Reckitt Reports Strong Q1 Sales Growth, Beating Expectations

Reckitt, a British multinational consumer goods company, reported better-than-expected like-for-like sales growth of 1.5% for the first quarter of 2024, surpassing analysts' expectations of a 0.9% decline. The company's shares were up nearly 6% in morning trading following the announcement.

Reckitt's strong performance was driven by its hygiene and health businesses, which saw mid-single digit growth. The hygiene division, which includes brands like Dettol, Lysol, and Harpic, experienced revenue growth of 7.1%, offsetting a 9.9% decline in the nutrition segment. The health unit also saw a 1.0% rise in like-for-like net revenues, propelled by growth in Intimate Wellness, non-seasonal over-the-counter brands, VMS, and Dettol.

CEO Kris Licht described the first quarter as 'good' and emphasized that the performance was bolstered by continued pricing strategies and consumers upgrading to its premium innovations. "We grew volumes in many of our power brands during the quarter," Licht stated. "Reckitt continues to benefit from carryover pricing and consumers trading up to its premium innovations."

The company's overall price mix ratio rose 2%, while volumes declined by 0.5%, better than the expected 2.2% price mix gain and 3.2% volume decrease. Geographically, Europe delivered mid-single-digit net revenue growth, while North America saw growth in hygiene brands offset by declines in the U.S. Nutrition business.

Why this matters: Reckitt's strong performance in the first quarter of 2024 demonstrates the resilience of its core hygiene and health businesses, despite challenges in the nutrition segment. The company's ability to navigate inflationary pressures and changing consumer preferences highlights its adaptability in a dynamic market environment.

Reckitt reiterated its full-year guidance, projecting like-for-like net revenue growth between 2% and 4% for the group, with adjusted operating profit expected to outpace net revenue growth. The company expects revenue and profit growth to be second-half weighted as it laps high over-the-counter comparatives from the first quarter of last year and will see the majority of the rebasing of its US Nutrition business in the first half of 2024.

Looking ahead, Reckitt is increasing cash returns to shareholders through an accelerated share buyback program and continues to make progress on its strategic agenda. The company is on track to deliver its full-year guidance, with mid-single-digit growth expected in the Health and Hygiene portfolios, and a mid-to-high single-digit decline in Nutrition as it rebounds in the second half of the year.

Key Takeaways

• Reckitt reported 1.5% Q1 2024 like-for-like sales growth, beating expectations.
• Hygiene and health businesses drove growth, offsetting nutrition segment decline.
• Reckitt maintained full-year guidance of 2-4% like-for-like net revenue growth.
• Reckitt to increase cash returns to shareholders via accelerated share buybacks.
• Reckitt expects mid-single-digit growth in Health and Hygiene, mid-to-high single-digit decline in Nutrition.