Reckitt Benckiser, the consumer goods giant behind brands such as Dettol, Nurofen and Cillit Bang, has today confirmed the completion of its £1 billion share buyback programme. The initiative, first announced in February 2023, saw the company repurchase shares on the open market, reducing its outstanding share count and returning cash to investors.
The FTSE 100-listed firm said the buyback was executed in full, with all shares acquired being cancelled. The programme formed part of a wider capital allocation strategy that also includes maintaining a progressive dividend and investing in growth. Reckitt’s shares have been under pressure in recent months amid rising raw material costs and a slowdown in demand for some hygiene products post-pandemic.
Analysts at Shore Capital noted that completing the buyback demonstrates Reckitt’s strong free cash flow generation and board’s confidence in the underlying business. “It sends a positive signal to the market, particularly at a time when many consumer staples companies are focusing on debt reduction,” they said in a note. The company reported net cash from operating activities of £2.8 billion in its 2023 full-year results.
For UK investors and pension funds, the buyback is significant because Reckitt is a heavyweight constituent of the FTSE 100, which closed at 8,332.65 points on Tuesday. A reduction in share count can boost earnings per share, potentially supporting the share price over the longer term. However, the consumer sector remains sensitive to inflation and household spending pressures, which could continue to weigh on revenue growth.
The move comes as Reckitt navigates a challenging economic environment, with input cost inflation and currency headwinds persisting. Chief Executive Kris Licht has previously emphasised the company’s focus on innovation and cost savings to protect margins. While the buyback is now complete, the company has not announced any further share repurchase plans for the current financial year.
Source: Reckitt Benckiser Group PLC