Health and hygiene group acknowledges ‘unsatisfactory’ Q4 performance

Reckitt Benckiser’s chief executive has acknowledged ‘unsatisfactory’ performance in the fourth quarter, as the firm posted a 3.5% rise in full-year like-for-like (LFL) revenues to £14.6bn.

Fourth quarter LFL revenues saw a 14.8% decline in nutritional products as the group’s North American business continued to rebase and revenues from its health products also declined 2%. The firm issued a voluntary recall of its Nutramigen hypoallergenic baby formula in the fourth quarter.

The Hull-based health and hygiene group also identified an understatement of trade spend in two Middle East markets, reducing revenues by £55m. It said it was taking disciplinary action after investigations had identified a small group of employees had acted inappropriately, but was confident it was an isolated incident.

The group announced full-year dividends of 192.5p, up 5%, in addition to £0.2bn from a share buyback programme and strong free cash flow of £2.3bn.

Full-year operating profits were £2.4bn, down from £3.2bn in 2022, reflecting a goodwill impairment of £810m over infant formula and child nutrition products.

Chief executive Kris Licht said: “2023 was a year of progress for Reckitt. We delivered a good trading performance in Health and Hygiene. Nutrition began rebasing and held market leadership in the US.

“Our innovation platforms proved that they can deliver meaningful growth through premiumisation, household penetration and category creation.

“We drove our gross margins back to historical levels, increased investment behind our brands and innovation and launched our fixed cost optimisation programme. We generated strong free cashflow and significantly increased cash returns to shareholders, enhanced by our new, sustainable share buyback programme.

“The organisation is fully focused on executing the strategy which I outlined in October, including strengthening our product superiority, optimising our fixed cost base and improving our in-market execution.

“While our performance in Q4 was unsatisfactory, we look to 2024 and beyond with confidence. We target another year of mid-single-digit growth in Health and Hygiene, driven by a more balanced contribution from price, mix and volume.

“We expect Nutrition to return to growth late in the year. We will continue to invest in, and harness the growth from, our strengthened pipeline.

“We will advance our fixed cost optimisation programme, and we will further increase cash returns to shareholders, aiming to double what we returned in 2019.”