Reckitt Benckiser Q4 LFL net revenue growth of 6.2%

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Reckitt Benckiser Group PLC (LON:RKT) has announced its final results.

	Q4 2022 £m	Q4 2022 Actual	Q4 2022 Change³ Constant	FY 2022 £m	FY 2022 Actual	FY 2022 Change³ Constant
Net Revenue¹	3,830	+14.0%	+5.6%	14,453	+9.2%	+3.9%
Like-for-Like (LFL)²			+6.2%			*+7.6%*

Adjusted² ex IFCN China
Operating Profit				3,439	+16.8%	+9.2%
Operating Profit Margin				23.8%	+90bps

Adjusted² inc IFCN China
Operating Profit				3,439	+19.5%	+11.7%
Total EPS (diluted)				341.7p	+18.4%

IFRS
Operating Profit				3,249	Nm
Operating Profit Margin				22.5%	Nm
Total EPS (diluted)				324.7p	Nm

1. Group excluding IFCN China net revenue growth on an IFRS basis of +14.4% in Q4 and +12.5% for the full year.

2. Adjusted measures are defined on page 28

3. Change vs prior year presented. Constant measured on a constant exchange rate basis (see page 28)

Q4 Highlights

· Q4 like-for-like (LFL) net revenue growth of +6.2. Our Hygiene GBU returned to growth in the quarter (+1.3%) due to further improved trends in Lysol, and mid-single digit growth in the rest of the portfolio. Health (+6.7%) saw strong growth in OTC brands, offset by weaker demand in China Intimate Wellness. Nutrition delivered another strong quarter (+19.4%) with strong demand in the US and the continued turn around in developing markets. On an IFRS basis net revenue grew by +14.0%.

FY Highlights:

· Group LFL net revenue growth of +7.6%. Growth was broad-based and led by our market-leading brands across the Auto Dishwash, Fabric Additives, OTC, Intimate Wellness, VMS and Nutrition categories. The positive impact on net revenue from the US Nutrition competitor supply issue is approximately +2.5%. On an IFRS basis net revenue grew by +9.2%.

· The Group delivered a three-year CAGR of +8.2% on a LFL net revenue basis. This includes two consecutive years of mid-single digit growth from 70% of the portfolio less sensitive to Covid dynamics. During the year, these brands grew high-single digits. Excluding the positive impact from US IFCN, growth was mid-single digits.

· Hygiene LFL net revenue decline of -3.1%, mostly due to tough comparatives in Lysol. Excluding Lysol, the business delivered mid-single digit growth. Lysol saw improving trends throughout the year, and delivered net revenue growth of around +45% above pre-pandemic levels. On an IFRS basis net revenue grew by +0.8%.

· Health LFL net revenue growth of +14.7%, driven by a combination of strong demand and share gains in our OTC portfolio, and continued momentum in our Intimate Wellness and VMS brands with a stable performance in Germ Protection, which remains around +40% ahead of pre-pandemic levels. On an IFRS basis net revenue grew by +18.6%.

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· Nutrition LFL net revenue growth of +22.9%, driven by mid-single digit growth in our Developing Markets business and around +40% growth in the US with strong execution amidst temporary competitor supply issues. On an IFRS basis net revenue grew by +10.2%.

· Double-digit adjusted operating profit (excluding IFCN China) growth of +16.8% (+9.2% on a constant FX basis) driven by strong top line growth, productivity and positive product mix. Adjusted operating margin (excluding IFCN China) grew by +90bps to 23.8%. The benefit on adjusted operating profit in 2022 from the US Nutrition competitor supply issue is approximately +80bps. 2022 IFRS operating margin was 22.5%.

· Double-digit adjusted EPS (diluted) growth +18.4% to 341.7p, driven by net revenue growth, operating margin expansion, and foreign exchange tailwinds. On an IFRS basis total diluted EPS was 324.7p.

· Strong balance sheet with net debt reduced to 2.1x adjusted EBITDA. Free cash flow generation of £2.0bn (2021: £1.3bn) and cash conversion of 83% (2021: 61%).

· Full year dividend increased by 5% to 183.3p (2021: 174.6p), with the aim to deliver sustainable dividend growth in future years.

2023 Outlook

· We target LFL net revenue growth of mid-single digits for the Group, excluding the lapping of a circa 2.5% impact of the competitor supply disruption in our US Nutrition business in 2022 (“US Nutrition impact”).

· We expect adjusted operating margins to be in line with or slightly above 2022 levels when excluding the one-off benefit of circa 80bps in 2022 related to US Nutrition. Within our guidance we expect to significantly increase BEI to support an exciting innovation programme in 2023.

Commenting on the results, Nicandro Durante, Chief Executive Officer, said:

“Reckitt Benckiser delivered a year of strong growth in net revenue, earnings, and free cash flow conversion amidst a continued challenging environment. We are now 28% larger than we were in 2019. Our healthy balance sheet underpins our financial strength, and we are delighted to grow the dividend in 2022 with the aim to deliver sustainable dividend growth in future years.

We enter 2023 as a strengthened business with enhanced financial, operational and brand resilience, and continued growth momentum. The benefits of our reinvigorated innovation pipeline and operational improvements are coming through – including a more agile supply chain and improved customer relationships.

We have more to achieve, and will continue to see macroeconomic and consumer pressures in the year ahead. However, our financial, operational and brand strength position us well for the future. We have a strong innovation pipeline in 2023 which will be supported by increased brand equity investment. We remain fully focused on the delivery of our strategy, to protect, heal and nurture in the relentless pursuit of a cleaner, healthier world.”

FY 2022 RESULTS PRESENTATION TODAY

There will be a results presentation for analysts and investors at 08:30 GMT which will be held at The Auditorium, Bank of America, 2 King Edward Street, London, EC1A 1HQ.

To attend in person, please email your details to [email protected] to register.