Reckitt Benckiser swings to FY profit, lifts dividend

In the 12 months to the end of December 2022, the company swung to a pre-tax profit of £3.07bn from a loss of £260m a year earlier. Net revenue rose to £14.5bn from £13.2bn.

Reckitt said revenue growth reflected price/mix improvements of 9.8%, with volumes down 2.2%.

Operating profit rose 16.8% to £2.4bn and the company lifted its full-year dividend by 5% to 183.3p a share.

On a like-for-like basis, group revenue increased 7.6%. Reckitt said growth was broad-based and led by brands across the Auto Dishwash, Fabric Additives, OTC, Intimate Wellness, VMS and Nutrition categories.

Reckitt said it was targeting LFL net revenue growth of mid-single digits for the group in 2023, excluding the 2.5% impact of the competitor supply disruption in its US Nutrition business in 2022.

Chief executive Nicando Durante said: "Reckitt 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."

At 0945 GMT, the shares were up 0.6% at 5,796p.

Russ Mould, investment director at AJ Bell, said: "Reckitt has been able to successfully pass on higher costs and this helped make up for lower sales volumes but it is fast approaching a point where it needs to decide if investors can continue to stomach further increases. Short-term gain could easily turn into long-term pain if it means Reckitt loses share to its rivals."

Matt Britzman, equity analyst at Hargreaves Lansdown, said: "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."