the Fuel for Growth program as a central contributor to both investment capacity and margin performance. Eisenhardt said group fixed costs were 19.4% of net revenue in 2025, a 150 basis point improvement year-over-year. She expects that ratio to rise in 2026 before declining again in 2027, driven by stranded costs from the Essential Home sale and a smaller revenue base. She also said the company remains on track to deliver within the GBP 1 billion investment envelope and now expects to exit 2027 with a fixed cost base below 19%.
Capital expenditure increased to GBP 592 million in 2025. Licht said the company is investing in localization, automation, and digitization to build a more scalable and resilient supply chain after what he described as “modest investment” historically that created risk and inconsistency. He cited initiatives including new Durex lines in Taicang, a China Science and Innovation Center planned to open in Shanghai in the summer, increased North America footprint including the Wilson, North Carolina factory slated to open next year, and capacity investments supporting brands such as Lysol, Finish, and Gaviscon.
Innovation remained a core theme. Licht highlighted the rollout of Durex Intensity to 18 countries in 2025 and extensions across brands including Lysol air sanitizer and Dettol antiseptic liquid. He also previewed a major pipeline launch in North America: Mucinex 12 Hour Cold and Fever, which he called the first and only 12-hour multi-symptom cold and fever remedy in the market, and said it is the first FDA-approved new drug application in the upper respiratory category in over 15 years.
2026 outlook: 4%-5% growth target, Europe still difficult, margins tied to stranded cost offset
For 2026, Eisenhardt guided to 4%-5% net revenue growth for Core Reckitt, in line with medium-term guidance, again led by emerging markets. She said Q1 is expected to be below the full-year guide due to continued softness from the season. For Mead Johnson Nutrition, the company expects low single-digit like-for-like growth in 2026, but a mid-single-digit net revenue decline in Q1 as it laps a retailer inventory build following the Mount Vernon tornado in 2024.
On margins, Eisenhardt said the Essential Home divestment is expected to be a tailwind to group operating margins because it was a lower-profit business, but stranded costs will be a headwind. The company aims to “largely offset” those stranded costs through Fuel for Growth in 2026, with more than offset expected by 2027. She also noted that gross margins are already sector-leading and the company is not targeting significant gross margin expansion given increased supply chain investment.
During Q&A, management said 51% of Core Reckitt’s top CMUs were in gain or hold territory for the full year, and Licht attributed some share weakness to the softer season, which he said tends to temporarily pressure shares for premium, medicated seasonal self-care brands.
Executives reiterated that Mead Johnson Nutrition is under review for “all strategic options,” while noting there was no new update on litigation timelines during the call. They also said Russia accounts for about 15% of sales within the company’s MENART region but is “not a driver of growth” and not a market where Reckitt is investing.
About Reckitt Benckiser Group (LON:RKT)
At Reckitt, we protect, heal and nurture. We are the company behind some of the world’s best known and most trusted Health and Hygiene consumer brands.
Delivering for a cleaner, healthier world requires strong brands with a global footprint. From Dettol, Lysol, Durex, Finish, Harpic and Vanish, Mucinex, Nurofen, Gaviscon, Veet and Strepsils, consumers love and rely on our brands to care for their families, as they have done for over 200 years.
We use our scientific expertise and deep human understanding to develop solutions to help people improve their lives – that is why over 30 million Reckitt products are sold each day worldwide.
At Reckitt, we’re all making a real difference to people all over the world, every day.
