Reckitt Benckiser Group Plc (LON:RKT) reported full year like-for-like (LFL) sales growth of 7.6%, with net revenue of £14.5bn. Performance was driven by higher prices, as volumes fell 2.2%.
Underlying operating profit, excluding IFCN China and ignoring the effect of exchange rates, grew 9.2% to £3.4bn.
Free cash flow increased from £1.3bn to £2.0bn, reflecting the growth in operating profits. The net debt position improved to £8.0bn, compared to £8.4bn the prior year.
Reckitt’s targeting mid-single digit LFL net revenue growth in 2023 and stable, or slightly higher, underlying operating margins. Those expectations exclude the impact of the competitor supply disruption that acted as a tailwind over 2022 in the US Nutrition business.
The board has recommended a final dividend of 110.3p.
Reckitt Benckiser's Earnings
Matt Britzman, equity analyst at Hargreaves Lansdown
“Price hikes have been the aim of the game over 2022 for Reckitt and it’s worked, as sales growth was slightly ahead of consensus after a decent beat over the fourth quarter. Shareholders have been able to share in the spoils with the full year dividend up 5%, the first increase since 2019 along with an aim to deliver sustainable growth in future years.
Lysol sales have been a drag on volumes over the year, as demand normalised from the highs seen over the pandemic. The positive news is that the rebase is significantly ahead of pre-pandemic levels and trends were positive over the year, it’s pretty clear now that heightened hygiene awareness is here to stay – a long term tailwind for Reckitt’s products.
Guidance for 2023 was broadly in line with what we were expecting, with perhaps a little bit of weakness in the margin outlook as interest and tax costs are expected to tick higher. There’s also plans to significantly increase brand support over the coming year to support the group’s innovation programme.”