Reckitt Benckiser Group PLC (LON:RKT) shares slipped on Wednesday as the Dettol and Air Wick maker saw revenue growth for the first quarter heavily dented by declines in its health and nutrition businesses, although the final growth figure remained in line with expectations.
In its results for the first quarter of 2021, the FTSE 100 firm reported net revenues of £3.5bn, up 4.1% on a like-for-like (LFL) basis, with 28.5% LFL growth in its hygiene division offsetting declines in the health and nutrition segments of 13% and 7.4% respectively.
The company said growth in its hygiene business had been led by “very strong demand and white space expansion” for its Lysol product as well as double-digit growth for Finish and Air Wick.
Meanwhile, the firm attributed the decline in health to lower demand for cold and flu relief products caused by “significant pantry loading” in the first quarter of last year, a factor that similarly afflicted nutrition which was also hit by “difficult market conditions” in China and Hong Kong.
Despite the declines, the company said it is seeing “continued successful execution” of its growth drivers, highlighting “increased penetration, market share gains, new places and new spaces”.
The company also noted a 24% increase in ecommerce sales to 13% of its net revenue, as a result of increased investment in the segment.
Looking ahead, Reckitt said its outlook for 2021 is unchanged and that it is “on track” to achieve its medium-term goals.
“2021 has started well with like-for-like net revenue growth of +4.1% in line with our expectations. This brings two-year growth to over 17% as we lap the pantry loading of March 2020. Demand for Lysol and Dettol continues to be strong as consumers remain vigilant to the spread of the virus and see use of our products, and improved hygiene habits, as a way of protecting their health and regaining normality in their lives. As is to be expected, the underlying drivers of near-term demand for disinfectant products are dynamic, with countries around the world at different stages of the pandemic, and we are therefore closely tracking shifts in consumer behaviour to understand supply and demand trends”, Reckitt chief executive Laxman Narasimhan said in a statement.
“Our portfolio is constructed to benefit pre- and post- COVID, and the inherent balance in our portfolio leaves us favourably placed to perform well in both the short- and longer-term. We see continued strong demand for our brands, better execution, and the benefits of our recent investments feeding through in the form of more focused innovation, increased capacity, and better customer service. There is still much to do, and the actions we are taking make Reckitt a stronger, more competitive, business with each day”, the CEO added.
Shares in the firm were down 1.4% at 6,494p in early trading.