After near-constant disappointment for Reckitt Benckiser investors since the pandemic, they finally have something to cheer about.
Like-for-for like sales grew 1.5% in the first quarter as a mix of higher sales prices and steady volumes culminated in a robust period for the group.
Prices did most of the heavy lifting, rising 2% while volumes fell 0.5% – an improvement on last year. Reckitt was upbeat about the performance of its ‘power brands’ Lysol, Dettol, Durex and Finish with all showing positive volumes.
The hygiene unit was the standout performer in the quarter with like-for-like sales jumping 7.1% and volumes increasing 2.9%. Hygiene is Reckitt’s largest unit by revenue and strength here offset weakness in nutrition where volumes sank 9.4%.
Reckitt Benckiser shares were over 5% higher at the time of writing but are still substantially below all-time highs.
“To say Reckitt Benckiser has had a tough year would be a significant understatement with the price plummeting almost a third since February off the back of poor Q4 results and litigation facing their baby formula brand. With that said, many shareholders may well have been bracing for impact this morning but in fact the results offer a timely reprieve,” said Adam Vettese, analyst at investment platform eToro.
“Even when consumers are tightening their belts, Reckitt’s array of consumer staples in well-known brands are still well in demand with consumers even upgrading to premium versions as smaller luxuries take the place of bigger, more extravagant purchases. Sales jumped despite price increases showing strong brand loyalty to the likes of Finish, Dettol and Nurofen and the increase is coming not only from price but volume also.”
Vettese also pointed to share buybacks helping improve investors’ mood:
“More buybacks are on the way in July and provided legal issues do not bring too much more trouble to the door, investors could see value at the current levels with the price 38% away from its 2024 high which was only at the end of February.”