Reckitt Benckiser LFL Revenue Beats Expectations Despite Lower Volumes — Update

By Michael Susin

Reckitt Benckiser's like-for-like revenue for the first quarter beat expectations, and the group backed its full-year guidance.

The consumer-goods company--which houses Dettol, Harpic and Durex among its brands--said Wednesday that revenue for the quarter was of 3.74 billion pounds ($4.66 billion), in line with the company expectations, compared with GBP3.92 billion the same period a year ago. However, the figure was above a company-provided consensus of GBP3.70 billion.

Net revenue grew 1.5% on a like-for-like basis, driven by a price contribution of 2.0%, while volumes fell 0.5%. The growth was offset by foreign-exchange headwinds, it said.

This was ahead of a market compiled-consensus, which expected LFL revenue to fall 0.9%. Price and volume contributions were estimated to grow 2.2% and fall 3.2%, respectively.

"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... In addition, we continue to benefit from carryover pricing and consumers trading up to our premium innovations," Chief Executive Kris Licht said.

The update prompted shares to rise 4.5%, leading the FTSE 100 index in early trading.

By segment, Hygiene LFL revenue grew 7.1%, health grew 1.0% while nutrition declined 10%.

Reckitt is the latest company to report a struggle with the balance between prices and volumes amid a consumer-confidence recovery and lowering input costs. Since 2022, companies started to lift their prices to pass on the inflationary pressures to consumers, often sacrificing their sales volumes.

For 2024, Reckitt said it continues to expect net revenue growth on a like-for-like basis of between 2% and 4%.

The company didn't provide any updates regarding the U.S. litigation related to its Enfamil Premature 24 infant formula.

On March 15, Reckitt lost almost $7 billion in market value after an Illinois jury ordered the company's infant-formula unit, Mead Johnson, to pay $60 million in compensation related to the death of a premature baby who was fed Enfamil product.

According to Jefferies analysts, the liability risk is likely to be reduced given the formal stance taken by the NEC Society, a necrotizing enterocolitis nonprofit, last week, which said that a punitive legal outcome for Reckitt could have negative consequences for babies and eliminate potentially beneficial therapy choices.

Write to Michael Susin at michael.susin@wsj.com

Corrections & Amplifications

This article was corrected at 1028 GMT to clarify that first quarter like-for-like revenue and volumes were expected to drop 0.9% and 3.2%, respectively. An earlier article misstated the direction of the forecasts.

(END) Dow Jones Newswires

April 24, 2024 04:22 ET (08:22 GMT)

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