REG - Reckitt Benckiser Gp - Final Results
06/03/2025 07:00
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RNS Number : 5458Z Reckitt Benckiser Group PLC 06 March 2025
6 March 2025
Results for the Year ended 31 December 2024
EXECUTING OUR STRATEGIC PLAN
TOP AND BOTTOM-LINE GROWTH with STRONG CASH RETURNS TO SHAREHOLDERS
"We are reshaping Reckitt into a more efficient, world-class consumer health
and hygiene company, focused on a portfolio of high-growth, high-margin
Powerbrands. Strengthened execution in key markets led to market share
improvements in Health and Hygiene with our performance further supported by
impactful innovation platforms, increased investment in our brands and R&D
and initial savings from our Fuel for Growth programme. This solid progress
enabled us to deliver our ambition for full year like-for-like net revenue,
adjusted operating profit, and EPS growth, as well as strong cash returns to
shareholders."
Kris Licht, Chief Executive Officer
IFRS
£m FY 2024 vs 2023(2) £m FY 2024 vs 2023(2)
Like-for-like (LFL) net revenue(3) +1.4% Net revenue 14,169 -3.0%
Hygiene +4.2% Hygiene 6,140 +0.1%
Health +2.1% Health 5,882 -3.0%
Nutrition -7.3% Nutrition 2,147 -10.9%
Gross profit margin 60.7% +70bps Gross profit margin 60.7% +70bps
Operating profit 3,475 +3.0% Operating profit 2,425 -4.2%
Operating profit (constant FX)(3) +8.6%
Operating profit margin 24.5% +140bps Operating profit margin 17.1% -20bps
Diluted EPS 349.0p +7.9% Diluted EPS 203.2p -11.1%
Free cash flow 2,232 -1.2% Cash generated from operating activities 2,682 +1.7%
Cash returns to shareholders(4) 2,709 +75.2%
Q4 LFL net revenue growth +4.6% Q4 net revenue 3,547 -0.4%
1. Adjusted and Non-GAAP measures are defined on page 32.
2. All growth rates are presented on an actual basis, except for where
separately noted.
3. LFL net revenue and adjusted operating profit growth is measured on
a constant exchange rate basis (see page 32).
4. Cash returns to shareholders represents dividend paid during the
year plus cash returned to shareholders through share buybacks.
TOP AND BOTTOM-LINE GROWTH WITH STRONG CASH RETURNS TO SHAREHOLDERS
· FY Group LFL net revenue growth +1.4%, in line with guidance,
with improved market share performance
o Hygiene and Health +3.1%; +4.6% excluding seasonal OTC brands; IFRS net
revenue -3.0% reflecting adverse foreign exchange
o Improved market competitiveness in Hygiene and Health: 55% of Top CMUs
holding or gaining share, 15% for Nutrition, 48% for the Group
o Broad-based volume growth, Hygiene and Health +2.1% excluding seasonal OTC
o Developing Markets +5.5% and Europe / ANZ +3.9%; North America -5.0%
reflecting weak seasonal OTC and rebasing of Nutrition business
· Sequential improvement in Q4 with LFL net revenue growth +4.6%
o Hygiene +5.5%; Health +2.4% (+8.0% excluding seasonal OTC); Nutrition +8.4%
with restocking post Q3 tornado
o Hygiene volumes +4.4%; Health volumes -2.1% (+2.5% excluding seasonal OTC)
· FY adjusted operating profit growth of +8.6% (at constant FX);
AOP margin 24.5% (+140bps)
o Pricing and productivity efficiencies supported increased investment in
brands (BEI +3.1% at constant FX)
o -90bps reduction in fixed costs to 20.9% of net revenue, with early benefits
of the Fuel for Growth programme
o Adjusted EPS +7.9%, supported by lower share count from ongoing share
buyback, and lower effective tax rate of 22.2% (2023:25.2%), offset by higher
net interest cost and adverse foreign exchange
o IFRS operating profit -4.2% impacted by higher impairment charges, relating
to IFCN (£696m) and Biofreeze (£142m), and restructuring costs
· Free cashflow generation of £2.2bn (-1.2%); £2.7bn cash returns
to shareholders, +75% (2023: +24%)
o Strong balance sheet with net debt at 2.0x adjusted EBITDA (2023: 1.9x)
o Full year dividend of 202.1p (+5%) in line with aim to deliver sustainable
dividend growth
o £1.3bn returned via our share buyback programme
DELIVERING STRATEGY TO CREATE A WORLD CLASS CONSUMER HEALTH AND HYGIENE
COMPANY
· A simpler, more effective Reckitt
o New operating model with three reporting segments from January 1st, 2025:
- Core Reckitt (71% of group net revenue): 11 Powerbrands, 4 categories, 3
Areas (39% Emerging Markets)
- On track to exit Essential Home (14% of Group net revenue) by end-2025
- Evaluating opportunities for Mead Johnson Nutrition (MJN) (15% of Group
net revenue)
· Powerbrands driving Core Reckitt 3 year 2021-24 LFL CAGR of +5%
o Emerging Market and Europe LFL CAGR above 5%; North America LFL CAGR broadly
flat, following a period of rapid growth through Covid
o Core Reckitt gross margin and operating margin above Group
· Increased investment to enhance local supply and strengthen
R&D capabilities
o New state-of-the-art manufacturing facility in North Carolina to produce
Mucinex tablets and liquids from 2027
o New Global Science and Innovation facility in Shanghai to support
innovation-led growth in China
· Stronger focus on innovation and market execution delivering
enhanced sustainable growth
o Lysol high-single digit growth; innovation with Laundry and Air Sanitizers
driving category growth
o Mucinex InstaSoothe volume growth in $1bn US sore throat category; launched
Mighty Chews for children
o Durex condoms and Intima female intimate wellness brand supporting
double-digit growth in China, with a first-to-world innovation of Nitrile male
condoms to be launched in Europe in Q1
o Finish Ultimate Plus All in 1 dishwasher tablets driving premiumisation;
thermoform tablets now account for 75% of total tablet net revenue
2025 outlook AND MEDIUM-TERM GUIDANCE
2025 outlook
· We are targeting +3% to +4% LFL net revenue growth in Core
Reckitt, with a balanced delivery across H1 and H2.
o In Q1, we expect mid-to-high single digit growth in Emerging Markets, with
Europe flat
o In North America, for Q1, we expect low-single digit growth, partially
driven by retailer destocking and slower than anticipated ramp up in new
capacity to meet stronger Lysol demand.
· We expect low-single digit LFL net revenue growth in Essential
Home and Mead Johnson Nutrition in 2025, with both being second half weighted.
Both businesses will show LFL net revenue declines in H1.
· Overall for 2025, we expect Group LFL net revenue growth of +2%
to +4%, with Essential Home and Mead Johnson Nutrition making this a little
more second half weighted.
· Our Fuel for Growth programme is expected to help drive adjusted
operating profit ahead of net revenue growth.
· We expect to deliver another year of adjusted diluted EPS growth.
· Other technical guidance:
o Adjusted net finance expense is expected to be in the range of £350m to
£370m (2024: £323m)
o The adjusted effective tax rate is expected to be 25% to 26% (2024: 22.2%)
o Capital expenditure as a percentage of net revenue is expected to be 3% to
4% (2024: 3.3%)
Medium-term guidance
· From 2026, we have the portfolio, the geographic footprint, and
the execution capabilities, for Core Reckitt to consistently deliver +4% to
+5% LFL net revenue growth. We will look to achieve this while consistently
delivering annual EPS growth, and creating value for shareholders.
Further information
A investor presentation will be held at The London Stock Exchange at 0830 GMT.
To attend in person, please email ir@reckitt.com. A webcast will be available
at https://www.reckitt.com/investors/results-and-presentations/
(https://www.reckitt.com/investors/results-and-presentations/)
Alternatively, dial in details are as follows:
United Kingdom: +44 203 936 2999
All other locations: +44 800 358 1035
Participant access code 416287
For enquiries contact:
Investors: Nick
Ashworth
+44 (0)7408 812350
Media: Patty O'Hayer, External Relations and Government
Affairs +44 (0)7825 755688
Charlie Armitstead, FTI Consulting
+44 (0)7703 330269
Cautionary note concerning forward-looking statements
This announcement contains statements with respect to the financial condition,
results of operations and business of Reckitt Benckiser Group plc and the
Reckitt group of companies (the "Group") and certain of the plans and
objectives of the Group that are forward-looking statements. Words such as
''intends', 'targets', or the negative of these terms and other similar
expressions of future performance or results, and their negatives, are
intended to identify such forward-looking statements. In particular, all
statements that express forecasts, expectations and projections with respect
to future matters, including targets for net revenue, operating margin and
cost efficiency, are forward-looking statements. Such statements are not
historical facts, nor are they guarantees of future performance.
By their nature, forward-looking statements involve risk and uncertainty
because they relate to events and depend on circumstances that will occur in
the future. There are a number of factors that could cause actual results and
developments to differ materially from those expressed or implied by these
forward-looking statements, including many factors outside the Group's
control. Among other risks and uncertainties, the material or principal
factors which could cause actual results to differ materially are: the general
economic, business, political, geopolitical and social conditions in the key
markets in which the Group operates; the Group's ability to innovate and
remain competitive; the Group's investment choices in its portfolio
management; the ability of the Group to address existing and emerging
environmental and social risks and opportunities; the ability of the Group to
manage regulatory, tax and legal matters, including changes thereto; the
reliability of the Group's technological infrastructure or that of third
parties on which the Group relies including the risk of cyber-attack;
interruptions in the Group's supply chain and disruptions to its production
facilities; economic volatility including increases in tariffs and the cost of
labour, raw materials and commodities; the execution of acquisitions,
divestitures and business transformation projects; product safety and quality,
and the reputation of the Group's global brands; and the recruitment and
retention of key management.
These forward-looking statements speak only as of the date of this
announcement. Except as required by any applicable law or regulation, the
Group expressly disclaims any obligation or undertaking to release publicly
any updates or revisions to any forward-looking statements contained herein to
reflect any change in the Group's expectations with regard thereto or any
change in events, conditions or circumstances on which any such statement is
based.
LEI: 5493003JFSMOJG48V108
GROUP OVERVIEW
Net Revenue £m Volume Price / Mix LFL(1) Net M&A FX Actual
FY 2024 14,169 -0.6% +2.0% +1.4% -0.3% -4.1% -3.0%
Q4 2024 3,547 +1.8% +2.8% +4.6% -0.4% -4.6% -0.4%
1. Non-GAAP measures are defined on page 32
Group net revenue
· FY LFL Group net revenue +1.4% to £14,169m, reflecting price /
mix improvements of +2.0% and a volume decline of -0.6%.
· Hygiene delivered broad-based growth of +4.2% despite a
competitive market environment, with improving volume trends supported by the
strong performance of our innovation platforms, including Lysol Air Sanitizer
and Finish Ultimate Plus All in 1.
· Health grew by +2.1%, with broad-based growth in Dettol, Durex,
Nurofen, Gaviscon and VMS portfolios partially offset by weakness in seasonal
OTC brands (c.10% of Group net revenue) due to weak cold and flu trends at the
start and end of 2024.
· Nutrition declined by -7.3% as the US lapped the prior year
competitor supply issue and experienced short-term disruptions to supply
following the Mount Vernon tornado in July.
· Total FY net revenue on an IFRS basis was down -3.0%, reflecting
foreign exchange headwinds of -4.1% and net M&A impact of -0.3%.
· Improving market share trends, 48% of our Top Category Market
Units (CMUs) held or gained share; 55% in Health (2023: 46%), 55% in Hygiene
(2023: 47%) and 15% (2023: 37%) in Nutrition (weighted by net revenue).
· Q4 Group LFL net revenue growth was +4.6% reflecting price / mix
improvements of +2.8% and volume growth of +1.8%.
· Hygiene Q4 LFL net revenue grew by +5.5%, with broad-based growth
across all of our Powerbrands, and delivered a sequential improvement in
volumes (+4.4%).
· Health Q4 LFL net revenue grew by 2.4% as continued strength in
Dettol, Intimate Wellness and non-seasonal OTC was partially offset by weaker
contributions from Mucinex due to the delayed onset of cold and flu in the US.
Health volumes declined by -2.1%, but excluding the seasonal OTC impact, were
+2.5%.
· Nutrition Q4 LFL net revenue returned to growth (+8.4%),
reflecting inventory restocking following the Mount Vernon tornado and the
base effect of the 200bps adjustment made in Q4 2023 in relation to the
voluntary recall of Nutramigen. Nutrition volumes returned to growth (+5.3%).
Group operating margins and profit
· FY gross margin 60.7% (2023: 60.0%), an increase of +70bps,
driven by pricing and productivity efficiencies against a more benign
environment for cost input inflation.
· Brand equity investment (BEI) increased by +3.1% (+£59m) on a
constant FX basis as we strengthened investment behind innovation launches to
support the long-term growth of our brands. BEI percentage of net revenue up
+30bps to 13.4% (2023: 13.1%).
· FY adjusted operating profit £3,475m (2023: £3,373m) at an
adjusted operating margin of 24.5% (2023: 23.1%), 140bps higher than the prior
year reflecting early delivery of cost efficiencies from our Fuel for Growth
programme, as well as +30bps of one-off items primarily driven by the benefit
of the insurance proceeds from the Mount Vernon tornado. Fixed costs declined
by -90bps to 20.9% of net revenue, versus 21.8% in 2023.
· FY IFRS operating profit was £2,425m (2023: £2,531m) at an
operating profit margin of 17.1% (2023: 17.3%). This was impacted by an
intangible assets impairment charge of £838 million (2023: £810m) relating
to IFCN and Biofreeze, reflecting a significant capital investment programme
that has commenced to meet regulatory requirements and to build greater
resilience in the wider supply network for IFCN, and a more challenging
marketplace for topical pain relief. Refer to Note 6 below for further
details.
· Following the announcement we made in our July 2024 Strategy
Update, the Group incurred £167m of one-off costs (of which £161m are
one-off cash costs) in relation to transformation and restructuring, which are
excluded from adjusted earnings.
EPS and dividends
· Total adjusted diluted EPS was 349.0p in 2024 (2023: 323.4p), a
rise of +7.9%, due to higher adjusted operating profit, a lower share count
from our ongoing share buyback, and a lower effective tax rate of 22.2% (2023:
25.2%), offset by higher net interest cost and adverse foreign exchange.
Total IFRS diluted EPS was 203.2p (2022: 228.7p).
· Full year dividend increased by 5% to 202.1p (2023: 192.5p) per
share, in line with our policy to deliver sustainable growth through a
progressive dividend. The final proposed dividend is 121.7p (2023: 115.9p) per
share.
Free cash flow
· Free cash flow was £2,232m in 2024 (2023: £2,258m) a -1.2%
decrease year on year.
· We continue to maintain a strong balance sheet with net debt at
2.0x adjusted EBITDA (2023: 1.9x adjusted EBITDA).
OPERATING SEGMENT REVIEW
Hygiene 43% of net revenue in 2024
Net Revenue £m Volume Price / Mix LFL(1) Net M&A FX Actual
FY 2024 6,140 +1.8% +2.4% +4.2% - -4.1% +0.1%
Q4 2024 1,555 +4.4% +1.1% +5.5% - -3.9% +1.6%
Operating Profit £m Constant FX (CER)(1) Actual
Adjusted Operating Profit(1) 1,375 +16.5% +11.2%
Adjusted Operating Profit Margin(1) % 22.4% +230bps
1. Non-GAAP measures are defined on page 32
Full Year Performance
Hygiene net revenue grew +4.2% on a LFL basis to £6,140m. Growth was
balanced with +2.4% price / mix improvements and +1.8% volume growth. Net
revenue growth was broad-based across all Powerbrands and regions.
55% of Hygiene Top CMUs (weighted by net revenue) gained or held share during
the year. Successful innovation launches and strengthened marketing were
positive growth drivers, offset by a more competitive environment in the US,
particularly in Auto Dish and Air Care.
Finish LFL net revenue grew mid-single digits, with strong growth across our
thermoforming formats driving further premiumisation in the auto dish category
as consumers continue to trade up to more superior solutions. Finish
thermoformed tablets now account for 75% of our tablet net revenue.
Lysol delivered high-single digit LFL net revenue growth in the year, led by
strong high-single digit growth in all surface and bathroom hygiene cleaners
in our established segments of disinfection. Our innovation platforms, Lysol
Laundry Sanitizer and Lysol Air Sanitizer, continue to drive category growth
with penetration gains and market share growth. Lysol Air Sanitizer
demonstrates how our platform discoveries lead to breakthrough propositions.
Since its launch in July 2023, it has created an entirely new category with
the first and only air sanitising spray approved by the EPA, which kills 99.9%
of airborne viruses and bacteria.
Harpic delivered mid-single digit LFL net revenue growth in the year, led by
India where our 10X Advanced Harpic formulation is delivering category share
gains.
Vanish LFL net revenue grew low-single digits in the year, led by mid-single
digit growth and market share gains in key markets across Europe, building on
our premiumisation strategy enabled through superior performance especially in
short and quick wash cycles.
We saw broad-based growth across our other Hygiene brands, including Air Wick
and Mortein.
Adjusted operating profit was £1,375m, up +16.5% on a constant FX basis and
+11.2% on an actual basis. Adjusted operating profit margin was 22.4%, up
+230bps driven by strong gross margin expansion, effective targeted brand
building and marketing investment, supported by further improvements in our
fixed cost base enabled by a strong productivity programme.
Fourth Quarter Performance
Hygiene net revenue grew +5.5% in the quarter on a LFL basis, with price / mix
improvements of +1.1% and volume growth of +4.4%. Growth was broad-based
across brands, with Finish (high-single digits), Air Wick (mid-single digits),
Vanish (high-single digits), Harpic (high-single digits) and Mortein (double
digits) all delivering strong growth in the quarter. Lysol grew low-single
digits despite lapping tough comparatives as a result of competitive
disruption in the prior year. Growth was broad-based across all regions.
Whilst we continue to see a more competitive environment in the US, Finish
market share improved in Europe as we exited the year.
Health 42% of net revenue in 2024
Net Revenue £m Volume Price / Mix LFL(1) Net M&A FX Actual
FY 2024 5,882 -0.3% +2.4% +2.1% -0.7% -4.4% -3.0%
Q4 2024 1,465 -2.1% +4.5% +2.4% -0.8% -4.4% -2.8%
Operating Profit £m Constant FX (CER)(1) Actual
Adjusted Operating Profit(1) 1,699 +6.5% +0.5%
Adjusted Operating Profit Margin(1) % 28.9% +100bps
1. Non-GAAP measures are defined on page 32
Full Year Performance
Health net revenue grew +2.1% on a LFL basis to £5,882m, reflecting price /
mix improvements of +2.4% and volume decline of -0.3%. Excluding the seasonal
OTC brands, Health net revenue grew 5.3% in the full year, with volumes
positive at +2.5%.
55% of Health Top CMUs (weighted by net revenue) gained or held share during
the year, driven by market share gains across our Intimate Wellness and
non-seasonal OTC portfolios.
Our Intimate Wellness portfolio, led by Durex, delivered high-single digit
growth in the year, with double-digit growth across Developing Markets, and
high-single digit growth across Europe. We are seeing strong market share
gains across these geographies with higher rates of adoption being driven by
improved in-store execution, distribution gains and recent innovation
launches. China, our largest market for Durex, grew mid-teens LFL net revenue,
helped by continued success in innovation platforms such as polyurethane
condoms and hyaluronic acid condoms, which have seen a strong response from
consumers, as well as our Intima feminine hygiene brand, which has seen strong
growth particularly across our online channel.
Our non-seasonal OTC brands grew mid-single digits LFL net revenue in the
year. Investment in expanding supply capacity enabled us to meet strong
consumer demand, with Gaviscon achieving double-digit growth and improved pack
fill rates, and strong growth in Nurofen across multiple European markets
supported by the roll-out of Nurofen Liquid Capsules in Italy, as well as a
promising early response to the launch of Nurofen sustained release with
12-hour pain relief in Romania.
Our seasonal OTC brands Mucinex and Strepsils declined high-single digits,
impacted by tough prior year comparatives in Q1, a weak end to the cold and
flu season in the first half of the year and a delayed onset of the US season
in the second half. Even against that backdrop, the equity of these brands
remains strong, and supported by ongoing innovation with the successful
September 2024 launch of Mucinex Mighty Chews, the first over-the-counter
medicated children's soft chew for cough relief. As the cold and flu season
has come in Q1 2025, we are seeing good growth and market share gains in the
US upper respiratory category early in the year.
Dettol grew low-single digits in the year, with strong volume growth partially
offset by the competitive pricing actions taken in certain ASEAN markets.
China delivered strong double-digit growth led by innovation across a number
of platforms.
Adjusted operating profit for Health of £1,699m was up +6.5% on a constant FX
basis and +0.5% on an actual basis. Adjusted operating margin was 28.9%, an
increase of +100bps, with gross margin expansion and fixed cost optimisation
more than offsetting increased investment behind our brands.
Fourth Quarter Performance
Net revenue grew +2.4% on a LFL basis with price / mix improvements of +4.5%
and volume decline of -2.1%. Growth was led by our Intimate Wellness
portfolio, with particularly strong growth in China. Non-seasonal OTC
brands, Dettol and VMS also grew in the quarter. This growth was partially
offset by double-digit decline in our seasonal OTC portfolio due to the
delayed onset of the cold and flu season. Excluding the seasonal OTC brands,
our Health portfolio grew volumes by +2.5% in the quarter.
Nutrition 15% of net revenue in 2024
Net Revenue £m Volume Price / Mix LFL(1) Net M&A FX Actual
FY 2024 2,147 -7.1% -0.2% -7.3% - -3.6% -10.9%
Q4 2024 527 +5.3% +3.1% +8.4% -0.3% -7.3% +0.8%
Operating Profit £m Constant FX (CER)(1) Actual
Adjusted Operating Profit(1) 401 -5.4% -10.3%
Adjusted Operating Profit Margin(1) % 18.7% +20bps
1. Non-GAAP measures are defined on page 32
Full Year Performance
Nutrition net revenue declined by -7.3% on a LFL basis to £2,147m, with price
/ mix of -0.2% and volume decline of -7.1%. This was driven by a combination
of the Mount Vernon tornado, which impacted short-term supply to customers in
the second half of the year, and our market shares rebasing from historical
highs reached in the prior year during the competitor supply issue.
Developing Markets remained broadly flat for the full year reflecting
category-led volume growth declines partially offset by growth in premium
products in ASEAN.
15% of Nutrition Top CMUs (weighted by net revenue) gained or held share
during the year, impacted by market shares rebasing in the US post the
competitor supply shortage issue, and the impact of the Mount Vernon tornado,
which resulted in us being out of stock in certain SKUs in some of our more
specialised formulations.
Adjusted operating profit for Nutrition at £401m was down -5.4% on a constant
FX basis and -10.3% on an actual basis. Adjusted operating margin was 18.7%,
up +20bps, as reduced gross margin was offset by the effect of the insurance
proceeds following the Mount Vernon tornado.
We continue to expand our market access and penetration with new format
releases and international rollouts. In the higher-growth digestion segment,
we successfully launched Enfamil NeuroPro Gentlease Powder in Q2 2024 to
soothe stomach problems with patented prebiotics.
Fourth Quarter Performance
Nutrition net revenue grew +8.4% on a LFL basis in the quarter, as we
partially refilled SKUs impacted by the tornado-related supply disruption
experienced in Q3 and lapped the 200bps adjustment we made in Q4 2023 in
respect of the voluntary recall of Nutramigen. Developing Markets grew
mid-single digits with strong growth across ASEAN and Latin America.
Necrotizing Enterocolitis (NEC)
Certain Group subsidiaries continue to face product liability lawsuits in
North America relating to allegations that preterm infant formulas and / or
human milk fortifiers cause Necrotizing Enterocolitis (NEC). The Company
continues to vigorously defend these claims. The first trial occurred in Q1
2024 in state court in Belleville, Illinois and resulted in a $60 million jury
verdict. We disagree with the verdict and are pursuing an appeal. A
second trial occurred in Q4 2024 in St. Louis, Missouri and resulted in a
verdict in Mead Johnson's favour. The Plaintiff is seeking post-trial
relief, including a new trial.
In October 2024, three US federal public health agencies (Food and Drug
Administration, Centers for Disease Control and Prevention, National
Institutes of Health) issued a consensus statement on premature infants and
NEC, which stated that " t here is no conclusive evidence that preterm infant
formula causes NEC," and while mother's milk is the preferred source of
nutrition - with pasteurised donor human milk as a next best alternative -
preterm infant formulas "can be critical for premature infants for whom
parental or donor milk is not an option, or where a supplement to parental or
donor milk is necessary for the health of the infant" and are "part of the
standard of care." They end their statement by stating that "while there is
a preference for human milk, all infants should be fed as soon as is
medically feasible through whatever appropriate nutritious food source is
available."
Performance by Geography
Net Revenue £m Volume Price / Mix LFL(1) Net M&A FX Actual
FY 2024
North America 4,542 -3.3% -1.7% -5.0% - -2.7% -7.7%
Europe / ANZ 4,859 -0.4% +4.3% +3.9% - -3.7% +0.2%
Developing Markets 4,768 +2.1% +3.4% +5.5% -0.9% -6.1% -1.5%
Total 14,169 -0.6% +2.0% +1.4% -0.3% -4.1% -3.0%
Q4 2024
North America 1,145 -1.0% -1.2% -2.2% -0.1% -3.6% -5.9%
Europe / ANZ 1,227 +3.1% +2.8% +5.9% +0.2% -3.3% +2.8%
Developing Markets 1,175 +3.4% +7.1% +10.5% -1.3% -7.1% +2.1%
Total 3,547 +1.8% +2.8% +4.6% -0.4% -4.6% -0.4%
1. Non-GAAP measures are defined on page 32
North America LFL net revenue declined -5.0% for the full year, with strong
growth in Lysol more than offset by the decline in seasonal OTC brands. Growth
was also impacted by the continued market share rebasing of our Nutrition
business and competitive challenges to our Finish and Air Wick brands.
In Europe / ANZ LFL net revenue grew +3.9% for the full year, with broad-based
growth across Hygiene and non-seasonal OTC portfolios, offset by declines in
seasonal OTC brands.
Developing Markets LFL net revenue grew +5.5% for the full year, with
broad-based growth across Hygiene and Health portfolios.
ADDITIONAL FINANCIAL COMMENTARY
The following section should be read in conjunction with the condensed
financial statements and the adjusted and other non-GAAP measures, definitions
and terms section.
Group net revenue
On a Group basis, net revenue was £14,169m, representing +1.4% growth on a
LFL basis of which -0.6% was volume
and +2.0% was price / mix. Total net revenue on an IFRS basis was down by
-3.0%, reflecting net M&A impact of -0.3% and foreign exchange headwinds
of -4.1%.
Group operating profit
Adjusted operating profit was £3,475 million (2023: £3,373 million) at an
adjusted operating margin of 24.5%, 140bps higher than the prior year (2023:
23.1%). This increase was driven by gross margins 70bps higher than 2023, and
fixed costs 90bps lower than 2023. This was partially offset by BEI and other
marketing spend increases of 20bps.
IFRS operating profit was £2,425 million (2023: £2,531 million) at an IFRS
operating margin of 17.1% (2023: 17.3%). IFRS operating profit in 2024 was
impacted by an intangible assets impairment charge of £838 million relating
to IFCN and Biofreeze (2023: £810 million). The IFCN impairment of £696
million (2023: £810 million) reflects changes in the regulatory environment
resulting in increased capital requirements as well as to build greater
resilience in the wider supply network (see note 6). During 2024, Biofreeze
performed below expectations following competitive pressure from both private
label and branded competitors, new entrants to the market and a reduction in
the level of displays present in the category which has resulted in an
impairment of £142 million (2023: £0 million), (see note 6). IFRS operating
profit was also affected by restructuring and other project costs of £167
million linked to the Group strategic announcements in 2024. This principally
includes professional advisor fees and severance costs relating to business
transformation and portfolio changes.
Net finance expense
Adjusted net finance expense was £323 million (2023: £247 million). The
increase in adjusted net finance expense in 2024 was primarily driven by
increased interest payable on borrowings due to the cost of debt issued in the
period.
IFRS net finance expense was £321 million (2023: £130 million). The net
finance expense under IFRS is higher in 2024 due to a £130 million credit in
2023 relating to translational foreign exchange gains arising upon liquidation
of a number of subsidiaries.
Tax
The adjusted effective tax rate (ETR) was 22.2% (2023: 25.2%). The 2024 ETR benefitted from a change in estimate of uncertain tax positions.
The IFRS tax rate was 31.9% (2023: 31.4%). The IFRS ETR in 2024 is higher than
the adjusted ETR due to the non-deductible impairment of intangible assets,
and the non-deductible costs linked to the Group strategic announcements in
2024. The IFRS ETR in 2023 is higher than the adjusted ETR due to the
non-deductible impairment of IFCN goodwill offset by the benefit from largely
non-taxable gains on liquidation of subsidiaries.
Earnings per share (EPS)
Adjusted diluted EPS was 349.0 pence (2023: 323.4 pence), an increase of 7.9%.
The increase was due to higher adjusted operating profit at constant exchange
rates and the beneficial effect of the ongoing share repurchase programme,
partly offset by the impact of foreign exchange.
IFRS diluted EPS was 203.2 pence (2023: 228.7 pence), a decrease of 11.1%.
The decrease was driven by a lower operating profit and higher net finance
expense, which more than offset the benefit of a lower diluted number of
shares.
Balance sheet
At 31 December 2024, the Group had total equity of £6,720 million (31
December 2023: £8,469 million).
Current assets of £4,598 million (31 December 2023: £5,302 million)
decreased by £704 million. Cash and cash equivalents reduced by £507m, which
includes an increase in share repurchases in the year. Inventories and
corporation tax receivables also reduced in the year.
Current liabilities of £7,943 million (31 December 2023: £8,338 million)
decreased by £395 million. The decrease principally relates to lower
borrowings and lower trade and other payables, together with lower current tax
liabilities. These decreases were offset by the share repurchase liability in
relation to committed purchases under the share buyback programme.
Non-current assets of £20,700 million (31 December 2023: £21,834 million)
primarily comprise goodwill and other intangible assets of £17,565 million
(31 December 2023: £18,588 million) and property, plant and equipment. The
decrease in goodwill and other intangible assets of £1,023 million is
predominantly due to impairment of IFCN and Biofreeze intangible assets.
Non-current liabilities of £10,635 million (31 December 2023: £10,329
million) increased by £306 million principally due to financing activity,
offset by a reduction in non-current tax liabilities.
Net working capital
During the year, net working capital decreased by £77 million to negative
£1,402 million (2023: negative £1,479m). Net working capital as a percentage
of 12-month net revenue is -10% (31 December 2023: -10%).
Cash flow
31 Dec 31 Dec
2024 2023
£m £m
Adjusted operating profit 3,475 3,373
Depreciation, share-based payments and gain on disposal of fixed assets (net 546 585
of proceeds)
Capital expenditure (465) (449)
Movement in working capital and provisions (271) (21)
Cash flow in relation to adjusting items(1) (61) (45)
Interest paid (292) (263)
Tax paid (700) (922)
Free cash flow 2,232 2,258
Free cash flow conversion 91% 97%
(1) Further details on adjusting items can be found on page 33.
Free cash flow (FCF) is the amount of cash generated from continuing operating
activities after net capital expenditure on property, plant and equipment and
intangible software assets. Free cash flow reflects cash flows that could be
used for payment of dividends, repayment of debt or to fund acquisitions or
other strategic objectives.
Free cash flow of £2,232 million decreased by £26 million or 1%. Free cash
flow conversion reduced by six percentage points to 91% as the benefit of
reduction in tax paid was more than offset by cash outflow relating to Group
strategic announcements, higher interest paid and cash outflow from increased
working capital commitments. Net cash generated from operating activities
has increased by £46 million to £2,682 million (2023: £2,636 million).
Net debt
31 Dec 31 Dec
2024
2023
£m £m
Opening net debt (7,290) (7,984)
Free cash flow 2,232 2,258
Share buyback (1,328) (207)
Purchase of ordinary shares by employee share ownership trust (3) (2)
Shares reissued 3 48
Acquisitions, disposals and purchase of investments 17 (80)
Dividends paid to owners of the parent company (1,381) (1,339)
Dividends paid to non-controlling interests (2) (8)
New lease liabilities in the period (70) (44)
Exchange and other movements (91) 76
Cash flow attributable to discontinued operations (1) (8)
Closing net debt (7,914) (7,290)
At 31 December 2024, net debt was £7,914 million, an increase of £624
million from 31 December 2023, as higher capital returns through dividends
(£1,381 million) and the ongoing share buy-back programme (£1,328 million)
more than offset continued strong free cash flow (£2,232m). Net debt was 2.0x
adjusted EBITDA at 31 December 2024 (31 December 2023: 1.9x).
The Group regularly reviews its banking arrangements and currently has
adequate facilities available to it. The Group has committed borrowing
facilities totalling £4,450 million (31 December 2023: £4,500 million), of
which £124 million (2023: nil) was drawn at year-end and of which £3,500
million (31 December 2023: £4,450 million) expire after more than two years.
The Group remains compliant with its banking covenants. The committed
borrowing facilities, together with cash and cash equivalents, are considered
sufficient to meet the Group's projected cash requirements.
Dividends
The Board of Directors recommends a final 2024 dividend of 121.7 pence (2023:
115.9 pence). The ex-dividend date will be 10 April 2025 and the dividend will
be paid on 29 May 2025 to shareholders on the register at the record date of
11 April 2025. The final 2024 dividend will be accrued once approved by
shareholders.
Return on Capital Employed (ROCE)
ROCE in 2024 was 13.5% (2023: 12.5%), an increase of 100bps from 2023, due to
a higher Net Operating Profit after Tax (NOPAT).
Capital returns policy
Reckitt has consistently communicated its intention to use its strong cash
flow for the benefit of shareholders. Our priority remains to reinvest our
financial resources back into the business, including through value-adding
acquisitions, in order to deliver sustainable growth in net revenue and
improving earnings per share over time.
In managing the balance sheet, we intend to maintain key financial ratios in
line with those expected of an A-grade credit-rated business. This will
broadly define acceptable levels of leverage over time. In 2024, our strong
free cash flow generation and healthy balance sheet enabled us to return
£1.3bn of cash to shareholders through share repurchases.
Growing the dividend is a long-term goal of the business. The Board's dividend
policy aims to deliver sustainable dividend growth in future years, subject to
any significant internal or external factors. Accordingly, the 2024 dividend
was increased by 5% in line with this objective.
Appendix A: Re-presentation of segmental financial information
Quarterly net revenue by segment
Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24
Emerging Markets 970 1,044 1,037 1,065 1,036 978 967 943 987 957 964 969
Europe 792 794 830 819 966 849 876 856 957 836 872 882
North America 646 542 693 797 711 596 669 755 682 593 667 664
Core Reckitt 2,408 2,380 2,560 2,681 2,713 2,423 2,512 2,554 2,626 2,386 2,503 2,515
Essential Home 468 463 510 521 532 483 525 493 530 477 507 513
MJN 547 622 665 628 673 622 563 514 582 565 445 520
Reckitt 3,423 3,465 3,735 3,830 3,918 3,528 3,600 3,561 3,738 3,428 3,455 3,548
Quarterly net revenue by category
Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24
Self Care 728 692 816 959 964 746 830 899 908 736 826 823
Germ Protection 796 760 819 791 759 733 762 744 743 739 777 749
Household Care 545 566 566 607 637 571 585 591 631 548 560 606
Intimate Wellness 339 362 359 324 353 373 335 320 344 363 340 337
Core Reckitt 2,408 2,380 2,560 2,681 2,713 2,423 2,512 2,554 2,626 2,386 2,503 2,515
Quarterly LFL net revenue growth by segment
Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24
Emerging Markets +6.5% +13.2% +3.8% +7.0% +2.7% -0.2% +6.5% -1.4% +5.7% +4.0% +5.6% +12.0%
Volume +6.3% +1.0% +2.7% +3.3%
Price / mix -0.7% +3.0% +2.8% +8.7%
Europe +11.9% +23.6% +14.8% +3.7% +19.9% +8.9% +10.9% +7.5% +5.4% +0.9% +1.2% +5.5%
Volume -3.0% -3.3% -1.7% +3.7%
Price / mix +8.4% +4.2% +2.9% +1.8%
North America -8.1% -10.9% -2.1% +6.0% +0.0% +11.4% +2.8% -0.6% +0.2% +0.0% +2.1% -8.7%
Volume +0.7% -0.5% +3.4% -6.5%
Price / mix -0.5% +0.5% -1.3% -2.2%
Core Reckitt +4.0% +10.4% +5.8% +5.6% +7.4% +5.5% +6.9% +1.6% +4.1% +1.9% +3.1% +3.7%
Volume +1.5% -0.9% +1.4% +0.5%
Price / mix +2.7% +2.8% +1.8% +3.2%
Essential Home -0.3% +2.8% -2.6% -3.5% +3.7% +1.2% +3.1% +7.3% +3.2% +0.3% +0.4% +5.0%
Volume +0.2% -0.6% -1.5% +4.6%
Price / mix +3.0% +1.0% +2.0% +0.4%
MJN +21.0% +27.6% +26.2% +18.1% +12.1% -0.7% -11.9% -15.0% -10.2% -7.6% -17.7% +8.5%
Volume -12.3% -7.8% -9.7% +5.9%
Price / mix +2.1% +0.2% -8.0% +2.5%
Reckitt +5.7% +11.9% +7.5% +5.9% +7.7% +3.8% +3.1% -0.4% +1.5% +0.0% -0.5% +4.6%
Volume -1.1% -2.1% -0.8% +1.9%
Price / mix +2.6% +2.1% +0.3% +2.7%
Quarterly LFL net revenue growth by category
Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24
Self Care 54.5% 53.2% 18.9% 13.3% 23.6% 9.9% 8.3% -1.6% 0.3% 1.6% 3.1% -2.9%
Germ Protection -21.2% -11.0% -6.2% -3.2% -8.8% 0.8% 2.2% 1.0% 5.2% 4.2% 5.5% 5.8%
Household Care 6.9% 12.5% 7.0% 11.6% 11.6% 4.4% 13.4% 4.7% 7.8% 0.0% -0.7% 7.8%
Intimate Wellness 5.0% 6.0% 7.7% -2.6% 3.4% 8.7% 4.3% 6.3% 5.3% 1.1% 4.5% 9.7%
Core Reckitt 4.0% 10.4% 5.8% 5.6% 7.4% 5.5% 6.9% 1.6% 4.1% 1.9% 3.1% 3.7%
Annual net revenue by segment
LFL net revenue growth
FY'21 FY'22 FY'23 FY'24 FY'22 FY'23 FY'24
Emerging Markets 3,603 4,116 3,924 3,877 +7.5% +1.9% +6.8%
Europe 3,031 3,235 3,547 3,547 +13.0% +11.8% +3.3%
North America 2,464 2,678 2,731 2,606 -3.5% +2.8% -1.8%
Core Reckitt 9,098 10,029 10,202 10,030 +6.3% +5.3% +3.3%
Essential Home 1,904 1,962 2,033 2,027 -1.1% +3.8% +2.3%
MJN 1,850 2,462 2,372 2,112 +23.2% -4.1% -7.3%
Reckitt 12,852 14,453 14,607 14,169 +7.6% +3.5% +1.4%
Annual net revenue by category
LFL net revenue growth
FY'21 FY'22 FY'23 FY'24 FY'22 FY'23 FY'24
Self Care 2,283 3,195 3,439 3,293 +30.4% +9.5% +0.5%
Germ Protection 3,364 3,166 2,998 3,008 -11.1% -1.3% +5.2%
Household Care 2,063 2,284 2,384 2,345 +9.5% +8.5% +3.8%
Intimate Wellness 1,388 1,384 1,381 1,384 +4.0% +5.7% +5.0%
Core Reckitt 9,098 10,029 10,202 10,030 +6.3% +5.3% +3.3%
Adjusted gross profit by segment
H1'22 H2'22 FY'22 H1'23 H2'23 FY'23 H1'24 H2'24 FY'24
Core Reckitt 2,803 3,105 5,909 3,121 3,165 6,286 3,112 3,127 6,239
Essential Home 473 506 978 515 541 1,056 541 559 1,100
MJN 728 746 1,474 788 630 1,418 688 568 1,256
Reckitt 4,004 4,357 8,361 4,424 4,336 8,760 4,341 4,254 8,595
Gross profit margin by segment
H1'22 H2'22 FY'22 H1'23 H2'23 FY'23 H1'24 H2'24 FY'24
Core Reckitt 58.5% 59.3% 58.9% 60.8% 62.5% 61.6% 62.1% 62.3% 62.2%
Essential Home 50.8% 49.1% 49.8% 50.7% 53.2% 51.9% 53.7% 54.8% 54.3%
MJN 62.3% 57.7% 59.9% 60.8% 58.5% 59.8% 60.0% 58.9% 59.5%
Reckitt 58.1% 57.6% 57.8% 59.4% 60.5% 60.0% 60.6% 60.7% 60.7%
Adjusted operating profit(1)
Adjusted operating profit margin
H1'24 H2'24 FY'24 H1'24 H2'24 FY'24
Emerging Markets 362 367 729 18.6% 19.0% 18.8%
Europe 551 512 1,063 30.7% 29.2% 30.0%
North America 385 409 794 30.2% 30.7% 30.5%
Core Reckitt 1,298 1,288 2,586 25.9% 25.7% 25.8%
Essential Home 230 260 490 22.8% 25.5% 24.2%
MJN 215 184 399 18.7% 19.1% 18.9%
Reckitt 1,743 1,732 3,475 24.3% 24.7% 24.5%
(1. ) Adjusted Operating Profit has been prepared by allocating
fixed costs between Core Reckitt and Essential Home on the basis of Net
Revenue and are not fully reflective of the cost base on a stand-alone basis.
Condensed Financial Statements
Group Income Statement
For the year ended 31 December 2024
2024 2023
£m £m
CONTINUING OPERATIONS
Net Revenue 14,169 14,607
Cost of sales (5,574) (5,847)
Gross profit 8,595 8,760
Impairment of intangible assets (839) (810)
Other operating expenses (5,331) (5,419)
Net operating expenses (6,170) (6,229)
Operating profit 2,425 2,531
Finance income 3 81 210
Finance expense 3 (402) (340)
Profit before income tax 2,104 2,401
Income tax charge 4 (672) (753)
Net profit from continuing operations 1,432 1,648
Net (loss)/profit from discontinued operations (4) 9
Net profit 1,428 1,657
Attributable to non-controlling interests 2 14
Attributable to owners of the parent company 1,426 1,643
Net profit 1,428 1,657
Basic earnings/(loss) per ordinary share
From continuing operations (pence) 5 204.2 227.9
From discontinued operations (pence) 5 (0.6) 1.3
From total operations (pence) 203.6 229.2
Diluted earnings/(loss) per ordinary share
From continuing operations (pence) 5 203.8 227.4
From discontinued operations (pence) 5 (0.6) 1.3
From total operations (pence) 203.2 228.7
Group Statement of Comprehensive Income
For the year ended 31 December 2024
2024 2023
£m £m
Net profit 1,428 1,657
Other comprehensive income/(expense)
Items that have or may be reclassified to the Income Statement in subsequent
years
Net exchange loss on foreign currency translation, net of tax (442) (639)
Reclassification of foreign currency translation reserves on disposal or (11) (131)
liquidation of foreign operations, net of tax
Gains on net investment hedges, net of tax 85 42
Fair value gains/(losses) on cash flow hedges, net of tax 9 (16)
Reclassification of cash flow hedges to the income statement 29 (23)
(330) (767)
Items that will not be reclassified to the Income Statement in subsequent
years
Remeasurements of defined benefit pension plans, net of tax (13) (26)
Revaluation of equity instruments - FVOCI, net of tax (28) (10)
(41) (36)
Other comprehensive expense, net of tax (371) (803)
Total comprehensive income 1,057 854
Attributable to non-controlling interests 2 13
Attributable to owners of the parent company 1,055 841
Total comprehensive income 1,057 854
Total comprehensive income attributable to owners of the parent company
arising from:
Continuing operations 1,059 832
Discontinued operations (4) 9
1,055 841
Group Balance Sheet
As at 31 December 2024
2024 2023
£m £m
ASSETS
Non-current assets
Goodwill and other intangible assets 6 17,565 18,588
Property, plant and equipment 2,385 2,399
Equity instruments 108 118
Deferred tax assets 243 287
Retirement benefit surplus 269 270
Other non-current receivables 130 172
Total non-current assets 20,700 21,834
Current assets
Inventories 1,517 1,637
Trade and other receivables 2,091 2,062
Derivative financial instruments 61 64
Current tax recoverable 45 80
Cash and cash equivalents 880 1,387
Assets held for sale 4 72
Total current assets 4,598 5,302
Total assets 25,298 27,136
LIABILITIES
Current liabilities
Short-term borrowings 7 (1,423) (1,679)
Provisions for liabilities and charges (112) (142)
Trade and other payables (5,291) (5,506)
Derivative financial instruments (38) (78)
Share repurchase liability (477) (296)
Current tax liabilities (602) (620)
Liabilities held for sale - (17)
Total current liabilities (7,943) (8,338)
Non-current liabilities
Long-term borrowings 7 (7,235) (6,858)
Deferred tax liabilities (2,849) (2,899)
Retirement benefit obligations (235) (233)
Provisions for liabilities and charges (62) (57)
Derivative financial instruments (173) (187)
Non-current tax liabilities - (28)
Other non-current liabilities (81) (67)
Total non-current liabilities (10,635) (10,329)
Total liabilities (18,578) (18,667)
Net assets 6,720 8,469
EQUITY
Capital and reserves
Share capital 74 74
Share premium 254 254
Merger reserve (14,229) (14,229)
Other reserves (1,390) (1,060)
Retained earnings 21,990 23,409
Attributable to owners of the parent company 6,699 8,448
Attributable to non-controlling interests 21 21
Total equity 6,720 8,469
Group Statement of Changes in Equity
For the year ended 31 December 2024
Share Share Merger Other Retained earnings Total attributable to owners of the parent company Non-controlling interests Total
capital premium reserves reserves
£m £m £m £m £m £m £m £m
Balance at 1 January 2023 74 254 (14,229) (294) 23,638 9,443 40 9,483
Comprehensive income
Net profit - - - - 1,643 1,643 14 1,657
Other comprehensive income/(expense) - - - (766) (36) (802) (1) (803)
Total comprehensive income/(expense) - - - (766) 1,607 841 13 854
Transactions with owners
Treasury shares reissued - - - - 48 48 - 48
Purchase of ordinary shares by employee share ownership trust - - - - (2) (2) - (2)
Repurchase of ordinary shares - - - - (503) (503) - (503)
Share based payments - - - - 102 102 - 102
Tax on share awards - - - - 1 1 - 1
Cash dividends - - - - (1,339) (1,339) (8) (1,347)
Forward purchase of shares held by non-controlling interest - - - - (143) (143) (24) (167)
Total transactions with owners - - - - (1,836) (1,836) (32) (1,868)
Balance at 31 December 2023 74 254 (14,229) (1,060) 23,409 8,448 21 8,469
Comprehensive income
Net profit - - - - 1,426 1,426 2 1,428
Other comprehensive income/(expense) - - - (330) (41) (371) - (371)
Total comprehensive income/(expense) - - - (330) 1,385 1,055 2 1,057
Transactions with owners
Treasury shares reissued - - - - 3 3 - 3
Purchase of ordinary shares by employee share ownership trust - - - - (2) (2) - (2)
Repurchase of ordinary shares - - - - (1,509) (1,509) - (1,509)
Share-based payments - - - - 85 85 - 85
Cash dividends - - - - (1,381) (1,381) (2) (1,383)
Total transactions with owners - - - - (2,804) (2,804) (2) (2,806)
Balance at 31 December 2024 74 254 (14,229) (1,390) 21,990 6,699 21 6,720
Group Cash Flow Statement
For the year ended 31 December 2024
2024 2023
£m £m
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax 2,104 2,401
Net finance expense 321 130
Operating profit from continuing operations 2,425 2,531
Loss/(profit) on sale of property, plant and equipment and intangible 3 (34)
assets
Depreciation, amortisation and impairment 1,308 1,290
Share-based payments 85 102
Decrease in inventories 61 118
Increase in trade and other receivables (133) (87)
Decrease in payables and provisions (74) (91)
Cash generated from continuing operations 3,675 3,829
Interest paid (350) (293)
Interest received 58 30
Tax paid (700) (922)
Net cash flows attributable to discontinued operations (1) (8)
Net cash generated from operating activities 2,682 2,636
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (370) (348)
Purchase of intangible assets (95) (101)
Proceeds from the sale of property, plant and equipment 14 63
Proceeds from sale of intangible assets and related businesses, net of cash 57 1
disposed
Acquisition of businesses, net of cash acquired - (81)
Other investing activities (2) -
Net cash used in investing activities (396) (466)
CASH FLOWS FROM FINANCING ACTIVITIES
Treasury shares reissued 3 48
Purchase of ordinary shares by employee share ownership trust (3) (2)
Repurchase of ordinary shares (1,328) (207)
Proceeds from borrowings 1,768 1,638
Repayment of borrowings (1,687) (1,855)
Dividends paid to owners of the parent company (1,381) (1,339)
Dividends paid to non-controlling interests (2) (8)
Acquisition of non-controlling interest (38) -
Other financing activities(1) (47) (84)
Net cash used in financing activities (2,715) (1,809)
Net (decrease) / increase in cash and cash equivalents (429) 361
Cash and cash equivalents at beginning of the year 1,380 1,156
Exchange losses (72) (137)
Cash and cash equivalents at end of the year 879 1,380
Cash and cash equivalents comprise:
Cash and cash equivalents per the balance sheet(2) 880 1,387
Overdrafts (1) (7)
879 1,380
1. Cash flow from other financing activities are principally
composed of cash receipts and payments on derivative contracts used to hedge
foreign exchange gains or losses on non-Sterling financing assets and
financing liabilities between the Group's treasury company and fellow Group
subsidiaries.
2. Included within cash and cash equivalents is £120 million
of cash (2023: £229 million) which is restricted for use by the Group but is
available on demand and freely available for use within the relevant
subsidiary.
Notes to Condensed Financial Statements
1 ACCOUNTING POLICIES
General
Reckitt Benckiser Group plc is a public limited company listed on the London
Stock Exchange and incorporated and domiciled in England. The address of its
registered office is 103-105 Bath Road, Slough, Berkshire, SL1 3UH.
Basis of Preparation
The financial information for the year ended 31 December 2024 is derived from
the full Annual Report which was approved by the Board of Directors on 5 March
2025. The consolidated financial statements in the full Annual Report are
prepared in accordance with UK-adopted International Financial Reporting
Standards ('IFRS'), with IFRS as issued by the International Accounting
Standards Board ('IASB') and with the requirements of the Companies Act 2006.
The auditor's report on those consolidated financial statements was
unqualified, did not draw attention to any matters by way of emphasis without
qualifying their report and did not contain statements under section 498(2) or
498(3) of the Companies Act 2006. This financial information does not comprise
statutory accounts within the meaning of section 434(3) of the Companies Act
2006. The Annual Report for the year ended 31 December 2024 will be delivered
to the Registrar of Companies following the Group's Annual General Meeting on
8 May 2025. The Annual Report for the year ended 31 December 2023 has been
delivered to the Registrar of Companies.
This financial information does not itself contain sufficient information to
comply with IFRS. A separate announcement will be made in accordance with
Disclosure and Transparency Rules (DTR) 6.3 when the annual report and audited
financial statements for the year ended 31 December 2024 are made available on
the Group's website on 26 March 2025.
The preparation of this financial information requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the end of the
reporting period and the reported amounts of revenue and expenses during the
reporting period. Actual results could vary from these estimates. The
estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period or in the period
of the revision and future periods if the revision affects both current and
future periods.
Going Concern
The Directors considered it appropriate to adopt the going concern basis of
accounting in preparing the consolidated Financial Statements. When reaching
this conclusion, the Directors took into account the Group's overall financial
position, exposure to principal risks and future business forecasts for at
least 12 months from the date of approval of these Financial Statements. At 31
December 2024, the Group had cash and cash equivalents excluding restricted
cash of £0.8 billion. The Group also had access to committed borrowing
facilities of £4.45 billion, of which £124 million (2023:£nil) was drawn at
year end and of which £3.5 billion (31 December 2023: £4.5 billion) expire
after more than two years.
New Standards, Amendments and Interpretations
On 1 January 2024, the Group adopted certain new accounting policies where
necessary to comply with amendments to IFRS, none of which had a material
impact on the consolidated results, financial position or cash flows of the
Group. Further details are provided in the Group's Annual Report for the year
ended 31 December 2024.
Critical accounting judgments
The judgements in the application of the Group's accounting policies in the
year ended 31 December 2024 are the same as in the year ended 31 December 2023
except for the following:
· In 2023 management has made judgments relating to the allocation of
consideration between the different elements in the forward contract to
purchase the non-controlling interest in RB Manon which is no longer a
critical accounting judgement for 2024.
· Management has determined that the Essential Home business should not
be classified as held for sale as at 31 December 2024, given the significant
level of pre-sale activity remaining to be completed before the Essential Home
business could be considered to be available for immediate sale in its present
condition subject only to terms that are usual and customary for sales of such
disposal groups.
Key sources of estimation uncertainty
Each year, management is required to make a number of assumptions regarding
the future. The related year end accounting estimates will, by definition,
seldom equal the final actual results. The estimates and underlying
assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised if the
revision affects only that period or in the period of the revision and future
periods if the revision affects both current and future periods. The
estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next
financial year are the same as in the year ended 31 December 2023.
2 OPERATING SEGMENTS
The Group's operating segments comprise of the Hygiene, Health and Nutrition
business units reflecting the way in which information is presented to and
reviewed by the Group's Chief Operating Decision Maker (CODM) for the purposes
of making strategic decisions and assessing Group-wide performance. The CODM
is the Group Executive Committee. This Committee is responsible for the
implementation of strategy (approved by the Board), the management of risk
(delegated by the Board) and the review of Group operational performance and
ongoing business integration.
The Group Executive Committee assesses the performance of these operating
segments based on Net Revenue from external customers and segment profit being
adjusted operating profit. Intercompany transactions between operating
segments are eliminated. Finance income and expense are not allocated to
segments, as each is managed on a centralised basis.
The segment information for the operating segments for the year ended 31
December 2024 and 31 December 2023 is as follows:
Year ended 31 December 2024 Hygiene Health Nutrition Adjusting Items Total
£m £m £m £m £m
Net revenue 6,140 5,882 2,147 - 14,169
Depreciation and amortisation (159) (189) (88) (25) (461)
Operating profit 1,375 1,699 401 (1,050) 2,425
Net finance expense (321)
Profit before income tax 2,104
Income tax charge (672)
Net profit from continuing operations 1,432
Year ended 31 December 2023 Hygiene Health Nutrition Adjusting Items Total
£m £m £m £m £m
Net revenue 6,135 6,062 2,410 - 14,607
Depreciation and amortisation (155) (193) (96) (26) (470)
Operating profit 1,236 1,690 447 (842) 2,531
Net finance expense (130)
Profit before income tax 2,401
Income tax charge (753)
Net profit from continuing operations 1,648
Financial information for the Hygiene, Health and Nutrition operating segments
is presented on an adjusted basis which excludes certain cash and non-cash
items. These items have a pattern of recognition that is largely uncorrelated
with the trading performance of the business. Financial information on an
adjusted basis is consistent with how management reviews the business for the
purpose of making operating decisions. Further detail on adjusting items,
which includes in the year to 31 December 2024 a £696 million impairment of
IFCN intangible assets (Note 6), £142 million impairment of Biofreeze
intangible assets (Note 6), and other project costs of £167 million linked to
the group strategic announcements in 2024.
3 NET FINANCE EXPENSE
2024 2023
£m £m
Finance income
Foreign exchange net gain on liquidation of subsidiaries - 130
Interest income on cash and cash equivalents 53 41
Pension net finance income 5 8
Foreign exchange gains on intercompany financing, net of hedging - 21
Finance income on tax balances 15 -
Other finance income 8 10
Total finance income 81 210
Finance expense
Interest payable on borrowings (363) (295)
Finance expense on tax balances - (22)
Forward purchase agreement interest expense (17) -
Interest payable on leases (13) (14)
Other finance expense (9) (9)
Total finance expense (402) (340)
Net finance expense (321) (130)
4 INCOME TAX EXPENSE
2024 2023
£m £m
Current tax 747 783
Adjustment in respect of prior periods (47) 22
Total current tax 700 805
Origination and reversal of temporary differences (30) (51)
Impact of changes in tax rates 2 (1)
Total deferred tax (28) (52)
Income tax charge 672 753
5 EARNINGS PER SHARE
2024 2023
pence pence
Basic earnings per share
From continuing operations 204.2 227.9
From discontinued operations (0.6) 1.3
Total basic earnings per share 203.6 229.2
Diluted earnings per share
From continuing operations 203.8 227.4
From discontinued operations (0.6) 1.3
Total diluted earnings per share 203.2 228.7
Basic
Basic earnings per share is calculated by dividing the net income attributable
to owners of the Parent Company from continuing operations (2024:
£1,430 million income, 2023: £1,634 million income) and discontinued
operations (2024: £4 million expense; 2023: £9 million income) by the
weighted average number of ordinary shares in issue during the year (2024:
700,386,007; 2023: 716,700,954).
Diluted
Diluted earnings per share is calculated by adjusting the weighted average
number of shares outstanding to assume conversion of all potentially dilutive
ordinary shares. The company has the following categories of potentially
dilutive ordinary shares: Executive Share Awards (including Executive Share
Options and Executive Restricted Share Scheme Awards) and Employee Sharesave
Scheme Options. The options only dilute earnings when they result in the
issue of shares at a value below the market price of the share and when all
performance criteria (if applicable) have been met as at the balance sheet
date. As at 31 December 2024, there were 16,237,641 (2023: 15,150,221)
Executive Share Awards excluded from the dilution because the exercise price
for the options was greater than the average share price for the year or the
performance criteria have not been met.
2024 average 2023 average
number of shares number of shares
On a basic basis 700,386,007 716,700,954
Dilution for Executive Share Awards 1,261,552 1,368,088
Dilution for Employee Sharesave Scheme Options 94,701 214,492
On a diluted basis 701,742,260 718,283,534
6 GOODWILL AND OTHER INTANGIBLE ASSETS
Brands Goodwill Software Other Total
£m £m £m £m £m
Cost
At 1 January 2023 14,525 11,036 653 278 26,492
Additions - - 101 - 101
Arising on business combinations - 17 - 39 56
Disposals (1) - - - (1)
Reclassifications - - 4 - 4
Reclassifications to held for sale (124) - - - (124)
Exchange adjustments (583) (660) (5) (4) (1,252)
At 31 December 2023 13,817 10,393 753 313 25,276
Additions - - 95 - 95
Arising on business combinations - 2 1 - 3
Disposals - (8) (5) - (13)
Reclassifications 5 (4) - (1) -
Exchange adjustments (118) (40) (10) 7 (161)
At 31 December 2024 13,704 10,343 834 319 25,200
Accumulated amortisation and impairment
At 1 January 2023 379 5,427 335 148 6,289
Amortisation 20 - 79 8 107
Impairment - 810 2 - 812
Disposals (1) - - - (1)
Reclassifications to held for sale (77) - - - (77)
Exchange adjustments (10) (422) (4) (6) (442)
At 31 December 2023 311 5,815 412 150 6,688
Amortisation 21 - 79 8 108
Impairment(1) 143 696 - - 839
Disposals (1) - (1) - (2)
Exchange adjustments (7) 11 (5) 3 2
At 31 December 2024 467 6,522 485 161 7,635
Net book value
At 31 December 2023 13,506 4,578 341 163 18,588
At 31 December 2024 13,237 3,821 349 158 17,565
1. Includes impairment of IFCN and Biofreeze.
Annual Impairment Review
Goodwill and other indefinite life intangible assets must be tested for
impairment on at least an annual basis. An impairment loss is recognised when
the recoverable amount of a GCGU or CGU falls materially below its net book
value at the date of testing.
The determination of recoverable amount, being the higher of value-in-use and
fair value less costs to dispose, is inherently judgemental and requires
management to make multiple estimates, for example around individual market
pressures and forces, future price and volume growth, future margins, terminal
growth rates and discount rates.
When forecasting the annual cash flows that support the recoverable amount,
the Group generally uses its short-term budgets and medium-term strategic
plans, with additional senior management and Board-level review. Cash flows
beyond the five-year period are projected using terminal growth rates. These
rates do not exceed the long-term average growth rate for the products and
markets in which the GCGU or CGU operates.
The cash flows are discounted back to their present value using a pre-tax
discount rate considered appropriate for each GCGU and CGU. These rates have
been derived from management's views on the relevant weighted average cost
of capital, subsequently converted to the pre-tax equivalent discount rate.
For the Health and Hygiene GCGUs, and the Intimate Wellness CGU, as at 31
December 2024 any reasonably possible change in the key valuation assumptions
would not imply possible impairment. The recoverable amount for each of these
GCGUs and CGU was determined utilising the value-in-use basis (2023:
value-in-use basis) with key assumptions including a pre-tax discount rate of
9% for Health, Hygiene and Intimate Wellness (2023: 11% for Health, Hygiene
and Intimate Wellness), and a terminal growth rate of either 2.5% for Health,
Intimate Wellness and Biofreeze (2023: 2.5%), or 2% for Hygiene and IFCN
(2023: 2%).
IFCN
Since the disposal of the IFCN China business in September 2021, the IFCN CGU
has represented the Group's remaining IFCN business principally in North
America, Latin America and ASEAN. In impairment assessments conducted in both
2021 and 2022, management determined that the recoverable amount of IFCN was
higher than its' carrying value such that no impairment was required.
During 2023 the market environment for IFCN continued to be influenced by the
infant formula supply shortages in the US which resulted from the temporary
closure of a major factory belonging to a competitor. The infant formula
supply shortages have resulted in an evolving regulatory environment, which
developed over the course of 2023 and 2024. Compliance with enhanced
regulatory requirements is expected to increase the capital requirement for
the IFCN business and to impact the cost of manufacture in future periods.
In 2023, as a result of these regulatory factors and to incorporate the effect
of higher interest rates, management increased the pre-tax discount rate used
to determine the value-in-use of the IFCN CGU. This resulted in the IFCN net
book value exceeding its recoverable amount, and so management recorded an
impairment loss against IFCN goodwill of £810 million.
During 2024, management further developed their response to the changing
regulatory environment and to provide greater resilience to the supply network
which now includes significantly more capital expenditure and the accelerated
replacement of capital equipment. This capital investment programme over the
next five years includes the delivery of replacement spray dryer capacity.
This resulted in the IFCN net book value exceeding its recoverable amount,
therefore management has recorded an impairment loss against IFCN goodwill of
£696 million to record the IFCN CGU at its recoverable amount of £3,890
million.
The recoverable amount for IFCN has been calculated on a value-in-use basis
(2023: value-in-use basis). The value-in-use of IFCN was determined utilising
a discounted cash flow approach with future cash flows derived from a detailed
five-year financial plan. Cash flows beyond the five-year plan are projected
using a terminal growth rate. The valuation used a pre-tax discount rate of
11% (2023: 11%) and an IFCN specific terminal growth rate of 2.0% (2023:
2.0%).
The determination of the recoverable amount for IFCN at 31 December 2024
incorporates certain key assumptions, some of which are subject to
considerable uncertainty. These assumptions include but are not limited the
costs of complying with the evolving regulatory landscape, execution of the
capital programme, ongoing resilience risk within the supply network, net
revenue growth rates, the commercial success of new product launches and the
expansion of speciality nutrition. The value in use does not include any
possible net cash outflows in respect of current and future NEC litigation
(note 9). As no headroom exists between the IFCN recoverable amount and net
book value, any changes to these assumptions, or any deterioration in other
macro or business-level assumptions supporting the IFCN recoverable amount
could necessitate the recognition of impairment losses in future periods
The key assumptions used in the estimation of value-in-use of IFCN are
outlined below:
2024
Pre-tax discount rate 11%
Terminal growth rate 2.0%
Net revenue compound annual growth rate (CAGR) for the period 2024-2029(1) 3.2%
Gross margin CAGR for the period 2024-2029(1) 2.7%
2023
Pre-tax discount rate 11.0%
Terminal growth rate 2.0%
Net revenue compound annual growth rate (CAGR) for the period 2023-2028(1, 2) 1.5%
Gross margin CAGR for the period 2023-2028(3) 2.2%
(1) These have been determined on a constant FX basis
(2) The net revenue CAGR for the period 2024-2028 is circa 4%, following
rebasing of Nutrition net revenue in 2024
(3) The gross margin CAGR for the period 2024-2028 is circa 5%
The key estimates incorporated within the determination of the IFCN
recoverable amount are summarised below:
Key estimates Commentary
Capital expenditure A significant capital investment programme has commenced to meet regulatory
requirements and to build greater resilience in the wider supply network.
Market In the US, management expects birth rates to be relatively stable. Tendering
for WIC contracts continues to be highly competitive but management expects
this to remain stable.
Within LATAM and ASEAN, management expects conditions to stabilize after
recent inflationary price increases.
Net Revenue In the short to medium term, the valuation model assumes a five-year CAGR
of 3.2%. This is expected to be achieved through ongoing premiumisation,
inflationary price increases and revenues from new products/category launches
including the expansion of speciality nutrition.
Margins In the short to medium term, the valuation model assumes IFCN margins
(both gross and operating) decline marginally as the capital expenditure
programme is delivered. In the long term these are expected to return more
normalised levels.
Discount rate Management determined an IFCN-specific weighted average cost of capital (WACC)
and the implied pre-tax discount rate with the support of a third-party
expert. In addition, management performed benchmarking against other
comparable companies. The specific risk premium reflects the risk associated
with the delivery of the capital investment programme over the next five years
and the continued impact of the evolving regulatory environment.
Terminal growth rate Management engaged a third-party expert to help calculate an IFCN-specific
terminal growth rate. Management is satisfied with the reasonableness of the
terminal growth rate when compared against independent market growth
projections and long-term country inflation rates.
The table below shows the sensitivity of the recoverable amount to reasonably
possible changes in key assumptions. The table assumes no related response by
management (for example, to drive further cost savings) and is hence
theoretical in nature.
2024
£m
Expected Net Revenue growth rates (2025 to 2029) adjusted by 100bps +475/-460
Expected EBIT growth rates (2025 to 2029) adjusted by 100bps +220/-215
Terminal growth rate (applied from 2030) adjusted by 50bps +330/-280
Pre-tax discount rate adjusted by 50bps +280/-250
The inclusion of a further £200 million of capital expenditure in the
value-in-use model, without any associated improvements in gross margin, would
result in an additional impairment of £154 million.
2023
£m
Expected Net Revenue growth rates (2024 to 2028) adjusted by 100bps +410/-400
Expected EBIT growth rates (2024 to 2028) adjusted by 100bps +220/-210
Terminal growth rate (applied from 2029) adjusted by 50bps +290/-250
Pre-tax discount rate adjusted by 50bps +270/-240
Biofreeze
On 12 July 2021, the Group acquired 100% of the equity interests in Lanai
Holdings, owner of the Biofreeze and TheraPearl brands, for cash consideration
of $1,060 million (£766 million). Biofreeze is a leader in over-the-counter
topical pain relief, with a strong footprint in the North America retail and
clinical channels and a growing international presence.
During 2022, Biofreeze performed below expectations following a short-term
category slowdown, in part due to macroeconomic conditions. This
underperformance, together with the macroeconomic environment, introduced
additional uncertainty into future Biofreeze cash flows. To reflect this
uncertainty, management increased the pre-tax discount rate used to determine
value-in-use to 12.0%. This resulted in the book value of the Biofreeze CGU
exceeding its recoverable amount at 31 December 2022, therefore in 2022
management recorded a goodwill impairment of £152 million to record Biofreeze
at its recoverable amount of £698 million ($843 million). Following this
impairment, at 31 December 2022 no headroom remained between the Biofreeze
recoverable amount and net book value.
During the second half of 2023, the integration of Biofreeze into the Health
business was completed. Following this integration, Biofreeze goodwill is
monitored at the Health GCGU level and Biofreeze goodwill has accordingly been
transferred to the Health GCGU. An impairment review of the Biofreeze CGU
inclusive of goodwill was performed immediately prior to the transfer of the
goodwill, with this review performed as at 30 September 2023. Biofreeze
goodwill was deemed recoverable immediately prior to transfer to the Health
GCGU.
During 2024, Biofreeze performed below expectations following a reduction in
the level of displays present in the category, competitive pressure from both
private label and branded competitors, new entrants to the market and a
reduction in the level of displays present in the category. This resulted in
Biofreeze net book value exceeding its recoverable amount at 31 December 2024,
therefore management has recorded an impairment against the brand intangibles
of £142 million ($178 million) to record Biofreeze at its recoverable amount
of £531 million ($664 million). The recoverable amount for the Biofreeze CGU
has been determined on a value-in-use basis using a discounted cash flow
approach, with future cash flows derived from a detailed five-year plan. Cash
flows beyond the five-year plan have been projected using a terminal growth
rate of 2.5% (2023: 2.5%).
The determination of the recoverable amount for Biofreeze in the 2024
impairment assessment incorporates certain key assumptions, some of which are
subject to considerable uncertainty. These assumptions include but are not
limited to anticipated market share improvement, the commercial success of new
product launches and international market expansion. The key assumptions used
in the estimation of value-in-use of Biofreeze at 31 December 2024 are
outlined below.
31 December 2024
Pre-tax discount rate 11%
Terminal growth rate 2.5%
Net revenue compound annual growth rate (CAGR) for the period 2024-2029 8%
Gross margin CAGR for the period 2024-2029 8%
The key estimates incorporated within the determination of the Biofreeze
recoverable amount in 2024 are summarised below:
Key estimates Commentary
Net Revenue In the short to medium term, the valuation model assumes a five-year CAGR of
8%, to be delivered through category growth and market share growth driven by
a mix of innovation arising from format expansion of existing products and
international expansion.
Margins In the short to medium term, the valuation model assumes Biofreeze margins
(both gross and operating) to increase from current levels as Biofreeze
benefits from productivity initiatives on integrating into Reckitt.
Discount rate Management determined the Biofreeze-specific weighted average cost of capital
(WACC) and the implied pre-tax discount rate with the support of a third-party
expert. For valuation purposes management used the mid-point of the calculated
range to reflect uncertainty in certain key assumptions.
Terminal growth rate Management is satisfied with the reasonableness of the terminal growth rate
when compared against independent market growth projections and long-term
country inflation rates.
The table below shows the sensitivity of the recoverable amount to reasonably
possible changes in key assumptions. The table assumes no related response by
management (for example, to drive further cost savings) and hence is
theoretical in nature.
31 December 2024
Expected Net Revenue growth rates (2025 to 2029) adjusted by 100bps +45/-40
Expected EBIT growth rates (2025-2029) adjusted by 100bps +30/-25
Terminal growth rate (applied from 2030) adjusted by 50bps +45/-40
Pre-tax discount rate adjusted by 50bps +45/-40
7 FINANCIAL LIABILITIES - BORROWINGS
Current 2024 2023
£m £m
Bank loans and overdrafts(1) 148 30
Commercial paper 592 -
Bonds - 1,571
Senior notes 604 -
Lease liabilities 79 78
Total short-term borrowings 1,423 1,679
Non-Current
Bonds 6,302 5,304
Senior notes 703 1,292
Other non-current borrowings 9 13
Lease liabilities 221 249
Total long-term borrowings 7,235 6,858
Total borrowings 8,658 8,537
Derivative financial instruments 136 140
Less overdrafts presented in cash and cash equivalents in the Cash Flow (1) (7)
Statement
Total financing liabilities 8,793 8,670
1. Bank loans are denominated in a number of currencies: all are unsecured and
bear interest based on market short-term interest rates.
The Group uses derivative financial instruments to hedge certain elements of
interest rate and exchange risk on its financing liabilities. The split
between these items and other derivatives on the Balance Sheet is shown
below:
Assets Liabilities
2024 (£m) Current Non-current(1) Current Non-current
Derivative financial instruments (financing liabilities) 32 14 (25) (157)
Derivative financial instruments (non-financing liabilities) 29 3 (13) (16)
At 31 December 2024 61 17 (38) (173)
(1) Included within other non-current receivables on the Balance Sheet
Assets Liabilities
2023 (£m) Current Non-current Current Non-
current
Derivative financial instruments (financing liabilities) 45 50 (58) (177)
Derivative financial instruments (non-financing liabilities) 19 - (20) (10)
At 31 December 2023 64 50 (78) (187)
Reconciliation of movement in financing liabilities to Cash Flow Statement 2024 2023
£m £m
At 1 January 8,670 9,140
Proceeds from borrowings 1,768 1,638
Repayment of borrowings (1,687) (1,855)
Other financing cash flows (47) (84)
Total financing cash flows 34 (301)
New lease liabilities 70 44
Exchange, fair value and other movements 19 (213)
Total non-cash financing items 89 (169)
At 31 December 8,793 8,670
8 DIVIDENDS
2024 2023
£m £m
Cash dividends on equity ordinary shares:
2023 Final paid: 115.9p (2022: Final paid: 110.3p) per share 820 790
2024 Interim paid: 80.4p (2023: Interim paid: 76.6p) per share 561 549
Total dividends for the year 1,381 1,339
The Directors are proposing a final dividend in respect of the financial year
ended 31 December 2024 of 121.7 pence per share which will absorb an estimated
£830 million of shareholders' funds. If approved by shareholders it will be
paid on 29 May 2025 to shareholders who are on the register on 11 April 2025,
with an ex-dividend date of 10 April 2025.
9 CONTINGENT LIABILITIES AND ASSETS
Humidifier Sanitiser issue
The Humidifier Sanitiser (HS) issue in South Korea was a tragic event. The
Group continues to make both public and personal apologies to the victims who
have suffered lung injury as a result of the Oxy HS product and the role that
the Oxy HS product played in the issue.
As previously reported, the South Korean government had designated a number of
diseases as HS injuries, in addition to the HS lung injury for which Reckitt
Korea's compensation plan was established. These include asthma, toxic
hepatitis, child interstitial lung disease (ILD), bronchitis, upper airway
disease, pneumonia, skin disease (accompanied by respiratory injuries) and
depression (accompanied by respiratory injuries).
The Korean National Assembly passed a bill on 6 March 2020 to amend the HS law
with the main changes in the amendment relating to: (i) the definition of HS
injury (essentially allowing the MOE to recognize a variety of disease as IRF
injury based on individual review of each IRF application); (ii) the legal
presumption of causation (shifting the burden of proof for causation to the
defendant if the plaintiff demonstrates 'epidemiological correlation' between
HS exposure and their injury), and (iii) amendments to the fund set up by the
government and funded by the government and HS companies (the Special Relief
Fund (SRF), now called the Injury Relief Fund (IRF)) to provide expanded
support payments to HS victims which would cover all elements of court awarded
damages except mental distress, aside from KRW 100 million consolation
payments for death cases, and partial lost income.
The Group currently has a provision of £30 million (2023: £27 million) in
relation to the HS issue in South Korea. In addition, there are further
potential costs that are not considered probable and cannot be reliably
estimated at the current time. The impact of the HS law amendments will
require further monitoring and analysis, in particular those which will be
subject to court interpretation, such as the new epidemiological correlation
standard, any limitation applied by courts to damage awards, the interest rate
applied by individual courts to damage awards and external factors such as the
rate of future IRF applications/recognitions. Accordingly, it is not possible
to make any reliable estimate of liability for individuals recognised by the
government as having HS injuries.
Necrotising Enterocolitis (NEC)
Product liability actions relating to NEC have been filed against certain
Group subsidiary companies, or against certain Group subsidiary companies and
Abbott Laboratories, in state and federal courts in the United States. The
actions allege injuries relating to NEC in preterm infants. Plaintiffs contend
that human milk fortifiers (HMF) and preterm formulas containing
bovine-derived ingredients cause NEC, and that preterm infants should receive
a diet of exclusive breast milk. The Company has denied the material
allegations of the claims. It contends that its products provide critical
tools to expert neonatologists for the nutritional management of preterm
infants for whom human milk, by itself, is not available or nutritionally
sufficient. The products are used under the supervision of medical doctors.
Any potential costs relating to the product liability actions are not
considered probable and cannot be reliably estimated at the current time.
Given the uncertainty on the number of cases and range of possible results
and/or outcomes on each case, the possible economic outflow cannot be reliably
estimated, but may be significant. In 2025 there are currently two trials
scheduled, these are currently expected to take place in H2 2025.
Whitfield Case
On 31 October 2024, a state court jury in the city of St. Louis, Missouri
ruled in favour of Mead Johnson. The case involved a child who was born
prematurely, developed NEC and has allegedly experienced subsequent long term
health issues. Given the verdict, an economic outflow is not considered
probable. The Plaintiff has filed a post-trial motion seeking a new trial.
Watson Case
On 13 March 2024, a state court jury in Belleville, Illinois awarded $60
million to a mother of a child who was born prematurely and died 25 days later
from Necrotizing Enterocolitis (NEC). Reckitt believe the allegations from the
plaintiff's lawyers in this case were not supported by the science or the
experts in the medical community. Reckitt are appealing the verdict, and at
this time, an economic outflow is not considered probable. There is a possible
outcome that may be unfavourable, however, the Group expects to benefit from
relevant product liability insurance subject to limits and deductibles that
the Group considers to be reasonable.
Phenylephrine
Starting in September 2023, putative class action lawsuits have been filed
against the Group and competitor companies in various United States
jurisdictions that generally allege that the defendants made
misrepresentations about the effectiveness of products containing
phenylephrine. In December 2023, the Judicial Panel on Multidistrict
Litigation (JPML) transferred all currently pending federal court cases and
any similar, subsequently filed cases to a coordinated multi-district
litigation (MDL) in the Eastern District of New York for pre-trial purposes.
In October 2024, a motion to dismiss the lawsuits was granted, dismissing all
claims. The plaintiffs are appealing that ruling. Potential costs relating to
these actions are not considered probable and cannot be reliably estimated at
the current time.
Other
From time to time, the Group is involved in discussions in relation to ongoing
tax matters in a number of jurisdictions around the world. Where appropriate,
the Directors make provisions based on their assessment of each case.
10 POST BALANCE SHEET EVENTS
There have been no events subsequent to the Balance Sheet date which require
disclosure.
APPENDIX - ALTERNATIVE PERFORMANCE MEASURES
The financial information included in these preliminary results is prepared in Other non-GAAP measures
accordance with International Financial Reporting Standards (IFRS Accounting
Standards) as well as information presented on an adjusted (non-IFRS) basis. · Like-for-like (LFL): Net revenue growth or decline at constant exchange
rates (see below) excluding the impact of acquisitions, disposals and
Financial information presented on an adjusted basis excludes certain cash and discontinued operations. Disposals include low margin manufacturing revenues
non-cash items. These items have a pattern of recognition that is largely which are agreed at the time of sale of a brand or business. Completed
uncorrelated with the trading performance of the business. Management reviews disposals are excluded from LFL revenue growth for the entirety of the current
the business on this basis for the purpose of making operating decisions and and prior years. Acquisitions are included in LFL revenue growth twelve months
showing these adjusted measures in addition to the IFRS measures provides after the completion of the relevant acquisition. LFL growth also excludes
useful additional information on trading performance to the users of the countries with annual inflation greater than 100% (Venezuela and Argentina)
Financial Statements. These adjusted measures should not be considered in
isolation from, as substitutes for, or superior to the financial measures · Constant exchange rate (CER): Net revenue and profit growth or decline
prepared in accordance with IFRS. adjusting the actual consolidated results such that the foreign currency
conversion uses the same exchange rates as were applied in the prior period
and excludes the effect of applying hyperinflation accounting in the relevant
subsidiaries
The following items (adjusting items) are excluded from IFRS earnings in
calculating adjusted earnings. · Brand Equity Investment (BEI): BEI is the marketing support designed to
capture the voice, mind and heart of our consumers
· Impact of business combinations, and similar purchases of
equity, where IFRS accounting results in the recognition of certain costs · Net working capital (NWC): NWC is the total of inventory, trade and
that are not comparable with those for internally generated assets, (although other receivables and trade and other payables less interest accrued on tax
the net revenues and other costs of these business combinations are not balances, indemnity provisions for disposed businesses and forward purchase
adjusted for): liabilities. NWC is calculated as a % of last twelve months net revenue to
compare changes in NWC to the growth of the business
· amortisation of (a) acquired brands, trademarks and
similar assets and (b) certain other intangible assets recorded as the result · Net Debt: The Group's principal measure of net borrowings being the
of a business combination; total of cash and cash equivalents, short-term and long-term borrowings, lease
liabilities and derivative financial instruments on debt
· inventory fair value adjustments;
· Free Cash Flow and Free Cash Flow Conversion: The Group's principal
· professional and advisor costs recorded as the result of measure of cash flow defined as net cash generated from continuing operating
a business combination; activities less net capital expenditure. A reconciliation of cash generated
from operations to Free Cash Flow is shown on page 36. The Group tracks Free
· changes in the amount of consideration paid or expected Cash Flow as a % of adjusted net income to understand the conversion of
to be paid (including changes in fair value) and associated tax impacts; adjusted profit into cash
· changes to deferred tax liabilities relating to (a)
acquired brands, trademarks and similar assets and (b) certain other
intangible assets recorded as the result of a business combination as the Other definitions and terms
amortisation or profit on disposal of these brands would be treated as an
adjusting item · Category Market Unit (CMU): Reckitt analyses its market share by CMUs,
which represent country and either brand or category, e.g. US Lysol. This
· Profits or losses relating to the sale of brands and related intangible allows us to analyse the components of market share growth taking into account
assets as the continued active management of our portfolio results in the both geography and brand/category. Management has identified those CMUs that
recognition of profits or losses relating to disposals of brands and related are the most strategically important (top CMUs). The list of CMUs is kept
intangible assets which are largely uncorrelated with the trading performance under continual review and will change over time based on strategic decisions.
of the business Currently, CMUs cover c.67% of Group net revenue and between c.63% to c.81%
of each Global Business Unit's (GBU) net revenue. As a measure of
· Re-cycled foreign exchange translation reserves upon the sale, competitiveness, management tracks the percentage of CMUs holding or gaining
liquidation, repayment of share capital or abandonment of a subsidiary market share, weighted by net revenue
previously controlled by the Group, as the gain or loss relates to mainly
exchange movements in previous periods rather than the current period · Discontinued operations: Includes credits or charges related to the
previously demerged RB Pharmaceuticals business that became Indivior plc. Net
· The reclassification of finance income/(expenses) on tax balances into profit/(loss) from discontinued operations is presented as a single line item
income tax expense, to align with the Group's tax guidance. As a result, the in the Group Income Statement
income/(expenses) are presented as part of income tax expense on an adjusted
basis · Return on Capital Employed (ROCE): Defined as adjusted operating profit
after tax divided by monthly average capital employed. Capital employed
· Other individually material items of expense or income. Some of these comprises total assets less current liabilities other than borrowings-related
items are resolved over a period of time such that the impact may affect more liabilities. Total assets exclude cash, retirement benefit surplus, current
than one reporting period tax and a technical gross-up to goodwill that arises because of deferred tax
liabilities recorded against identified assets acquired in business
Adjusted measures combinations. Total assets have been adjusted to add back impairments of
Goodwill except where the impaired asset has been disposed or partially
· Adjusted Operating Profit and Adjusted Operating Profit margin: disposed. Current liabilities exclude the share repurchase liability, legal
Adjusted operating profit reflects the IFRS operating profit excluding items provisions recorded as a result of adjusting items and current tax
in line with the Group's adjusted items policy. See pages 33-34 for details on
the adjusting items and a reconciliation between IFRS operating profit and · Net revenue attributable to 'more sustainable' products: A product is
adjusted operating profit. The adjusted operating profit margin is the defined as 'more sustainable' when it scores a total of 10 or more points
adjusted operating profit expressed as a percentage of net revenue across five parameters (carbon, water, plastics, packaging and ingredients) at
time of launch using our Sustainable Innovation Calculator (a streamlined
· Adjusted tax rate: The adjusted tax rate is defined as the adjusted Lifecycle Assessment tool that models the environmental impacts of products).
continuing income tax expense as a percentage of adjusted profit before tax The net revenue from 'more sustainable' products is expressed as a percentage
of total net revenue. The calculation is done on the basis of a 12 month
· Adjusted diluted EPS: Adjusted diluted EPS is the IFRS diluted EPS period ending September (to allow for the assembling of the related data)
excluding items in line with the Group's adjusted items policy. See pages
33-34 for details on the adjusting items and a reconciliation between IFRS net · Reconciliation of IFRS like-for-like net revenue excluding seasonal OTC
income and adjusted net income. The weighted average number of shares for the brands: LFL is shown excluding net revenue from seasonal OTC products that are
period is the same for both IFRS diluted EPS and adjusted diluted EPS affected by the Cold and Flu season. As this season can vary both in intensity
and timing in the year, presenting net revenue growth excluding this can
· Adjusted EBITDA (earnings before interest, tax depreciation and provide a view of growth excluding this factor
amortisation): Adjusted operating profit less depreciation and amortisation
(excluding adjusting items)
The table below reconciles the Group's IFRS measures to its adjusted measures
for the year ended 31 December 2024.
Adjusting Items
IFRS Impact of business combinations Net gain on disposal of brands Finance income reclass Other individually material items of income and expense Adjusted
£m £m £m £m £m £m
Net revenue 14,169 - - - - 14,169
Cost of sales (5,574) - - - - (5,574)
Gross profit 8,595 - - - - 8,595
Net operating expenses (6,170) 40 (9) - 1,019 (5,120)
Operating profit 2,425 40 (9) - 1,019 3,475
Net finance expense (321) 17 - (15) (4) (323)
Profit before income tax 2,104 57 (9) (15) 1,015 3,152
Income tax charge (672) (6) - 15 (38) (701)
Net income from continuing operations 1,432 51 (9) - 977 2,451
Less: Attributable to non-controlling interests (2) - - - - (2)
Net income from continuing operations attributable to owners of the parent 1,430 51 (9) - 977 2,449
company
Net profit from discontinued operations (4) - - - 4 -
Total net income attributable to owners of the parent company 1,426 51 (9) - 981 2,449
Earnings per share (EPS)
Continuing operations(1)
Basic 204.2 7.3 (1.3) - 139.5 349.7
Diluted 203.8 7.3 (1.3) - 139.2 349.0
Discontinued operations(1)
Basic (0.6) - - - 0.6 -
Diluted (0.6) - - - 0.6 -
Total operations(1)
Basic 203.6 7.3 (1.3) - 140.1 349.7
Diluted 203.2 7.3 (1.3) - 139.8 349.0
( )
(1) EPS is calculated using 700.4 million shares (basic) and 701.7 million
shares (diluted)
Impact of business combinations comprised: Other individually material items of income and expense comprise:
· £25 million of amortisation of certain intangible assets · Restructuring, and other project costs of £167 million linked to
recognised as a result of historical business combinations and a related £6 the group strategic announcements in 2024. This principally includes
million tax credit professional advisor fees and severance costs relating to business
transformation and portfolio changes;
· £15 million related transitional service charge associated with
the acquisition of the minority interest. · £838 million expense relating to the impairment of IFCN goodwill
and Biofreeze intangible assets (see note 6);
· £17 million relating to remeasurement of payments as part of an
agreement to acquire remaining interests from minority shareholders. · £13 million expense relating to costs incurred in relation
to the Korean Humidifier Sanitiser issue;
· £38 million tax credit on the intangible asset impairment,
Net gain on disposal of brands comprises £9 million profit on sale of certain restructuring and other project costs; and
small developing market brands completed in 2024.
· £4m from discontinued operations relating to interest accruing
Reclassification of finance expense of £15 million relates to the on an uncertain tax position relating to the former RB Pharmaceuticals
reclassification of interest expense on income tax balances from net finance business (now Indivior plc).
expense to income tax.
The table below reconciles the Group's IFRS measures to its adjusted
measures for the year ended 31 December 2023.
Adjusting items
IFRS Impact of business combinations Net gain on disposal of brands Reclassified foreign exchange translation on liquidation of subsidiaries Finance income reclass Other individually material items of income and expense Adjusted
£m £m £m £m £m £m £m
Net revenue 14,607 - - - - - 14,607
Cost of sales (5,847) - - - - - (5,847)
Gross profit 8,760 - - - - - 8,760
Net operating expenses (6,229) 28 1 - - 813 (5,387)
Operating profit 2,531 28 1 - - 813 3,373
Net finance expense (130) (9) - (130) 22 - (247)
Profit before income tax 2,401 19 1 (130) 22 813 3,126
Income tax charge (753) (4) (9) - (22) (1) (789)
Net income from continuing operations 1,648 15 (8) (130) - 812 2,337
Less: Attributable to non-controlling interests (14) - - - - - (14)
Net income from continuing operations attributable to owners of the parent 1,634 15 (8) (130) - 812 2,323
company
Net profit from discontinued operations 9 - - - - (9) -
Total net income attributable to owners of the parent company 1,643 15 (8) (130) - 803 2,323
Earnings per share (EPS)
Continuing operations(1)
Basic 227.9 2.1 (1.1) (18.1) - 113.3 324.1
Diluted 227.4 2.1 (1.1) (18.1) - 113.1 323.4
Discontinued operations(1)
Basic 1.3 - - - - (1.3) -
Diluted 1.3 - - - - (1.3) -
Total operations(1)
Basic 229.2 2.1 (1.1) (18.1) - 112.0 324.1
Diluted 228.7 2.1 (1.1) (18.1) - 111.8 323.4
( )
(1) EPS is calculated using 716.7 million shares (basic) and 718.3 million
shares (diluted)
Impact of business combinations comprise: Reclassified foreign exchange translation on liquidation of subsidiaries of
£130 million relates to a gain following the liquidation of legal entities as
· £27 million relates principally to amortisation of certain intangible part of simplification of the Group's legal entity structure.
assets recognised as a result of historical business combinations and a
related £4 million tax credit.
· £9 million finance credit relating to reduction in the liability under Reclassification of finance income of £22 million relates to the
the agreement to purchase the non-controlling interest in RB Manon, and £1 reclassification of net interest expense on income tax balances from net
million of related professional fees. finance expense to income tax.
Net gain on disposal of brands includes charge of £2 million relating to Other individually material items of income and expense comprises:
remeasurement on held for sale of certain small developing market brands, a
related £9 million tax credit and £1 million of residual income relating to · £810 million impairment of goodwill in IFCN;
previous brand sales.
· £3 million expense relating to costs incurred in relation to the Korean
HS issue;
· £9 million income from discontinued operations which relates to the DoJ
settlement in 2019.
Reconciliation of IFRS to Like-for-Like Net Revenue (by GBU)
For the quarter ended 31 December For the year ended 31 December
Net revenue Hygiene Health Nutrition Group Hygiene Health Nutrition Group
£m £m £m £m £m £m £m £m
2023 IFRS 1,531 1,507 523 3,561 6,135 6,062 2,410 14,607
M&A - (15) (13) (28) - (61) (25) (86)
Exchange and hyperinflation 18 16 3 37 (26) (7) - (33)
2023 Like-for-like 1,549 1,508 513 3,570 6,109 5,994 2,385 14,488
2024 IFRS 1,555 1,465 527 3,547 6,140 5,882 2,147 14,169
M&A - (3) (5) (8) - (21) (16) (37)
Exchange and hyperinflation 79 82 34 195 223 256 80 559
2024 Like-for-like 1,634 1,544 556 3,734 6,363 6,117 2,211 14,691
Like-for-like growth 5.5% 2.4% 8.4% 4.6% 4.2% 2.1% (7.3%) 1.4%
Reconciliation of IFRS to Like-for-Like Net Revenue (by Geography)
For the quarter ended 31 December For the year ended 31 December
Net revenue North America Europe/ Developing Markets Group North America Europe/ Developing Markets Group
ANZ
ANZ
£m £m £m £m £m £m £m £m
2023 IFRS 1,217 1,193 1,151 3,561 4,919 4,849 4,839 14,607
M&A (5) (1) (22) (28) (17) (7) (62) (86)
Exchange and hyperinflation (2) 21 18 37 1 - (34) (33)
2023 Like-for-like 1,210 1,213 1,147 3,570 4,903 4,842 4,743 14,488
2024 IFRS 1,145 1,227 1,175 3,547 4,542 4,859 4,768 14,169
M&A (2) (3) (3) (8) (13) (9) (15) (37)
Exchange and hyperinflation 40 60 95 195 131 179 249 559
2024 Like-for-like 1,183 1,284 1,267 3,734 4,660 5,029 5,002 14,691
Like-for-Like Growth (2.2%) 5.9% 10.5% 4.6% (5.0%) 3.9% 5.5% 1.4%
Reconciliation of IFRS like-for-like net revenue excluding seasonal OTC brands
For the quarter ended 31 December For the year ended 31 December
Net revenue Health Health & Hygiene Group Health Health & Hygiene Group
£m £m £m £m £m £m
2023 Like-for-like 1,508 3,057 3,570 5,994 12,103 14,488
2023 seasonal OTC 413 413 413 1,480 1,480 1,480
2023 LFL ex. seasonal OTC 1,095 2,644 3,157 4,514 10,623 13,008
2024 Like-for-like 1,544 3,178 3,734 6,117 12,480 14,691
2024 seasonal OTC 361 361 361 1,365 1,365 1,365
2024 LFL ex. seasonal OTC 1,183 2,817 3,373 4,752 11,115 13,326
2024 Like-for-like growth 2.4% 4.0% 4.6% 2.1% 3.1% 1.4%
2024 LFL growth ex seasonal OTC 8.0% 6.5% 6.8% 5.3% 4.6% 2.4%
Reconciliation of operating cash flow to free cash flow Net Working Capital
31 Dec 2024 31 Dec 2023
£m £m
Cash generated from continuing operations 3,675 3,829
31 Dec 2024 31 Dec 2023
Less: net interest paid (292) (263) £m £m
Less: tax paid (700) (922) Inventories 1,517 1,637
Less: purchase of property, plant & equipment (370) (348) Trade and other receivables 2,091 2,062
Less: purchase of intangible assets (95) (101) Trade and other payables (5,291) (5,506)
Plus: proceeds from the sale of property, plant & equipment 14 63 Less: Forward purchase liability 133 158
Free cash flow 2,232 2,258 Less: Interest accrued on tax balances 101 122
Free cash flow conversion 91% 97% Less: Indemnity provisions for disposed businesses 47 48
Net working capital (1,402) (1,479)
Net working capital as percentage of 12-month net revenue (10%) (10%)
12 months Adjusted EBITDA to Net Debt
31 Dec 2024 31 Dec 2023
Adjusted EBITDA £m £m ROCE Calculation
Operating profit 2,425 2,531
31 Dec 2024 31 Dec 2023
Excluding: adjusting items 1,050 842 £m £m
Adjusted operating profit 3,475 3,373 Adjusted operating profit 3,475 3,373
Excluding: adjusted depreciation and amortisation 436 444 Less: taxation on adjusted operating profit (771) (850)
Adjusted EBITDA 3,911 3,817 Adjusted net operating profit after tax 2,704 2,523
IFRS total assets 25,298 27,136
31 Dec 2024 31 Dec 2023 IFRS total current liabilities (7,943) (8,338)
Net debt £m £m IFRS total assets less current liabilities 17,355 18,798
Cash and cash equivalents (inc. overdrafts) 879 1,380 Excluding IFRS items not included in capital employed:
Financing liabilities (8,793) (8,670) Short-term borrowings 1,423 1,679
Net debt (7,914) (7,290) Current tax liabilities 602 620
Net debt/Adjusted EBITDA (times) 2.0 1.9 Legal provisions 30 30
Interest accrued on tax balances 101 122
Share repurchase liability 477 296
Cash and cash equivalents (880) (1,387)
Dividend Cover Current tax recoverable (45) (80)
Retirement benefit surplus (269) (270)
IFRS balances included in capital employed 18,794 19,808
31 Dec 2024 31 Dec 2023 Add back: impact of unrealised impairments 4,921 4,078
£m £m Less: goodwill due to deferred tax on intangibles (4,303) (4,265)
Interim dividend paid in year 561 549 Impact of average in year vs closing balance 687 531
Final dividend proposed 830 828 Average capital employed 20,099 20,152
Total dividends 1,391 1,377 Return on capital employed 13.5% 12.5%
Adjusted net income 2,449 2,323
Dividend cover (times) 1.8 1.7
12 months Adjusted EBITDA to Net Debt
31 Dec 2024 31 Dec 2023
Adjusted EBITDA £m £m
Operating profit 2,425 2,531
Excluding: adjusting items 1,050 842
Adjusted operating profit 3,475 3,373
Excluding: adjusted depreciation and amortisation 436 444
Adjusted EBITDA 3,911 3,817
31 Dec 2024 31 Dec 2023
Net debt £m £m
Cash and cash equivalents (inc. overdrafts) 879 1,380
Financing liabilities (8,793) (8,670)
Net debt (7,914) (7,290)
Net debt/Adjusted EBITDA (times) 2.0 1.9
Dividend Cover
31 Dec 2024 31 Dec 2023
£m £m
Interim dividend paid in year 561 549
Final dividend proposed 830 828
Total dividends 1,391 1,377
Adjusted net income 2,449 2,323
Dividend cover (times) 1.8 1.7
Net Working Capital
31 Dec 2024 31 Dec 2023
£m £m
Inventories 1,517 1,637
Trade and other receivables 2,091 2,062
Trade and other payables (5,291) (5,506)
Less: Forward purchase liability 133 158
Less: Interest accrued on tax balances 101 122
Less: Indemnity provisions for disposed businesses 47 48
Net working capital (1,402) (1,479)
Net working capital as percentage of 12-month net revenue (10%) (10%)
ROCE Calculation
31 Dec 2024 31 Dec 2023
£m £m
Adjusted operating profit 3,475 3,373
Less: taxation on adjusted operating profit (771) (850)
Adjusted net operating profit after tax 2,704 2,523
IFRS total assets 25,298 27,136
IFRS total current liabilities (7,943) (8,338)
IFRS total assets less current liabilities 17,355 18,798
Excluding IFRS items not included in capital employed:
Short-term borrowings 1,423 1,679
Current tax liabilities 602 620
Legal provisions 30 30
Interest accrued on tax balances 101 122
Share repurchase liability 477 296
Cash and cash equivalents (880) (1,387)
Current tax recoverable (45) (80)
Retirement benefit surplus (269) (270)
IFRS balances included in capital employed 18,794 19,808
Add back: impact of unrealised impairments 4,921 4,078
Less: goodwill due to deferred tax on intangibles (4,303) (4,265)
Impact of average in year vs closing balance 687 531
Average capital employed 20,099 20,152
Return on capital employed 13.5% 12.5%
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