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Reckitt Price Hikes Drive Better Than Expected Sales Growth

By Donna Ahern
Reckitt Price Hikes Drive Better Than Expected Sales Growth

Reckitt Benckiser Group beat first-quarter sales expectations on Friday, having increased prices to offset soaring raw material costs and flat volumes.

Consumer goods manufacturers from Procter & Gamble to Nestlé have for months sought to raise prices in the face of higher supply chain and commodity expenses, with Russia's invasion of Ukraine having also driven energy prices to record highs.

The maker of Lysol cleaning products and Durex condoms said that cost inflation has increased to percentages in the 'high teens'.

The company had said in February that full-year costs had risen by about 11% and it expected expenses to be higher in 2022.

"The input environment remains highly volatile and unpredictable," Reckitt said.

"It has become more adverse since our last market update in February due to the ongoing war in Ukraine."

Full-Year Forecast

Reckitt raised prices by 5.3% during the quarter and said it now expects full-year like-for-like net revenue growth towards the upper end of its forecast of 1-4%.

"We're very conscious of our competitive position, of our price gaps versus competitors," Laxman Narasimhan, chief executive said on a media call. "We're looking at price points and ensuring consumers have a range of price points."

The company expects full-year adjusted operating margins in line with current market expectations of 22.9%.

Quarterly Sales Increase

Quarterly like-for-like sales rose 5.6%, ahead of the 1.5% growth analysts had expected in a company-supplied poll.

"It's a strong, broad-based beat ... They're able to take the pricing (measures) they need to offset input cost pressures this year and still grow market share," Barclays analyst Iain Simpson said, adding that companies far and wide are having to raise their prices.

News by Reuters, edited by Donna Ahern, Checkout. For more A-brand news, click here. Click subscribe to sign up for the Checkout print edition.

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