1st Quarter Results Announcement

GOOD Q1 PERFORMANCE

 ON TRACK FOR FULL YEAR DELIVERY

Q1 2024
	LFL1 growth	Volume	Price / Mix	Net Revenue (£m)	IFRS growth
Hygiene	7.1%	2.9%	4.2%	1,608	1.1%
Health	1.0%	-0.1%	1.1%	1,538	-6.4%
Nutrition	-9.9%	-9.4%	-0.5%	591	-13.5%
Group	1.5%	-0.5%	2.0%	3,737	-4.6%

1.     Adjusted measures are defined on page 5

Commenting on these results, Kris Licht, Chief Executive Officer, said:

“We have delivered a good first quarter. Following a period of price-led growth, we are now returning to a more balanced contribution from price, mix and volume. We grew volumes in many of our powerbrands in the quarter, including Lysol, Dettol, Durex and Finish, as well as our non-seasonal OTC portfolio. In addition, we continue to benefit from carryover pricing and consumers trading up to our premium innovations.

The net revenue performance in the quarter is in line with our expectations. Hygiene delivered broad-based growth. Health saw good growth across many brands, reduced by a tough comparator in our cold & flu OTC brands. Nutrition continues to normalise in the US as expected, and we have maintained our value market share leadership.

We are well placed to deliver value creation by leveraging our strong portfolio of brands through investment and innovation. This drives our continued strong free cashflow generation, our accelerated share buyback programme and increased cash returns to shareholders.

We are on track to deliver our full year revenue and profit targets, led by mid-single-digit growth across our Health and Hygiene portfolios.”

Q1 Highlights:

·      Like-for-like (LFL) net revenue growth of 1.5% with volume decline of 0.5% and price/mix growth of 2.0%.

·      Improving volume momentum with volume growth of 1.4% in our Hygiene and Health portfolios. Both delivered broad-based volume growth across key brands.  

·      Group reported net revenue decline of -4.6%, with LFL growth more than offset by FX headwinds of -5.7%.

·      Hygiene LFL net revenue growth of 7.1%.  Broad-based volume growth across powerbrands – Finish, Lysol, Harpic and Vanish. Growth also benefited from additional sell-in ahead of a SAP implementation in Brazil.

·      Health LFL net revenue growth of 1.0%. Strong volume growth across Intimate Wellness, non-seasonal OTC brands, VMS and Dettol, offset by the expected lapping of prior year retailer inventory rebuild in seasonal OTC products.    

·      Nutrition LFL net revenue decline of -9.9%. Continued value share leadership in the US, while the rebasing from temporary market share gains from the competitor supply issue in prior years continues.

·      Broad-based geographic growth with mid-single-digit growth across Europe and Developing Markets.

·      Acceleration of ongoing share buyback programme.  As previously announced, the third tranche of our £1bn share buyback programme commenced in April 2024. We expect to announce the next programme in July

OUTLOOK

We reiterate our 2024 outlook:

·      LFL net revenue growth of between +2% to +4% for the Group

o  Mid-single-digit growth for our Health and Hygiene portfolios

o  Mid- to high-single-digit decline for our Nutrition business as it continues to rebase in the first half of the year with a return to growth late in the year

·      Adjusted operating profit to grow ahead of net revenue growth

·      Revenue and profit growth to be second half weighted as we lap high OTC comparatives from Q1 last year and will see the majority of the rebasing of our US Nutrition business in H1

Other technical considerations

·      Adjusted net finance expense is expected to be in the range of £300m to £320m (2023: £247m) (No change)

·      The adjusted tax rate is expected to be 25-26% (2023: 25.2%) (No change)

·      Capital expenditure is expected to be 3-3.5% of net revenue (2023: 3.1%) (No change)

·      If foreign exchange rates were to hold at March 2024 closing rates for the remainder of 2024, the estimated negative impact on 2024 GBP net revenue would be around 2.5% and 2024 GBP adjusted diluted EPS would be around 3.5% (as published on our website)