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

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

·      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.

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/   

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

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).

Hygiene                                                                                                  43% of net revenue in 2024

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

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

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

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.

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

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

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.