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Reckitt Benckiser expects to full year revenues to be at the upper end of guidance as it maintained sales volumes despite pushing through price rises of almost 6%.

The consumer giant said net revenue grew by 5.6% on a like for like basis in the first three months of 2022, with volume growth of 0.3% and price/mix improvements of 5.3%.

It said overall sales volumes were impacted by the decline in Lysol and the temporary benefit in US infant nutrition. Excluding these, volumes grew by around 7%.

On a reported basis, net revenue declined 2.3% to £3.4bn as divestments of disposal of IFCN China and Scholl reduced sales by 6.9% and currency translation by 1%.

Reckitt said growth was been broad-based across the business, with brands less sensitive to Covid dynamics, representing around 70% of the portfolio, growing high-single digits.

Hygiene net revenues declined by 9% (3.9% growth ex-Lysol), with growth in Finish, Air Wick, Harpic and Vanish.

Health like for like sales were up 20.6%, driven by strong growth in OTC, VMS and its intimate wellness portfolio.

Nutrition like for likes were also up 20.4% as US IFCN grew over 30% with innovation and strong execution amidst temporary competitor supply issues.

However, the supply chain environment during the quarter “continues to be challenging”, both in terms of logistical availability and certain raw material constraints.

Despite significant cost inflation, Reckitt said it now expects like for like net revenue growth towards the upper end of its guidance of 1-4% and adjusted operating margins in-line with prior year and current market expectations

It cautioned that the input environment remains “highly volatile and unpredictable”, with the conflict in Ukraine meaning inflation on its cost of goods sold has increased from low teens to high teens based on current commodity pricing.

However, it said the benefits from favourable mix, productivity initiatives and pricing “give us the confidence to expect adjusted operating margins in-line with both the prior year and current market expectations, whilst continuing to invest in the long-term growth of our brands”.

CEO Laxman Narasimhan commented: “We have made a strong start to the year across all our business units and geographies despite a challenging operating environment. Investments we have made in brand building, innovation, and execution, have resulted in broad-based market share gains. These, coupled with pricing and revenue management actions, stand us in good stead to maintain this positive momentum.

“As we look to the balance of the year, the operating environment remains highly unpredictable. We are well placed to address these market dynamics through the strength of our brands, our favourable product mix, our productivity program and the responsible pricing initiatives already undertaken, with scope to take further actions.”

Reckitt shares have opened up 1.5% at 6,300p.

Morning update

MP Evans, the producer of Indonesian palm oil, has issued a statement on the Indonesian government of plans temporarily to ban exports of palm oil.

The government has banned export, including both crude palm oil and refined products, effective from 28 April, to protect domestic supply.

Local demand for palm oil is expected to increase significantly for a short time over the Lebaran festival period, celebrated over the next seven to ten days, MP Evans said.

The Indonesian government last month introduced a revised export levy to subsidise local supplies as global supplies of vegetable oil have been limited.

Indonesia is the world’s largest producer of palm oil and a significant consumer, accounting for 59% of global supply and 22% of global consumption in 2021.

The group said: “Management continues to monitor the situation closely and awaits clarity from the Indonesian government regarding the length of the export ban and extent of its impact on the domestic market.”

It said it will provide further updates as appropriate.

On the markets this morning, the FTSE 100 is up 0.4% to 7,541.9pts.

Risers include Coca-Cola Europacific Partners, up 6.1% to €48.50, THG, up 5.7% to 111.1p and Just Eat Takeaway.com, up 4.5% to 2,234p.

Fallers include Cranswick, down 4.3% to 3,294p, Bakkavor, down 3.4% t 103.4p and Hotel Chocolat, down 1.1% to 370p.

Yesterday in the City

The FTSE 100 recovered from its falls earlier in the week to end the day up 1.1% at 7,509.2pts yesterday.

Sainsbury’s suffered a 4.3% drop back to 228.7p despite posting booming annual profits, after it warned profits for the coming year would be lower due to inflationary pressures.

Conversely Unilever ended the day up 2.7% at 3,675p despite suffering a drop in first quarter volumes as price hikes of 8% drove higher than expected sales in the quarter.

Elsewhere, risers included Tate & Lyle, up 15.9% to 773p, Just Eat Takeaway.com, up 5.2% to 2,137.5p, Deliveroo, up 3.5% to 104.6p, C&C Group, up 3.5% to 209.6p, Pets at Home, up 3% to 308.8p, WH Smith, up 2.9% to 1,496.5p, AG Barr, up 2.7% to 573p and Associated British Foods, up 2.5% to 1,615p.

The day’s fallers included Coca-Cola Europacific Partners, down 6.4% to €45.70, Nichols, down 3.2% to 1,305p, Glanbia, down 2.2% to €11.11, Ocado, down 2% to 911p and Naked Wines, down 0.9% to 358.2p.

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