Reckitt Benckiser Group PLC (LSE:RKT, ETR:3RB) said its transformation is on track as it reported revenues ahead of forecasts for 2021 and predicted growth for the current year, "despite significant commodity inflationary pressures".
The consumer goods group reported net revenue of £13.2bn for the year to end-December 2021, a fall of 5.4% on the previous year, but on a like-for-like basis, the number was 3.5% higher, beating expectations.
Compared with two years ago, before the pandemic, like-for-like net revenue grew by 17.4%.
The company said it had seen a strong performance in its Hygiene business, particularly in North America, and a recovery in the Health division as it exited the year.
Fourth quarter like-for-like net revenue rose by 3.3%, with a 17.5% rise in Health offsetting a 6.1% decline in Hygiene, which was up against tough comparators during the height of the pandemic in the previous year.
COVID continued to impact net revenue during the year, Reckitt noted. The 70% of its portfolio which has brands that are less sensitive to COVID dynamics, grew mid-single-digits.
However, for the remaining 30% of the portfolio, which includes the disinfectants Lysol and Dettol and the cold and flu brands Mucinex, Strepsils and Lemsip, performance was more volatile, reflecting fluctuations in COVID-related demand, the company pointed out.
Reckitt said it is making strong progress in its transformation towards higher growth, which include the disposals of IFCN China and Scholl, the proposed disposal of E45 and the acquisition of Biofreeze.
The group recorded operating losses of £804mln for 2021, compared with a profit of £2.16bn the year before, reflecting losses relating to its strategic review and the disposal of IFCN China.
The adjusted operating margin, excluding IFCN China, was 22.9%, down from 24.5% in 2020, but in line with the company’s guidance of 22.7%-23.2%.
There was a pre-tax loss of £260mln versus a profit of £1.87bn.
The company declared a final dividend of 101.6p, taking the full-year payout to 174.6p, unchanged on 2020.
Looking ahead, Reckitt said it expects to exit 2022 with mid-single-digit like-for-like net revenue growth. It is also targeting growth in adjusted operating profit margins, from a base of 22.9%, “despite an unprecedented inflationary environment and ongoing uncertainties created by COVID”.
It said it will try to mitigate against these challenges by taking "appropriate pricing and net revenue growth management" actions.
“We expect both net revenue growth and margin expansion in 2022 to be second-half weighted due to both the phasing of pricing initiatives and the strong prior year comparatives in Hygiene in Q1 2021,” the company said.
Its medium-term target is to achieve adjusted operating margins in the mid-20s by the middle of the decade.
Shares were 3.6% higher at 6,016.00p in early trade.