Charlie, and I'll be coordinating the call today. If you'd like to ask a question at the end of the presentation, you can do so by pressing Star followed by one on your telephone keypad. I will now hand over to our host, Jonathan Myers, Chief Executive Officer, to begin. Jonathan, please go ahead.
Thank you, Charlie, and good morning, and thank you to all of you for joining the call. Today, Sarah and I will update you on our results for the year to the end of May 2023, and progress against our longer-term strategy. As usual, I'll start by providing a short overview before handing over to Sarah to take you through the financials and the outlook.
After that, I'll talk through some of the operational and strategic highlights in more detail, and also provide an update on our priorities for FY 2024. We will then, of course, be delighted to take your questions. One brief matter of housekeeping, and to prove that we are indeed live, we've just been informed there will be a 1 minute fire alarm at 11:00 A.M.
So we'll have a very brief pause when it begins, and then we will pick up from where we left off. Such is life in the volatile markets in which PZ Cussons operates. So back to the presentation. Let me start with some key messages to update on our progress. First of all, we have delivered a third consecutive year of like-for-like revenue growth, with revenues up 6.1%. We've seen a sustained performance in Australia and New Zealand, and a return to growth for our U.K. personal care business by the end of the year. Our continued brand building activities meant that the majority of our Must Win Brands were in growth, too. We've been able to achieve this while navigating continued external uncertainties.
We have successfully absorbed around GBP 80 million of cost inflation over the past 3 years, and we are dealing head-on with the well-documented challenges of the Naira devaluation in June. Now, while all of this has taken a fair bit of street fighting, and there's no doubt we'll need more of that in the coming months, we haven't taken our eyes off our strategy. We have continued to make good progress, investing in our capabilities, our people, and our brands. I'll talk more later about how we're not only strengthening and growing our core, but starting to expand beyond it. To achieve this, we have set the organization clear priorities for the current financial year, with an appropriate balance of short-term interventions to tackle external challenges while also planting the seeds for future growth.
We remain as excited as ever about the attractive long-term opportunities we see in building a higher growth, higher margin, simpler, and more sustainable business. Sarah, over to you.
Thanks, Jonathan. Good morning, everyone. I'm going to walk you through the performance of the business last year and share our outlook for the coming year. Overall, we delivered a solid financial performance in FY 2023, against a backdrop of ongoing external volatility and uncertainty. We delivered a third consecutive year of like-for-like revenue growth, and this was the primary driver of the 10.7% reported revenue growth, which was also supported by the strong contribution from Childs Farm and favorable forex. Operating margin of 11.2% was down 10 basis points, but up around 10 basis points if we adjust out Childs Farm from both years. A creditable performance in light of continued cost inflation. We're reporting growth in profit before tax of 12.6%, ahead of consensus estimates.
Despite this, EPS was down, reflecting a higher tax rate, up from 19.5% in FY 2022 to 27.1% in FY 2023, as well as an increase in minority interests. Both of these factors are explained primarily by the strong profit growth in Nigeria during the year. Recognizing the devaluation of the Naira, which took place following the end of our last financial year, and which will have an adverse impact on FY 2024 financials, the board are proposing that the final FY 2023 dividend be held flat, equating to a flat full-year dividend of 6.4 pence. Cash flow improved versus FY 2022 and saw us move from a net debt position to one of overall net cash.
I should also note at this point, the non-cash impairment we recorded on Sanctuary Spa impacting our statutory profit results, and I will reference this later in the context of the U.K. washing and bathing category. Let's take a look at the FY 2023 performance in more detail. The like-for-like revenue growth of 6.1% was driven by both Asia Pac and Africa, offset by a slight decline in the Europe and Americas business. All but three of our Must Win Brands grew in the year, and we'll comment on them later. Reflecting the inflationary environment, growth has been primarily driven by price mix and with the volume decline, mainly in Nigeria. The acquisition of Childs Farm, which completed in March 2022, improved reported revenue by GBP 11 million....
Movements in forex provided a benefit to our reported numbers in FY 2023, reflecting the general depreciation of sterling against most other currencies, including the Naira. We've provided a breakdown in the appendix. Now, this favorable position has, of course, reversed in recent weeks, especially versus the Naira. Again, detailed in the appendix. Our operating margin declined 10 basis points versus the prior year to 11.2%. Of course, reversed in recent weeks, especially versus the Naira. Again, detailed in the appendix. Our operating margin declined 10 basis points versus the prior year to 11.2%. We saw a pleasing 80 basis points increase in gross profit margin, and like last year, there are a couple of moving parts beneath this.
We've again seen a combination of productivity initiatives and revenue growth management activity, more than offset the increases in input costs, resulting in an underlying improvement in gross margin, double that of the reported figure. Then, as in FY 2022, there was a negative impact from country mix, namely our lower margin Africa and ANZ businesses, growing more rapidly than the higher margin U.K. and Indonesian businesses. And this is amplified in our earnings per share performance, Africa and ANZ businesses growing more rapidly than the higher margin U.K. and Indonesian businesses. And this is amplified in our earnings per share performance, with Nigerian and Australian profits subject to higher rates of corporation tax.
The improved gross margin allowed us to increase investment in overheads, which largely represents the annualization of new leadership and capability roles created in FY 2022, and the restoration of the company LTIP incentive plan, which had not previously paid out since 2014. Brand investment increased in absolute terms, but decreased slightly as a percentage of revenue, and this was a result of the planned normalization of Carex investment, with most brands receiving more investment compared to FY 2022, and with, once again, investment focus behind the must-win brands. Our Wilmar Palm Oil joint venture in Nigeria contributed GBP 7.5 million in absolute profit terms, as in FY 2022, with no year-on-year margin impact. And finally, forex caused a slight adverse margin movement due to the revaluation of intercompany royalties payable to the U.K. from Nigeria.
Let's take a closer look at each of the reporting segments in turn. Europe and the Americas was a tale of two halves. After a 6% like-for-like revenue decline and 11 percentage point reduction in margin in the first half, we saw this reverse in the second half, as we'd expected. Revenue declined very slightly for the year as a whole, but this should be seen in the context of a 3% decline in the washing and bathing category in the U.K., which represents around 70% of Europe and Americas' revenue. And more on this in a minute. The margin of 18.6% in the second half was in line with the guidance at our interim results in February and in line with the FY 2022 margin.
Benefiting from pricing taken in the first half of FY 2023, a more benign input cost environment, and a more normalized level of brand investment after the relaunches of Imperial Leather and Sanctuary Spa in half one. On this slide, we've sought to lift the lid on our U.K. washing and bathing brands, which, as I mentioned, represent the majority of the Europe and Americas business. You can see the breakdown of the GBP 800 million total washing and bathing category, shower being the most important segment. And we've detailed the largest brand within each segment, although, of course, our brands tend to play across several. So you can see how the overall 3% category contraction mentioned earlier came about, with hand hygiene in decline and also bath, given the...
You can see how the overall 3% category contraction mentioned earlier came about, with hand hygiene in decline and also bath, given the high cost of energy. With the exception of Cussons Creations and Imperial Leather, which together grew in a declining bath segment, our brand's performance was otherwise closely correlated with their respective categories. Reflecting these challenging underlying trends, Sanctuary Spa, not shown here, as although it plays across several segments, is not the single largest, saw revenue decline as the ambitious restaging of the brand, while driving positive price mix, fell below our overall year one expectations. This was the key contributor to the impairment of the brand recorded in the results this morning. Looking at the bottom two rows of this slide, you can see that as we've entered the first quarter of this new financial year, we've seen improved trends.
Bath has returned to growth, and while the hand hygiene category is slightly down, it is much improved compared to FY 2023, and with the liquid segment back in growth. So the takeaway here is that FY 2023 performance was not as we'd hoped, but also not a surprise given the performance of our categories. And secondly, there are green shoots with improved category trends and better share gains so far this year. Nevertheless, we have more work to do in the U.K., and Jonathan will talk more about that key priority for FY 2024 a little later. If Europe and Americas was a tale of two halves, then Asia Pac is a tale of two markets. Behind the overall 4.4% like-for-like revenue growth, we've seen a strong and consistent performance from ANZ, with broad-based share gains from our locally loved brands in growing categories.
As we mentioned at the half year, we see ANZ as an excellent example of the turnaround underway across the wider group. And some of you will remember the inconsistency of delivery there several years ago. Offsetting the good ANZ performance was Indonesia, where revenue was down in FY 2023. As inflation picks up following the removal of fuel subsidies around a year ago, household budgets have been increasingly squeezed, necessitating some pullback in discretionary spend, impacting Cussons Baby. One of the three Must Win Brands that I mentioned was in decline. It's taken a while for the destocking to be felt through the distributor networks, and so we do expect Indonesia performance to continue to weigh on at least the first half of FY 2024.
We also saw some further planned reduction in revenue as we ceased some low-margin Asia manufacturing by-product sales to third parties. Operating profit margins increased 240 basis points, reflecting the strong ANZ revenue performance and a more benign cost environment, and positive mix management in Asia business development. Finally, Africa, which grew revenue by 13.4% on a like-for-like basis. Given the inflation across the region, this has unsurprisingly been driven by price mix improvements, with several rounds of price increases. But the route to market changes we've implemented and the continued brand investment we've made have helped to limit volume declines. And each of our major brands in Nigeria reported double-digit revenue growth in the year. Operating profit margin improved for the third consecutive year, a transformation since the loss-making period only a few years ago.
However, as noted in our Q4 trading update in June, these results are, of course, presented using the FX rates for FY 2023. Were we to use July and August 2023 averages as a proxy for current exchange rates, Africa operating profit would have been GBP 22.5 million, not the GBP 37 million shown in the table, as a result of the translation impact of the Naira devaluation. More on Nigeria in just a moment. First, turning to cash flow and to the balance sheet. Our higher operating profit converted into strong free cash flow, supported by an improvement in working capital. Cash inflows from the disposal of residential properties in Nigeria added GBP 14 million, while the dividend was a GBP 29 million outflow. Forex movements partially offset the inflow, and this adverse effect impact million pounds, while the dividend was a GBP 29 million outflow.
Forex movements partially offset the inflow, and this adverse effect impact will, based on current rates, be higher in FY 2024, reflecting the devaluation of the Naira. The overall net cash increase of GBP 15.5 million saw us move from a net debt to a net cash position. Beneath this net cash position is U.K. gross borrowing and a Nigeria cash balance, as detailed on the slide, broadly offsetting and reflecting the challenges in repatriating cash from Nigeria. In the event that repatriation becomes more feasible, we will look to do so and use that cash to pay down debt or to reinvest elsewhere in and on the business. So turning now to the outlook for FY 2024. Let me start by commenting first on Nigeria.
As you will appreciate, predicting the performance of our Nigerian business this year is a challenge, but we have tried to call out the main variables and uncertainties, and the mitigation plans we have in train. The underlying challenges are clear. The devaluation of the Naira in June has not only introduced adverse translational forex impacting our reported results, but coupled with the other fiscal changes, most notably the removal of fuel subsidies, it's had a marked adverse impact on consumer spending. We're also seeing continued challenges to our own input costs, many of which are priced in U.S. dollars. And obtaining hard currency to acquire raw materials, and in the case of our electricals business, semi-finished products, remains a notable challenge.
As mentioned on the previous slide, repatriation of cash to the U.K. via the settling of intercompany payables remains difficult, as Nigeria has not yet seen a more comprehensive package of economic reforms successfully implemented, nor yet the realization of the benefits from the announced changes to the forex regime. But we saw the devaluation coming, even if it happened earlier than expected, and the team on the ground have done well to navigate the necessity of taking price, given the consumer backdrop. Jonathan will talk about the other operational self-help measures already achieved. We also see opportunity for meaningful cost savings over the coming years. Furthermore, we've been working above market on more corporate interventions. For example, the planned minority buyout and delist announced earlier this month, which will provide greater strategic flexibility in Nigeria, reduce costs, and improve group earnings per share from FY 25.
So pulling all this together at the group level, we expect to see a fourth consecutive year of like-for-like revenue growth in FY 2024, with strong growth in operating profit on a constant currency basis. As noted earlier, there's an approximate GBP 15 million forex headwind at operating profit from the Naira alone, and other currencies have also moved slightly against us. This still sees us with operating profit comfortably within the range of current consensus expectations. The devaluation of the Naira will have other implications beyond the translational impact, although these remain subject to evolving market conditions. Net finance costs are likely to be higher as a result of lower cash deposit rates in Nigeria, not now compensating for higher U.K. borrowing costs.
Offsetting this, lower Nigerian profitability would lead to a lower minority interest in FY 2024, and all else being equal, a more stable tax rate for the group. We commented briefly this morning on group performance to date, which has been positive, with year-on-year growth in like-for-like revenue and a higher operating profit margin in constant currency. We've seen continued good revenue growth in Nigeria and Australia. Very encouragingly, a stable performance in the U.K., but also a continued decline in Indonesia for the reasons I described earlier. And with that, I'll hand back to Jonathan for an update on the broader business and strategic progress.
Thanks, Sarah. Moving on, let's take a look at progress versus our strategy. Let's start with a slide that you should all be very familiar with. It's one that our teams certainly are. It summarizes our strategy in 10 words, and building on these, I'll update you on progress we have made in how we've been serving cost-conscious consumers around the world, how we've been reducing complexity to improve our consumer offering and strengthen our core, and how we've started to expand beyond our core, growing our existing brands in existing markets, but also taking some of them into new markets, too. Sarah talked about the inflationary pressures we've experienced, and we're not the only ones. So, too, have our consumers. Around the world, the day-to-day cost of living has become more expensive as inflation and borrowing costs bite for consumers.
While the timing of the economic cycle may have differed, we have seen this dynamic in all our markets in recent years, whether it's rising mortgage rates in the U.K. or the price of diesel tripling over two years in Nigeria, where it remains vital for domestic power generators to deal with the unreliable electricity supply. The statistics shown here for our largest are for our largest markets, but we could have shown smaller markets, too, not least inflation peaking at over 40% in Ghana. Now, we've worked hard to understand changing consumer needs and shopper habits in response to these pressures. Moving to implement what is needed to win in such an environment and sharing lessons across our markets as we go. Our primary focus has been on offering the best possible value for consumers, wherever they choose to shop and whatever their spending power might be.
We have therefore worked resolutely alongside our retail customers to deliver great value for the cost-conscious consumer. Our first priority is to remove costs the consumer doesn't see or value... and then we use our portfolio and innovation to deliver value, whether, for example, that's hitting key price points or providing more benefits for the price the consumer pays. Just two examples of that could be seen here, one from a developed market and the other from more of an emerging market. In the U.K., we launched a new value brand, Cussons Creations. Introduced at the same time as we relaunched Imperial Leather with a more premium positioning, Cussons Creations offers great formulations and fragrances in a fun proposition at good everyday prices.
It's already a top 10 brand in each of the washing and bathing subcategories in which it plays, and it's as high as the number 4 brand in liquid soap. We've been really pleased with feedback from key customers who see this product as distinctive innovation, directly serving shoppers that are feeling the pinch. Financial results have been strong, with combined Imperial Leather and Cussons Creations revenue up for the first time in years. Turning to Indonesia, more of an emerging market, not only have we introduced smaller-sized bottles of some of our best-selling products to enable cash-strapped parents to be able to stay in the brand with lower levels of disposable income, but we've also launched value packs that hit key price points and literally shout value as they hang above the counters of traditional trade stores.
I can tell you from seeing them when I was in the local markets of Jakarta last month, they really stand out. So we are acting at all levels of price point, driving price mix where we can add value for the consumer, but also ensuring we are hitting critical price points at the lower end, where discretionary income may be tight. As I said, our first port of call is to ensure we are being as efficient as possible, tackling costs the consumer should not pay for. We have, therefore, remained hard at work, reducing complexity across our business, and one key area has been supply chain. Our teams are creating a structure that is fit for purpose, one that is not only simpler with the associated cost benefits, but also allows us to prepare PZ Cussons supply chain for the future.
It's one of the most significant transformation programs across PZ operations in 20 years. We're engaged on three main projects. First, the planned closure of our underutilized soap factory in Thailand and subsequent sourcing shift to more efficient third parties. This enables us to achieve significant cost savings, improve working capital, shorten manufacturing lead times, and reduce freight usage. Not only does this drive efficiency, it also supports our sustainability goals by reducing our carbon footprint and landfill waste. This project alone will reduce our group's total carbon emissions by 2% and see a 17-ton reduction in waste to landfill. Second, the closure of our in-house fragrance operation and subsequent outsourcing to world-class fragrance houses. This will reduce costs, improve quality, and increase flexibility.
Finally, the onshoring of our procurement capabilities, bringing the function back to the U.K. from Singapore, creating synergies as the procurement resources now sit alongside commercial and other supply chain teams in Manchester. These projects, which are all well underway and on track to complete by the end of this financial year, will provide a GBP 2-3 million annualized saving, as well as cash proceeds from the eventual sale of the factory in Thailand. It goes without saying that we continue to identify further opportunities to improve efficiencies and capabilities in our supply chain for the future. Moving on now to Nigeria. Sarah described the challenges and some of the actions we are taking, but let me discuss how we've strengthened the business over the past couple of years and what you should expect next.
We've talked previously about the self-help approach we have taken in Nigeria, from strengthening our route to market capabilities, covering more stores more effectively, to the simplification of the portfolio, cutting small brands and SKUs that it simply doesn't make sense to keep. These actions have driven improved revenue, gross margin, and greater resilience. Moving on now to Nigeria. Sarah described the challenges and some of the actions we are taking, but let me discuss how we've strengthened the business over the past couple of years and what you should expect next. We've talked previously about the self-help approach we have taken in Nigeria, from strengthening our route to market capabilities, covering more stores more effectively, to the simplification of the portfolio, cutting small brands and SKUs that simply it doesn't make sense to keep. These actions have driven improved revenue, gross margin, and greater resilience.
Sarah touched on the announcement we made to buy out and delist the local minorities. More than a legal or financial technicality, we see this as a significant intervention in the market, simplifying and strengthening the business we have in Nigeria while providing improved financial returns for the group. We continue to see this as an exciting market for the future. I've talked so far about how we're strengthening our core. Now, let me talk a little bit about how we are selectively, and with discipline, opening up new growth opportunities where we believe we have a right to win.... A good example of this is Morning Fresh, our market-leading hand dishwash brand in Australia, which the team expanded into the auto dishwash category earlier this year. This marks a clear move to take one of our existing top-performing brands into new category adjacencies.
The auto dishwash segment is around twice the size of the hand dishwash segment and growing significantly faster. While we continue to drive our own market share gains in hand dishwash, it's clear that value is shifting to the auto dish category over time. It's early days, but the signs are positive. We have good support from the two top retailers in Australia, as well as distribution in other channels. Early results have been in line with expectations, especially when on promotion and display in a category which is heavily sold on deal. Rest assured, we have not taken our eye off the ball on the core. Hand dishwash share is around 50%, with gains in both the last three and the last 12 months.
I was with the team on the ground just a few weeks ago, and had the chance to walk a store with an executive from one of our top customers. It was very clear that while our categories are highly competitive, our brands stand out, and it was reassuring to hear the retailer support our long-term ambitions in both hand and auto dish. It's not just through entering adjacent categories in existing markets that we can expand from the core and serve more consumers. It's also by taking existing brands and expanding them into new markets. Many of you will have met Paul Yocum at the Childs Farm Capital Markets event back in July. Along with the team, Paul talked you through how Childs Farm is expanding beyond its home market of the U.K..
As Managing Director of Business Development, Paul and his team are also responsible for taking our other brands elsewhere. We're being highly selective and disciplined about which of our brands have the potential to travel and to which markets. Let me talk you through two examples. The first is Original Source, which launched into the Spanish market in July. The sector in Spain is worth around GBP 300 million and is Europe's third-largest bath and shower gel market, signaling the strength and ambition of the brand to continue to grow. The team put together a brilliant launch campaign focused around out-of-home and social media activations. For the Spanish speakers on the call, you'll spot that, just like here in the U.K., it remains a brand with an edge.
For the Brits, who visit Spain on a regular basis, you'll be reassured to know that we've seen some of the best early results in the tourist hotspots for your holidays. So we're securing additional display spaces, so you don't need to worry about packing your Original Source from back home. Of course, we have further distribution plans for the next few months, and I look forward to updating you on our progress. Elsewhere, we launched Imperial Leather Shower Gel in Thailand in July. Here, the focus of the launch was social media, working with key influencers within the region and TV campaigns. The market size is nearly GBP 200 million and will enable us to leverage our existing leading position in bar soap in a new category.
To give you a sense of the brand positioning, which builds on what we've done in the U.K., but with relevance to the Thai market, we have taken the core brand proposition of everyday indulgence, brought to life through fragrance and lather, a touch of luxury, but still very much down to earth. Let's take a look at the video.
Moving now to Childs Farm. Those of you who are able to attend the Capital Markets event in July will know that we're really pleased with the progress Childs Farm has been making since we acquired it, and how excited we are about our plans for the future. You can see on the left of the slide how we've applied our PZ Cussons Growth Wheel playbook to building this brand. Based on consumer insight, we launched Oat Derma and SlumberT ime innovations. We're communicating the brand better than ever, with its first TV commercial, on top of some fantastic digital and PR activity. And then we're making sure we win where the shopper shops, expanding our U.K. distribution further with recent wins, as described at the Capital Markets event. Looking beyond the U.K., we're clear on our prioritization.
First, transforming existing markets where we have some presence through distributors, then moving on to the U.S. and key Western European markets. We're seeing good momentum internationally, and we are confident that there is much to come, which is why we believe that we can triple the brand's revenue over the next 5 years. We're now 3 years into our new strategy, and we felt it would be helpful to give a sense of the progress made over that time in our effort to build a higher growth, higher margin, simpler, and more sustainable business. We've sustained increased investment levels behind our brands, overcoming shorter-term challenges to serve more consumers and to do so more efficiently, including getting Nigeria back to profitability.
Much of this has been thanks to a strengthened team, now including a Nigerian leading our Nigerian business and an Indonesian leading our Indonesian business, in both cases for the first time in our 139-year history, while also striving to deliver sustainable full performance by doing the right thing for people and the planet. That said, we know that there is more to do. We can't assume that the operating environment will improve anytime soon, and therefore, the more resilient and agile we are as an organization, the better we will be able to smooth out those bumps and the faster we will make progress. To that end, we've set out four priorities for the business in FY 2024. A healthy balance of street fighting, which will continue to be necessary, as well as planting the seeds for future growth.
The priorities are a blend of activities to drive performance this financial year and to set us up for sustained performance in future years. First, the currency situation in Nigeria remains complex, posing risks and, of course, opportunities. Our teams are very well supported by central expertise as we navigate these challenges. Over the course of the next year, you'll see us manage the FX challenges, while continuing to reduce complexity in Nigeria and strengthen the business for the long term, just as we have done for the last three years. Second, we have more to do to realize our full potential in our home market of the U.K. We're seeing progress in our U.K. personal care business unit, and I've already mentioned the results on Childs Farm, but still need to deliver improved performance on our beauty portfolio.
We'll always face tough competition in the U.K., but we see the opportunity for improved performance in the future. Third, we'll continue to expand from our core, just as we have with the Morning Fresh Auto Dish, Childs Farm International, and Imperial Leather Thailand examples earlier. We will balance such expansion with making sure we continue to grow in our existing core business, too. And finally, we are going to continue to build critical capabilities to support and enable our performance in the future. We'll build on the progress made in areas such as revenue growth management and sustainability by continuing to raise our brand building and our route to market capabilities with digital transformation underpinning our plans. Longer term, we remain optimistic about PZ Cussons' prospects. We are building from stronger foundations, operating across attractive markets and with the benefit of a much-loved portfolio of trusted brands.
Our market position is strong. Our size brings scale to compete against smaller local players, but also agility and strong local consumer and customer understanding to compete against much larger multinationals. We maintain a 50/50 split between developed and emerging markets, and we have good exposure to rapidly growing markets with underlying structural tailwinds, where we're positioned for growth. As you can see on the right here, we also maintain significant brand strength across our core categories in priority markets, including some impressive performances on portfolio brands as well as Must Win Brands. We don't see this changing anytime soon. Overall, we see a clear pathway to create value for all stakeholders as we continue to execute against our strategy.
To summarize, we've delivered a third consecutive year of like-for-like revenue growth, with a really strong performance in ANZ and improving U.K. personal care performance in the second half. Secondly, we're navigating external uncertainties. We've proven we can do this with the GBP 80 million cost headwinds over the last three years, and we'll do it again with a headwind borne out of the Naira devaluation. Thirdly, these near-term challenges haven't dented our clear strategic intent, and we've made good progress here. Next, we've set clear priorities for FY 2024, which will not only address our current challenges, but stand us in good stead for the long term. And finally, we continue to see attractive long-term opportunities for PZ Cussons, given the strength of our market positions and brands. With that, I'll hand back to the operator, and Sarah and I will be happy to take your questions.
Thank you. Of course, if you'd like to ask a question via the telephone lines, you can do so by pressing star followed by one on your telephone keypad now. If you choose to withdraw your question, please press star followed by two. When preparing to ask your question, please ensure your phone is unmuted locally. As a reminder, that's star followed by one on your telephone keypad now. Our first question comes from Damian McNeela of Numis. Damian, your line is open. Please go ahead.
Hi. Morning, Jonathan. Morning, Sarah. Just a couple of questions from me to start with, please. I think both of you mentioned that sort of Europe, Americas is not where you want it to be. I just think, would you be able to give us a bit of color on the level of margin expansion that we should expect, or, A, should we expect margin expansion next year, and where is that coming from? What's behind that, essentially? And then I think, Jonathan, can you just talk a bit more about how beauty has performed. I think we were hoping that the second half would see an improvement in St. Tropez performance, and I think we got it.
But I'm just wondering where that brand is at the minute, and what further sort of growth opportunities you see for that going forward? And I'll leave it there for now. I'm sure other people have got questions.
Very good, Damian. So good morning. I should have said that if you're gonna ask any really difficult questions, we might have another fire alarm, but as you didn't, we can move ahead with those. So why don't I ask Sarah to answer on the Europe, Americas margin expectations, and then I can come back, making sure I address your questions on beauty and more specifically, St. Tropez.
Thanks, Damian. Morning. So we were dissatisfied with our Europe and Americas performance in the first half of FY 2023. We were very pleased into the second half of the year, and we see many of those positive trends into FY 2024. So I think it's fair to assume that 18.6% margin in it, in itself, healthy structural economics, can continue, if not, be slightly better in FY 2024. The reasons being, for the first time in three years, we are seeing some slightly deflationary impacts through our product cost network. St. Tropez, of course, more in the second half of the year than in the first half of the year in the U.S., continues to go from strength to strength.
Most notably, I think, in terms of the turnaround, the U.K. washing and bathing category, 70% of Europe and Americas is now back into growth in the first quarter of this year, and Carex, which we expect to grow in each of the following three quarters. So we're confident about the margin profile in Europe and Americas.
And then to address your question on beauty and more specifically on St. Tropez, Damian. Yeah, we saw a really strong second half on St. Tropez in the U.S.. We saw very strong levels of retailer support, and we had a very good pre-season level of support from the retailers there, which meant that St. Tropez in the U.S. delivered very strong growth in the second half, which was great. It was a slightly different story in the U.K., but we're not letting that mask where we see future opportunity, which is elsewhere in Europe, particularly as we try to make sure we work with the perfect or the right distributor partners, who we know are the ones with the best capabilities on the ground. And whilst we do that, and we continue to see momentum in the U.S. business, the U.K. business really is a question of fixing St.
Tropez in a heavily commoditized category. It's a very different challenge to what we face in the U.S., so increasingly, I think you should expect to see a divergence between some of the activation that we execute in the U.K. market versus what we're doing to sustain a more premium positioning in the U.S. and then expanding that more broadly across Europe. But we continue to have very high hopes for the brand in the future.
Okay. That's, that's very clear. Thank you.
Thanks, Damian.
Perfect. Thank you. As a reminder, if you'd like to ask a question via the telephone lines, you can do so by pressing Star, followed by one on your telephone keypad now. We'll pause briefly to allow any further questions to be registered. We currently have no further questions registered, but we do have a follow-up from Damian McNeela of Numis. Damian, your line is open. Please proceed.
Sorry, guys, I didn't realize, I didn't know who else was on the call.
Yeah.
A few more for me then, if you don't mind. CapEx in the year was relatively low now, what—I mean, can you provide any sort of context for that, sort of what looks like a pretty low number, and what we should be expecting, further out? And then in terms of like the Must Win Brands, I think you mentioned that all but three were in growth. Can you sort of give us the sort of the general or the overview of what the sort of level of growth was? And I think Carex was, wasn't in growth. I think you mentioned, another brand that wasn't in growth, which has slipped my mind, but what was the third one, please?
Cussons Baby, Sanctuary Spa-
Yeah.
And Carex.
Carex, yeah.
Right. Okay. Yep. Thank you.
Do you want to do the CapEx?
Shall I?
Yep.
Damian, you've got another one?
Just on the dividend as well. I mean, I know you've held it this year, and it might be we might be getting ahead of ourselves, but given the impact of Naira, what how should we think about or is it too early to talk about the sort of, shareholder distributions for next year?
Let me-
I'll leave it there.
Let me take the CapEx one first. So you're right to say in FY 2023, there was a slight trending down of the level of investment that we'd had in the previous two years. So roughly from between GBP 8-9 million per year to between GBP 6-7 million. So what you shouldn't see that is any curtailing of investment in the business. If I just take an accounting moment for a second, some of what would typically have been accounted for as CapEx through the supply chain, we are now seeing in some of our adjusting items. So if you remember, 12-18 months ago, we announced a GBP 20 million transformational investment, and that sits behind some of the strategic cost savings that Jonathan talked about.
It's a good ongoing level of investment in the business, and we still think there's more to go for.
And if I just pick up a little bit on the theme-
Okay.
Sorry, Damian. Go on.
No, no, no. Just Sarah. Thanks to Sarah.
So why don't I just pick up a little bit on the theme of the, of the Must Win Brands? So as, as Sarah mentioned, Carex, Sanctuary Spa, and Cussons Baby in Indonesia were the three that declined. We talked a bit about some of the consumer realities that the Indonesian, market is facing, and we're navigating our way through there. We're trying to absolutely make sure the brand stays relevant, and we're trying to make sure we're competitive in a market where there's a lot of volatility and literally consumers are running out of money and therefore choosing which subcategories or products they stay in or not. But we are all over that. I was there, as I said, last month.
Sanctuary Spa, we talked a bit about, and of course, Carex, we have talked about, and we are very hopeful, more than hopeful, that we will see improving trends as we move through the balance of this year. But just a moment on some of the other brands as well. You know, we have had some really impressive performances elsewhere in the Must Win Brands. We talked about St. Tropez in the U.S. Morning Fresh in Australia goes from strength to strength. As I said, latest market shares are up, whether you look at a 3-month basis or a 12-month basis, hence the confidence to move into auto dish. But actually, also, a little bit of a shout-out for some of our portfolio brands that don't get quite as much airtime, but we've seen some equally impressive performances from in the last year.
Take a couple in Nigeria, Stella, even our Thermocool electricals brand, have shown really strong levels of double-digit revenue growth. And you move to ANZ, and you look at the number two and number three brands in our portfolio, and they'd be Radiant laundry liquid powder and Rafferty's Garden baby food. They have both grown market share in the last year. Rafferty's Garden continues to really consolidate its position as market leader in the baby food category in Australia, as well as growing revenue on both businesses. So actually, top three brands are a bit of a full house in ANZ, revenue growth and market share growth. Hence, why we're calling that out as an example of a business unit that's really got some sustained performance.
Let me take the dividend.
Yeah, okay. Thank you, Jonathan. Yep.
Question.
Yeah.
Damian, so you're right to say the board has taken, I think, what I'd describe as a precautionary step to hold the dividend flat this year after two consecutive years of a good level of increase in the dividend. That represents really two factors. One is actually the mechanical translational impact of our Nigerian profits now in GBP terms. So we always want to make sure we have a good level of earnings to dividend cover. It also reflects that at the moment, it's difficult to repatriate cash from Nigeria to the U.K. Now, fortunately, we have strong free cash flow conversion, a good level of flexible borrowing arrangements in place in the U.K., but still, it felt sensible just to hold it flat for this year.
We still believe we've both got the balance sheet flexibility and also the pipeline of ideas to be able to invest behind growth in the business, be that organic, inorganic, and also distribute a good level of return to our shareholders. A precautionary step.
Okay, thank you. That's me done for questions for now.
Thanks, Damian.
Thank you.
Thank you, Damian. We currently have no further questions registered on today's call, so I'll hand it back over to the management team for any further remarks.
Okay. So look, my main message to all of you is thank you for joining today. We continue to make progress against our strategy, and we continue to work hard to deliver in this year and to build our performance potential for future years. If any of you have got any further questions, obviously, Simon Whittington is available, and so are we, and we look forward to catching up whenever. Thanks a lot!