Reckitt Benckiser Group Q1 Earnings Call Highlights

Key Points

• Reckitt reported muted Q1 like‑for‑like growth with Core Reckitt +1.3% and group +0.6%, weighed down by a weak cold/flu season, European competitive pressure and expected destocking in North America; excluding seasonal OTC, Core grew +3.1%.
• Emerging markets were a bright spot with +7.6% LFL growth driven by China (its 11th consecutive quarter of double‑digit growth) and India, but Russia and the Middle East were material headwinds — Russia created a roughly 200bp drag and sanctions impacts are expected to persist through 2026.
• Management reiterated full‑year Core Reckitt LFL guidance of 4%–5% and said margins will be “back‑half weighted” (first‑half AOP margin ~200bps below 2025), while the company has repurchased GBP 669 million of a GBP 1 billion buyback program.

Reckitt Benckiser Group LON: RKT reported modest first-quarter like-for-like growth as a weak cold and flu season, competitive pressures in Europe, and geopolitical disruption weighed on results, while emerging markets and the company’s non-seasonal North America portfolio provided support.

Q1 growth held back by weak season and geopolitical disruption

CEO Kris Licht said Core Reckitt delivered 1.3% like-for-like net revenue growth in Q1, which he said was “impacted by the end of a very weak season, a competitive environment in Europe… and geopolitical disruptions.” Excluding the seasonal over-the-counter (OTC) business, Core Reckitt delivered 3.1% like-for-like growth.

CFO Shannon Eisenhardt added that group like-for-like net revenue growth was 0.6% in Q1, “driven by 1.3% growth in Core Reckitt.” Licht said incidence levels across categories in North America were down about 10% versus the prior season, with similar dynamics across regions affecting seasonal performance.

Emerging Markets driven by China and India; Russia and Middle East headwinds

In Emerging Markets, Eisenhardt reported 7.6% like-for-like net revenue growth, consisting of 0.5% volume growth and 7.1% from price/mix. She said volume growth was lower than recent quarters due to declines in Russia and flat performance in Durex China.

China delivered its 11th consecutive quarter of double-digit growth, led by Dettol, Intima, and vitamins, minerals and supplements (VMS), Eisenhardt said. Durex in China was “broadly flat” after a VAT increase on condoms at the start of the year and higher promotional activity from competitors in Q1.

India also delivered double-digit growth, with Eisenhardt citing broad-based strength across categories and “a very strong performance in Dettol,” while Durex was also up double digits. Latin America was flat, with marginal declines in Brazil and Mexico offset by double-digit growth in Colombia.

Geopolitical impacts were most visible in Russia and the Middle East. Eisenhardt said the company’s MENAP region posted a double-digit like-for-like decline, including a Russia decline that created a 200 basis point headwind to area growth. Russia represents around 2% of Core Reckitt net revenues, she said, with the impacted categories “less than half” of the Russia business. Eisenhardt said Reckitt now believes the impact from the sanctions-related changes “will persist through 2026,” and the process to transfer ownership of Russian operations remains ongoing.

In the Middle East, Eisenhardt said a strong start to the year “eroded” through the quarter due to the war, resulting in flat like-for-like net revenues in Q1. Licht said impacts have largely been confined to the Middle East business, with no significant spillover to countries outside the region so far.

Europe and North America: competitive pressure vs. non-seasonal momentum

Europe posted a 4.2% like-for-like net revenue decline in Q1, with volumes down 4.5% and price/mix up 0.3%, Eisenhardt said. More than a third of the decline came from seasonal brands, and she said the company expects improvement as it progresses into Q2.

Gaviscon grew high single digits in Europe, driven by activation and expansion of the Double Action range, while auto dish remained competitive. Finish declined mid-single digits in the quarter, although Licht said actions to improve market share resulted in Finish “regaining leadership across our largest seven markets.” Eisenhardt also pointed to mix improvements, noting mix was up 1.5% as Reckitt pushed premiumization, particularly in Finish.

In North America, Reckitt reported a 0.9% like-for-like net revenue decline, which Eisenhardt attributed to “expected destocking at the end of a weak cold and flu season.” She said the non-seasonal business grew mid-single digits, led by Lysol up low double digits, supported by continued strength in Lysol Air Sanitizer and Lysol Laundry Sanitizer and “strong sell-in ahead of the spring cleaning season.”

Category trends: Germ Protection leads; Household Care pressured

At a category level, Eisenhardt said:

• Self-care was broadly flat, as a double-digit decline in seasonal OTC brands was largely offset by strong double-digit growth in emerging markets.
• Germ Protection grew 9.5%, driven by double-digit growth in Dettol and Lysol.
• Household Care declined 7.6%, with Finish down mid-single digit and Vanish down high single digits due to weakness in Brazil and Russia.
• Intimate Wellness grew 0.3%, with double-digit growth in Intima and flat Durex performance in China, partially offset by double-digit growth in India, South Africa, and several ASEAN markets.

Guidance maintained; margin expected to be back-half weighted

Management reiterated full-year guidance for Core Reckitt like-for-like net revenue growth of 4%–5%. Addressing questions on what supports the outlook after a weak start and an incremental Russia headwind, Eisenhardt said the company had guided “as prudent as possible” and still sees “significant upsides” over the next three quarters, including a reset of the seasonal baseline and a pipeline of innovations weighted more to the back half of the year.

Licht highlighted innovation launches across brands, including formula upgrades for Finish and Vanish, a broader rollout of Dettol Activ-Botany outside China, Durex Intensity extensions, and launches in China such as Intima foam wash and MegaRed formulations. He also pointed to Mucinex 12-Hour Cold and Fever, with initial shipments expected later in Q2.

On margins, Eisenhardt maintained expectations for full-year group adjusted operating profit (AOP) margin, saying delivery would be “back-half weighted.” She said first-half AOP margin is expected to be about 200 basis points lower than the 24.6% delivered in 2025 due to stranded costs, the Q1 seasonal impact, and incremental commodity costs. In the second half, she said AOP margin should be “much stronger than 2025,” citing stranded-cost mitigation from the Fuel for Growth program, a more normal season, improved mix, innovation activation, and actions to offset commodity inflation.

Reckitt expects full-year group AOP margin to be up versus the 24.9% delivered in 2025, but “not all the way to the 25.6% baseline when excluding Essential Home,” Eisenhardt said, reflecting an expectation that stranded costs will be largely offset through Fuel for Growth.

On input costs, Eisenhardt said roughly 40% of net revenues are represented by cost of goods sold, with around 40% of raw materials correlated to oil prices. Modeling an oil scenario of $110 per barrel for the rest of the year indicates a GBP 130 million–GBP 150 million gross impact in 2026, which she described as manageable through supply chain flexibility and productivity, hedging, pricing actions, and the company’s gross margin profile.

Separately, Eisenhardt said Reckitt has bought back GBP 669 million of shares under its current GBP 1 billion program that began in July 2025. Mead Johnson Nutrition, described as non-core, declined 2.7% like-for-like in Q1 as it cycled inventory rebuilding in Q1 2025; Eisenhardt said the company expects a return to growth from Q2 and “low double-digit growth for the year.”

In the Q&A, Licht said he remains “extremely comfortable” with the outlook for Durex in China despite the Q1 slowdown, attributing softness to the VAT increase and competitor promotions and saying he expects it to correct through the rest of 2026. He also said Reckitt had not seen shortages in raw materials and described European delistings as not a significant factor, while noting that the company temporarily closed and then reopened its production facility in Bahrain due to safety considerations.

Concluding, Licht said Reckitt expects “a step-up in performance in Core Reckitt in Q2 and beyond,” driven by innovation, execution improvements in Europe, and sustained growth in China, India, and the non-seasonal North America business.

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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