Reckitt Benckiser boosted by baby formula exports and rising cold and flu cases

Reckitt Benckiser boosted by baby formula exports as rising cold and flu cases drive over-the-counter demand

  • The consumer goods firm revealed that net turnover rose by 9.2% cent last year
  • Reckitt’s Enfamil becoming the most popular baby formula brand in the USA
  • Sales of the firm’s over-the counter medicines soared by more than a third

Reckitt Benckiser has credited an infant formula shortage, as well as a longer cold and flu season, for achieving a bumper annual performance.

The consumer goods business revealed that net turnover increased by 9.2 per cent last year following price hikes, and strong growth in its health and nutrition divisions offsetting waning demand for disinfectant products.

Revenues expanded the fastest in North America amid a strengthening US dollar and Enfamil becoming the most popular baby formula brand in the United States after public health regulators approved its importation. 

Health conscious: Demand for Reckitt Benckiser’s over-the-counter medicines, including Nurofen (pictured), Strepsils and Gaviscon, soared by more than a third last year

Abbott Laboratories previously held the top spot but lost that title when it shut down production at its Michigan facility twice due to flooding and discovering bacteria, thereby causing a significant formula shortfall nationwide.

Those shortages began subsiding during the fourth quarter, yet Reckitt’s US-based nutrition arm still saw like-for-like net revenues jump by 40 per cent over the year.

Demand for the company’s over-the-counter medicines, which include Strepsils, Nurofen and Gaviscon, soared by more than a third, buoyed by a prolonged cold and flu season.

In the previous two years, purchases of such products were impacted by lockdown restrictions encouraging people to work from home and limiting their interaction with different households.

By comparison, orders of hygiene-related brands like Dettol and Lysol skyrocketed as fears of contracting Covid-19 encouraged consumers to clean surfaces and objects more regularly and thoroughly.

Reckitt said those behaviours have largely remained as economies have reopened, even though sales of Lysol plunged by a quarter in 2022. It anticipates orders for disinfectant products will start rising again this year.   

Chief executive Nicandro Durente said: ‘We enter 2023 as a strengthened business with enhanced financial, operational and brand resilience, and continued growth momentum. 

‘The benefits of our reinvigorated innovation pipeline and operational improvements are coming through – including a more agile supply chain and improved customer relationships.’ 

The company also revealed swinging back to a £2.35billion profit in 2022, against a £21million loss the previous year when it sold infant formula brands in China and Argentina and foot treatment firm Scholl. 

Reckitt Benckiser shares were 2.5 per cent higher at £59.06 on Wednesday afternoon, although they have shrunk by around 13 per cent in the past six months.

Adam Vettese, an analyst at trading platform eToro, said: ‘Reckitt Benckiser is the classic defensive stock, offering solid performance even when the outlook for the economy looks far from certain.’

He added: ‘Many of its products, such as Dettol antiseptic or Nurofen pain relief, are seen as vital household staples, and so people are willing to swallow any increase in their price.

‘There is a limit to that, of course, but based on these results, Reckitt Benckiser has achieved the right mix.’