26 July 2023
If you are covering Reckitt Benckiser’s latest financial results, please find below a comment from Chris Beckett, head of equity research at Quilter Cheviot:
"Reckitt Benckiser's performance has been rather disappointing. Although they have managed to offset volume declines with price increases, their report card indicates there is much room for improvement. The post-Covid normalisation period has had its toll, with less demand for disinfectants, but despite this their Lysol brand returned to positive results in the U.S in Q2.
"A couple of significant headwinds face Reckitt Benckiser. First is the post-Covid normalisation, and second, the resurgence of their major competitor, Abbot, in the baby formula market. They had benefitted from Abbot's absence last year following it having to withdraw its products from the market, but the regained competition means they have to fight for market share once more. In addition, the company faces cost inflation due to the diverse range of products and significant packaging used in their product line-up.
"Compounding the issues, Reckitt Benckiser has increased variable compensation, translating into higher staff costs. It's clear that while they maintain a good long-term outlook, their immediate performance leaves much to be desired. Their share price hasn't shown significant growth for nearly eight years, an underwhelming result considering the markets they operate in.
Under their new CEO, who brings a renewed focus on over-the-counter healthcare, there's hope for improved performance. However, for a company of its stature, Reckitt Benckiser's current standing suggests it should be achieving much more.
