Reckitt Benckiser Group H1 Earnings Call Highlights

Reckitt Benckiser Group LON: RKT reported accelerating sales growth in the second quarter of 2026, supported by innovation, emerging-market demand and a return to growth in North America, while maintaining its full-year outlook despite commodity and supply-chain volatility.

Chief Executive Officer Kris Licht said Core Reckitt generated like-for-like net revenue growth of 2.7% in the first half, accelerating to 4.2% in the second quarter. Group like-for-like revenue growth was 2.6% in the half and 4.7% in the second quarter. Licht said every area and category improved sequentially in the second quarter, with growth split more evenly between volumes and price mix.

“Our focused portfolio continues to deliver, with growth accelerating in the second quarter and improving across all areas and categories,” Licht said.

Profitability and shareholder returns

Chief Financial Officer Shannon Eisenhardt said Core Reckitt and Mead Johnson’s adjusted operating profit margin was 23.6% in the first half, down 100 basis points year-over-year but ahead of the company’s expectations. The performance reflected a less severe-than-expected gross-margin impact from the conflict in the Middle East and earlier-than-anticipated savings from the Fuel for Growth efficiency program.

Core Reckitt and Mead Johnson gross margin declined 50 basis points to 60.5%. Core Reckitt’s gross margin was 60.9%, down 110 basis points from a year earlier, as higher input costs and category mix changes offset benefits associated with the sale of Essential Home.

Adjusted earnings per share fell 9.7% to £1.521, primarily because of the Essential Home divestment and higher input costs. Free cash flow was £419 million, producing cash conversion of 42% as the company continued to invest in Fuel for Growth.

Reckitt returned more than £3 billion to shareholders during the first half through its full-year dividend, special dividend and share repurchases. It also announced a new £500 million share buyback program lasting 12 months and raised its interim dividend by 5%. Since unveiling its strategic plan in 2024, the company has returned more than £6 billion to shareholders, management said.

• Net debt to EBITDA stood at 2.5 times at the end of the first half.
• Fuel for Growth remains on track to reduce fixed costs below 19% of net revenue by the end of 2027.
• The company expects costs to deliver the program of about £1 billion, including about £350 million in 2026.

Emerging markets lead growth

Emerging markets delivered like-for-like net revenue growth of 8.5% in the first half and 9.4% in the second quarter. Excluding Russia Hygiene, first-half growth was 10.3%.

China posted its 12th consecutive quarter of double-digit growth, driven by Dettol Activ Botany and the company’s vitamins, minerals and supplements portfolio. India grew at a high single-digit rate, supported by sales-force automation, expanded distribution and in-store execution. ASEAN, Latin America and Africa also improved during the quarter.

The company said conditions in the Middle East improved following an initial ceasefire, although it continues to monitor volatility. Licht said Reckitt had temporarily closed its Bahrain plant at times for employee safety and has faced challenges obtaining inputs in the region. The company has responded by building strategic inventories, shifting sourcing and manufacturing where possible, and modifying formulations or materials, including greater use of recycled plastic.

Emerging-market adjusted operating margin rose 150 basis points to 21.4%, aided by category mix, selective pricing and Fuel for Growth savings.

Europe and North America show sequential improvement

Europe’s like-for-like net revenue declined 3% in the first half, though the decline narrowed to 1.5% in the second quarter. Reckitt said all four categories improved sequentially as seasonal effects eased and in-store execution strengthened.

Finish delivered volume growth in European Auto Dish while maintaining market leadership despite elevated promotional activity. Vanish returned to growth in the quarter following the rollout of its Turbo formulation. Durex produced volume growth, although net revenue declined modestly as Reckitt made targeted pricing investments.

Licht said the Auto Dish market remains difficult because promotion levels in Europe have become unusually high. He said Reckitt intends to defend its leadership position but will not match every deep promotional price point. The company expects Europe to return to modest like-for-like revenue growth in the second half, supported by innovation, pricing and easier comparisons later in the year.

North America grew 0.8% in the first half and 2.8% in the second quarter. Volumes rose 4% in the second quarter, led by Lysol and initial shipments of Mucinex 12 Hour Cold & Fever. Lysol delivered high-single-digit growth in the first half, benefiting from demand for air sanitizer and laundry sanitizer products.

Management said North America experienced some retailer destocking, particularly through April, after a weak cough-and-cold season. Licht said inventories now appear to have reached a more normal level, although he cautioned that retailer actions cannot be predicted with certainty. The company expects a stronger second half in North America, weighted toward the fourth quarter because of a challenging third-quarter comparison.

Innovation and outlook

Reckitt cited innovation as a key driver of its performance. Dettol Activ Botany exceeded initial expectations in China and has been extended into ASEAN and Europe. Durex Intensity has been introduced in 19 markets, while Mucinex 12 Hour Cold & Fever began shipping in the U.S. in the second quarter. Licht said retailers have provided multiple shelf facings for the new Mucinex product, including as many as nine in some stores.

The company is also expanding the use of digital tools and generative artificial intelligence in research and development, shared services and other functions. Eisenhardt said token costs for AI were currently small, while the more significant investment is in building internal models and capabilities intended to support productivity and revenue growth.

Reckitt reiterated its 2026 outlook for Core Reckitt like-for-like net revenue growth of 4% to 5%. The guidance does not assume the closure of a Russia Hygiene transaction, Licht said. The company also maintained its full-year adjusted operating margin target of 24.9% to 25.6% for Core Reckitt and Mead Johnson, with a significantly stronger second half expected.

Management said it is planning for seasonal over-the-counter illness incidence to be slightly higher than the prior season, which Licht described as a prudent assumption following an abnormally weak recent cough-and-cold period. The company expects to mitigate commodity volatility over the full year through procurement, sourcing and pricing actions.

About Reckitt Benckiser Group (LON:RKT)

At Reckitt, we protect, heal and nurture. We are the company behind some of the world's best known and most trusted Health and Hygiene consumer brands. Delivering for a cleaner, healthier world requires strong brands with a global footprint. From Dettol, Lysol, Durex, Finish, Harpic and Vanish, Mucinex, Nurofen, Gaviscon, Veet and Strepsils, consumers love and rely on our brands to care for their families, as they have done for over 200 years. We use our scientific expertise and deep human understanding to develop solutions to help people improve their lives – that is why over 30 million Reckitt products are sold each day worldwide. At Reckitt, we're all making a real difference to people all over the world, every day.

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