By Richa Naidu
LONDON (Reuters) – Reckitt, the maker of Dettol and Lysol cleaning products, on Wednesday missed first-quarter like-for-like net sales growth estimates as volumes in its top European and North American markets fell, sending its shares down.
The company also said that while it was “continuing to progress” the sale of its Essential Home business, expected this year, it recognised that “market conditions may impact this timeframe”.
Reckitt maintained its full-year expectations of like-for-like net sales growth of 2%-4%, though it noted the “more challenging” macroeconomic outlook.
A global trade war sparked by U.S. President Donald Trump has prompted economic uncertainty and fears of a recession.
Consumer staples companies are considered more resilient during economic downturns, but big brands like Reckitt, P&G and Unilever increasingly face stiffer competition from cheaper private label brands that gained popularity during the COVID-19 pandemic.
“Given that Reckitt is in the middle of a complex turnaround, we view no news as good news in terms of operational performance,” Barclays analyst Iain Simpson said.
“We note widespread apprehension around this results season across consumer staples given the limited macro outlook.”
Reckitt shares were down by more than 5.4% in morning trade after reporting results. The company said it was still trying to exit the Essential Home business this year.
“We are not announcing any delay today to our Essential Home (sale) process at all,” CEO Kris Licht said on a call with investors. “It takes longer to execute transactions in an environment like the one we’re operating in.”
The company’s first-quarter like-for-like net sales rose 1.1%, below the 1.4% analysts had expected in a company-supplied poll. Sales volumes declined in Europe and North America, two of Reckitt’s biggest markets, by 4.7% and 1.8%, respectively.
Price/mix, a metric that reflects how much Reckitt sold its products for, rose 3%, and volumes declined 1.9% overall on a group level. Analysts expected price/mix to rise by 1.3% and volumes to be flat.
The company, whose other products include Nurofen tablets, cold remedy Lemsip and Durex condoms, said it was “closely monitoring the evolving situation around global tariffs and the potential impacts on our supply chain and cost base”.
Some investors have said they worry Reckitt is more exposed than its rivals in the United States due to its lower manufacturing capacity there compared to companies such as Haleon and Unilever.
Reckitt said on Wednesday that tariffs would have an “immaterial annualised impact on its cost of goods sold base” that it could mitigate.
(Reporting by Richa Naidu; Editing by Jane Merriman, Tomasz Janowski and Jan Harvey)
