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Reckitt Joins Unilever and P&G in Strong Sales Driven by Pricing Hikes

Reckitt Joins Unilever and P&G in Strong Sales Driven by Pricing Hikes

Reckitt Benckiser Group Plc joined other consumer-goods companies in raising prices to offset rapidly soaring supply chain costs, helping the maker of Dettol and Lysol cleansers beat first-quarter revenue estimates.

Comparable sales grew 5.6% in the three months through March, the Slough, England-based company said in a statement Friday. That compares with Bloomberg’s consensus analyst estimate of 1.2%. Volumes grew marginally. 

“There is no doubt we’re experiencing a significantly worsening inflationary environment since announcing our guidance in February,” Chief Executive Officer Laxman Narasimhan said on a call with reporters, pointing to the soaring costs of commodities since Russia’s invasion of Ukraine. The maker of Durex condoms and Nurofen painkillers now sees inflation in the high teens, having previously seen it in the low teens, Narasimhan said.

Reckitt said it expects its full-year comparable sales to be in the upper end of its guidance of +1 to +4%. The company now foresees full-year adjusted operating margin in line with last year’s 22.9%. In February, Reckitt had forecast an improvement.

Reckitt shares rose as much as 2.7% in early London trading, before paring gains.

Reckitt joins companies including Unilever Plc, Carlsberg A/S and Pernod Ricard SA in increasing the pressure on consumers worldwide with higher prices for products ranging from Dove soap to beer and Havana Club rum, raising the risk that shoppers may start to balk at spending more. Those three companies reported sales growth Thursday at about double the pace analysts had expected. 

Reckitt is facing about 1 billion pounds ($1.2 billion) of cost inflation this year, Chief Financial Officer Jeff Carr told reporters. He said achieving last year’s margin would be a “fantastic feat” in that context. He later said on a call with analysts that about two-thirds of the company’s 2022 expenses are hedged. 

Reckitt is also pursuing a sale of the remainder of its infant nutrition business and has asked for offers by late May, people familiar with the matter said earlier this month. The operations, which are mainly in the U.S., are likely to appeal mostly to private equity buyers, the people said.

©2022 Bloomberg L.P.