annual report and financial statements 2017
Healthier Lives,
Happier Homes
Bringing Our Purpose to Life
2017
Highlights
Our purpose is to make a difference by giving people innovative solutions for healthier lives and happier homes.
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Chief Executive's Statement
Our strategic moves during 2017 position the Group extremely well for the future.
This was a hugely important year for RB, as we made real progress towards our purpose of healthier lives and happier homes.
Our business model
- We're using our strengths
- To power our business
- And pursue our purpose
- So we drive outperformance
- We are using our strengths
- To power our business
- And pursue our purpose
- So we drive outperformance
Strategic inputs
Our people & culture
We employ outstanding people, who work in a unique culture that harnesses their passion and allows them to make a real difference
Our brands
We have 20 Powerbrands, which are leaders in their markets and offer faster growth and higher margins
Our knowledge and skills
We have deep consumer understanding, proven R&D capabilities and an agile organisation, which gets products to market fast
Our relationships
We develop strong, value-creating relationships with customers, consumers, suppliers and communities
Our infrastructure
Our business is underpinned by well-invested manufacturing sites, R&D laboratories and logistics centres
Our financial strength
Shareholders’ equity, debt and retained profit give us the financial resources to implement our strategy
Our operating segments
In 2017, RB was organised into three operating segments – Europe and North America (ENA), Developing Markets (DvM) and Infant and Child Nutrition (IFCN).
ENA
Europe (including Russia/CIS and Israel), North America and Australia/New Zealand
Net Revenue £6.7bnDvM
Africa, Middle East (excluding Israel), Turkey, Asia (excluding Russia/CIS) and Latin America
Net Revenue £3.3bnIFCN
IFCN is the acquired MJN business, which includes the world’s leading franchise in infant and children’s nutrition
Our categories
Health
Nourishing the best start to life with the IFCN business, and treatments for everyday issues such as pain and flu, wellness products covering sexual wellbeing, footcare, vitamins and supplements
Hygiene
Personal and home hygiene products, which provide the foundation for healthy living
Home
Brands that make the home environment more harmonious and less stressful, so families are happier every day
Reorganising for growth
From Q1 2018, RB is developing a platform for future growth and outperformance by creating two focused, fully accountable and more agile business units - Health and Hygiene Home.
Our purpose is to make a difference, by giving people innovative solutions for healthier lives and happier homes
Megatrends
Powerful long-term trends are influencing our markets and driving demand for our products, from longer lives and increasing incomes to the relentless rise of technology and e-commerce.
Our strategy
We have designed our strategy to respond to these trends and deliver long-term success.
betterbusinessHow we outperform, through our focus on our brands, markets, people and creating a digitally connected company
bettersocietyHow we support our communities and drive quality and safety in all we do
betterenvironmentHow we reduce our environmental impact and ensure we source materials responsibly
Our operating model
Our three-part model enables us to rapidly scale up our ideas and offer them to consumers worldwide.
CreateCreate innovative products that meet consumers' under-served demands
ScaleScale our innovations, to make them as global as possible
ActivateActivate our ideas through our customer relationships, while driving consumer demand through offline and digital channels
Our values
Our values help us to realise our vision and purpose and are key to our distinct culture.
Our strategy and operating model create value for all our stakeholders.
People
challenging careers
RB provides exciting and challenging careers, with excellent rewards for outstanding performance
Consumers
market-leading Powerbrands
Consumers receive innovative, safe and high-quality products, which give them healthier lives and happier homes
Shareholders
Total Shareholder Return since adoption of new strategy in 2012
Shareholders benefit from strong operational and financial performance, resulting in attractive returns via dividends and long-term share price appreciation
Communities
people reached with health and hygiene messaging
Our products and social programmes lead to improved health and hygiene standards
Customers
Customers gain from selling our leading brands, which grow each category and drive customer value in relevant channels
Key performance indicators
betterbusiness
40%
CommentaryWe have 16 Powermarkets. These are the markets which have the highest absolute growth potential for us and where we see the greatest ability to win. They are weighted towards developing markets which have greater economic growth, rising middle classes and more opportunities to increase market penetration.
1 As a percentage of RB base business80%
CommentaryWe invest heavily in our portfolio of 20 market-leading Powerbrands. They provide over 80% of our revenue and offer higher growth and margins.
1 As a percentage of RB base businessGrowth in Net Revenue, excluding the impact of changes in exchange rates, acquisitions and disposals
| Health | Hygiene Home | |
|---|---|---|
| Category growth rate |
3 - 5% | 2 - 3% |
| Ambition | Upper end | In line to upper end |
Females in Top 400
24% Target:Expand our focus on diversity and talent by improving the retention rates of women from managers to senior managers. This is in line with out goal of doubling the number of women in senior management roles from a 2016 base line
CommentaryOur people are what make us outperform. Respecting them, keeping them safe and developing their skills and careers is essential if we are to be successful. We recognise and embrace the value that a diverse, engaged and motivated workforce can bring.
Continued decrease of rate
CommentaryDefinition: Number of incidents resulting in at least one lost day of work per 100,000 hours worked.
Increase in our LWDAR since 2012: 13%**We have revised the classification of our Lost Work Day Accident Rate (LWDAR) from 2017 to include accidents associated with organised travel and commercial offices. Excluding accidents from organised travel and commercial offices, there has been a 36% reduction in LWDAR since 2012.
bettersociety
400m
CommentaryImproving health and hygiene through our products, brand educational programmes and corporate social investment.
Continual increase in social impact investment
CommentaryWe recognise the role we must play in making a positive impact and transforming the health and lives of communities around the world. Our social impact investment strategy focuses on three areas that have a direct connection with our business: sexual health and rights, malnutrition and stunting, and health and hygiene.
Note: 2017 includes broader social impact investment and brand contributions33% of Net Revenue
CommentaryDesigning and launching more sustainable products.
1 As a percentage of RB base business
betterenvironment
40% reduction
CommentaryReducing our GHG emissions in our operations and across our product lifecycle, through energy efficiency programmes, investing in renewable technologies and procuring electricity from renewable sources, and product innovation.
The percentage reduction in our total carbon footprint per dose of product manufactured, against our 2012 baseline.
(2)% Target to 2020:33% reduction
CommentaryReducing carbon footprint per dose of product remains challenging
The percentage reduction in total water consumption per unit of production, against our 2012 baseline
(37)% Target to 2020:35% reduction
Total water used during the product’s life cycle, from material sourcing to disposal or recycling, adjusted to reflect water scarcity at each stage, and divided by the number of product doses manufactured
(8)% Target to 2020:33% reduction
CommentaryReducing the water impacts of our products throughout their lifecycle, including reducing water use in our manufacturing operations, especially in water-scarce regions.
The percentage of our factories achieving zero waste to landfill, including both hazardous and non-hazardous waste
100% Target to 2020:100%
The percentage reduction in manufacturing waste per unit of production, against our 2012 baseline
(21)% Target to 2020:30% reduction
CommentaryReducing our manufacturing waste and ensuring zero manufacturing waste is sent to landfill.