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Reckitt Benckiser boosted by baby food exports as rising demand for cold and flu spurs demand for over-the-counter drugs
- The consumer goods company revealed that net sales rose 9.2% cents last year
- Reckitt’s Enfamil becomes the most popular baby food brand in the US
- Sales of the company’s over-the-counter drugs increased by more than a third
Reckitt Benckiser has credited an infant formula shortage and a longer cold and flu season for achieving excellent annual performance.
The consumer goods division revealed that net sales increased 9.2 percent last year as price increases and strong growth in the health and nutrition divisions offset declining demand for disinfectant products.
Revenues rose fastest in North America amid a strengthening US dollar and Enfamil became the most popular baby food brand in the country after public health regulators approved its importation.
Health-conscious: Demand for Reckitt Benckiser’s over-the-counter medications, including Nurofen (pictured), Strepsils and Gaviscon, rose more than a third last year
Abbott Laboratories previously held the top spot, but lost that title when it halted production at its Michigan plant twice due to flooding and the discovery of bacteria, causing a significant shortage of formulas across the country.
Those shortfalls began to ease in the fourth quarter, but Reckitt’s U.S.-based nutrition division still saw comparable net income increase 40 percent over the year.
Demand for the company’s over-the-counter drugs, including Strepsils, Nurofen and Gaviscon, rose by more than a third, buoyed by a protracted cold and flu season.
In the past two years, purchases of such products have been impacted by lockdown restrictions that encouraged people to work from home and restricted their interaction with different households.
In comparison, orders from hygiene-related brands such as Dettol and Lysol skyrocketed as fears of contracting Covid-19 encouraged consumers to clean surfaces and items more regularly and thoroughly.
Reckitt said this behavior has largely continued as economies reopen, even as Lysol sales are down by a quarter by 2022. It expects orders for disinfectant products to rise again this year.
Chief executive Nicandro Durente said: “We are entering 2023 as a strengthened company with enhanced financial, operational and brand resilience and continued growth momentum.
“The benefits of our revived innovation pipeline and operational improvements are starting to show, including a more flexible supply chain and improved customer relationships.”
The company also revealed a slide to a profit of £2.35 billion in 2022, from a loss of £21 million last year when it sold baby food brands in China and Argentina, and foot treatment company Scholl.
Reckitt Benckiser Shares were 2.3 per cent higher on Wednesday afternoon to £59.96, though they have shrunk by around 13 per cent over the past six months.
Adam Vettese, analyst at trading platform eToro, said: “Reckitt Benckiser is the classic defensive stock, delivering solid performance even when the outlook for the economy seems far from certain.”
He added: “Many of its products, such as Dettol antiseptic or Nurofen pain relief, are seen as essential household items, which is why people are willing to swallow any increase in their price.
‘There is of course a limit to that, but based on these results Reckitt Benckiser has achieved the right mix.’