The British company said it would target like-for-like net revenue growth of mid-single digits for 2023.
Abbott Laboratories early last year recalled dozens of infant nutrition products in the United States. Reckitt, its biggest rival at the time, ramped up production to fill the supply gap left by Abbott, helping drive full-year like-for-like net sales growth of about 23% in its nutrition business.
The impact from the shortage added about 17.5% to the unit's growth, Reckitt said.
Value And Volume Sales
Overall, the price/mix for Reckitt's products, which include Nurofen tablets, cold remedy Lemsip and Durex condoms, rose 9.8%, helping the company make up for a 2.2% decline in sales volumes driven by its business in North America.
The company said full-year like-for-like net revenue increased by 7.6% to £13.66 billion (€15.52 billion), edging analysts' expectations of a 7.5% rise, according to a company-provided consensus.
Reckitt's own 2022 like-for-like net revenue growth target was 6% to 8%.
Full-year adjusted earnings rose 16.8% to £3.44 billion (€3.91 billion).
"Reckitt delivered a year of strong growth in net revenue, earnings, and free cash flow conversion amidst a continued challenging environment," commented CEO Nicandro Durante. "We are now 28% larger than we were in 2019. Our healthy balance sheet underpins our financial strength, and we are delighted to grow the dividend in 2022 with the aim to deliver sustainable dividend growth in future years.
"We enter 2023 as a strengthened business with enhanced financial, operational and brand resilience, and continued growth momentum. The benefits of our reinvigorated innovation pipeline and operational improvements are coming through - including a more agile supply chain and improved customer relationships."
Commenting on Reckitt's performance, analyst Russ Mould of AJ Bell said, “Big brands still count in the nutrition and health market. That’s the clear message underlined by results from Reckitt where these two areas helped it beat expectations. At a time when household budgets are under real pressure, you’d think people would be happy to buy unbranded over-the-counter drugs, but products like Nurofen still look to be a winner with consumers.
“The strong infant nutrition sales in the US shouldn’t be counted on long term, as a recall by rival Abbott Laboratories allowed Reckitt to fill the gap. However, lingering brand damage for Abbott could help Reckitt consolidate at least some of these market share gains.
“Reckitt has been able to successfully pass on higher costs and this helped make up for lower sales volumes, but it is fast approaching a point where it needs to decide if investors can continue to stomach further increases. Short-term gain could easily turn into long-term pain if it means Reckitt loses share to its rivals.
“This decision will fall to new CEO Nicandro Durante, who can at least draw on years of industry experience to help make that call.”