26th Apr 2023 11:22
(Alliance News) - Reckitt Benckiser Group PLC said price hikes supported its first-quarter outturn, though there is a worry that top-line growth will suffer further down the line if volumes continue to slide.
Consumers may turn to budget alternatives as incomes are squeezed by cost of living pressure.
Reckitt, behind brands such as Air Wick, Dettol and Strepsils, also named a new chief executive. The Slough, England-based consumer goods company promoted from within for the top job.
The company said volumes fell 4.5% on-year in the first quarter of 2023, though it logged price/mix improvements of 12%.
It noted "improving volume trends", however. Volumes had slid by 5.8% annually in the fourth quarter of 2022.
"At the moment Reckitt has been passing on extra costs to the customer via higher prices but volumes have been declining, illustrating how many people have been trading down from popular brands to supermarket own-label items which are more affordable. If economic conditions continue to be tough around the world, there is a risk to Reckitt this trend remains intact," AJ Bell analyst Russ Mould commented.
Reckitt said total net revenue in the first quarter rose 14% year-on-year to GBP3.92 billion from GBP3.42 billion a year earlier, or 7.9% on a life-for-like basis.
Hygiene revenue increased by 8.6%, or 2.0% on a like-for-like basis, to GBP1.59 billion. Health revenue was up 17%, or 13% like-for-like, to GBP1.64 billion. Nutrition revenue increased by 23% on a reported basis, and 12% like-for-like, coming in at GBP683 million.
Looking ahead, Reckitt Benckiser said it expects group like-for-like net revenue growth of 3% to 5% for 2023. In 2022, net revenue was GBP14.45 billion, with like-for-like growth of 7.6% from a year earlier.
Additionally, the company said it promoted Kris Licht to become chief executive officer designate as of May 1. He will immediately begin the transition to the CEO role. Licht will succeed Nicandro Durante, and take over CEO by the end of 2023.
Licht has been chief customer officer and served as president of Reckitt's Health business since July 2020. Prior to this, he was chief transformation officer from November 2019 to July 2020.
Reckitt said Licht helped the Health arm return to a "strong growth trajectory".
interactive investor analyst Victoria Scholar commented: "Investors will be relieved that a new boss has been appointed, who has been with the firm since 2019 and is seen as a continuity candidate, unlikely to spearhead any immediate drastic changes at the group."
Reckitt in September said Laxman Narasimhan left the company to relocate to the US. Narasimhan was named chief executive of Starbucks Corp. Reckitt named former British American Tobacco PLC chief Nicandro Durante to step into the role on an interim basis.
Shares in the company traded 1.7% lower at 6,390.00 pence each in London on Wednesday morning.
By Eric Cunha, Alliance News news editor
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