Reckitt Benckiser Q1 sales jump, FY outlook lifted

Consumer goods company Reckitt Benckiser lifted its full-year outlook on Thursday and reported a jump in first-quarter sales as demand for its products was boosted by the coronavirus pandemic.

In the three months to the end of March, total sales rose 12.3% to £3.5bn, with like-for-like sales up 13.3%. Reckitt said growth was led by strong demand for many of its hygiene and health products, in particular Dettol, Lysol, Mucinex, Nurofen and VMS.

Reckitt said its 2020 performance is now expected to be ahead of original expectations, although the outlook for the balance of 2020 remains uncertain, with significant Covid-19 challenges across its markets.

Chief executive officer Laxman Narasimhan said: "We have seen strong consumer demand, particularly in March and April but the split between defensive buying and higher levels of underlying consumption is unclear.

"At this stage, it is uncertain how quickly this will change in the months ahead. Improved penetration and usage, particularly for products like Dettol and Lysol, may well sustain, although we will likely see some unwinding of 'pantry load' as we work our way through the crisis. The near-term operational challenges to meet additional demand and handle lockdown conditions, with the associated costs, are also likely to continue for some time."

At 1315 BST, the shares were up 4.3% at 6,674p.

Russ Mould, investment director at AJ Bell, said: "Reckitt Benckiser has demonstrated that not everyone is suffering equally in the coronavirus crisis. The consumer goods giant lifting outlook guidance feels like a dose of vitamins to a market facing a wave of profit warnings, dividend cuts and fundraisings.

"Reckitt’s slant towards health and hygiene chimes perfectly with the need to look after ourselves and the reality that cleanliness is now less of an aspiration and more of a necessity. It is little surprise to see brands like Dettol, Lysol, Mucinex and Nurofen in demand.

"The business also seems to have passed the supply chain test in the face of exceptional demand that saw a substantial increase in sales in a very short period. The company is also doing its bit in the effort to tackle the pandemic by putting 1% of profit into a support fund, thereby ticking the good corporate citizen box.

"Although sales were lifted by stockpiling as the crisis took hold, it seems likely that some of the changes to consumer behaviour in the wake of the pandemic will be lasting. This could provide some extra pep to the recovery plan being delivered by CEO Laxman Narasimhan."