Reckitt joins Unilever, Carlsberg, and Pernod in raising prices as global costs rise

Prices raised by firms to offset soaring supply chain costs.

A number of consumer-good manufacturers have raised their prices.

Reckitt Benckiser — the maker of Dettol and Nurofen painkillers — has joined other consumer-goods companies in raising prices to offset rapidly soaring supply chain costs, helping the company beat first-quarter revenue estimates.

Comparable sales grew 5.6% in the three months through March, the company said.  That compares with a consensus analyst estimate of 1.2%. Volumes grew marginally.

“There is no doubt we’re experiencing a significantly worsening inflationary environment since announcing our guidance in February,” 

chief executive Laxman Narasimhan told reporters, pointing to the soaring costs of commodities since Russia’s invasion of Ukraine. 

The company which also makes Durex condoms now sees inflation in the high teens, having previously seen it in the low teens, Mr Narasimhan said.

Inflation

Reckitt said it expects its full-year comparable sales to be in the upper end of its guidance and now foresees full-year adjusted operating margin in line with last year’s 22.9%. .

Reckitt joins companies including Unilever, Carlsberg, and Pernod Ricard in increasing the pressure on consumers worldwide with higher prices for products ranging from Dove soap to beer and Havana Club rum, raising the risk that shoppers may start to balk at spending more. 

Those three companies reported sales growth earlier this week at about double the pace analysts had expected.

Reckitt is facing about £1bn of cost inflation this year, chief financial officer Jeff Carr told reporters. He said achieving last year’s margin would be a “fantastic feat” in that context. 

Reckitt is also pursuing a sale of the remainder of its infant nutrition business and has asked for offers by late May, sources said last month. The operations, which are mainly in the US, are likely to appeal mostly to private equity buyers. 

Cost of living warning

Meanwhile, Britain's competition regulator flagged "a worrying combination of trends" in markets that could worsen a cost-of-living crisis, saying companies were able to increase mark-ups in markets that were getting more concentrated.

In its second report into how well competition is working in Britain, the Competition and Markets Authority (CMA) said the level to which markets are dominated by a limited number of companies remained higher than it was before the global financial crisis. The CMA also said it had found that the biggest firms were maintaining their leading positions for longer.

"The fact that all these indicators are pointing in the same direction provides a warning sign about the state of competition in the UK," CMA's chief economic adviser Mike Walker said in a statement.

"We've found that the poorest households are likely to suffer the effects of these changes the most - at the very time when they are already being hit by sharp rises in the cost of essential items," the CMA said.

• Bloomberg and Reuters