Reckitt reveals big price hikes as US baby formula business booms
Prices have increased but so have the company’s sales.
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Your support makes all the difference.Dettol maker Reckitt has hiked prices for customers rapidly over the last year yet has continued to sell more products, the company has revealed.
The business said on Wednesday that it had increased prices by 9.7% in the second quarter of the year, compared to a year ago.
Yet despite a huge hit to wallets around the world, shoppers have not been voting with their feet, Reckitt revealed. The volume of products it sold continued to increase, by 2.2%.
Between higher prices and more sales, the business posted an 11.9% hike in like-for-like revenue, hitting £3.5 billion.
Reckitt said the standout performer was its nutrition arm. One of its main competitors for baby formula in the US, Abbott Laboratories, had to halt production at a plant and launch a product recall amid an investigation by safety regulators.
Reckitt said: “Our focus remains doing everything possible to put more infant formula on shelves, addressing concerns of parents across the US, while safeguarding the highest levels of quality.
Innovation and improved in-market execution are driving sustained, broad-based revenue growth and market share momentum across our portfolio
“We have recently been granted a temporary import approval by the Food and Drug Administration which enables us to import additional infant formula supplies into the US from our manufacturing facilities in Singapore.”
Net revenue in its nutrition business rose 23.6% in the first half of the year, hitting £1.2 billion on a like-for-like basis.
The amount of product the unit sold rose 10.7%, while prices increased 12.9%, the company said.
It estimated that Abbott’s problems gave it a 16.1% boost in the first half.
Reckitt now expects like-for-like net revenue will increase between 5% and 8% in the financial year, and rise from its previous 1% to 4% range.
But it still sees further cost hikes to come, with inflation on what it pays increasing “in the high teens” percentage wise.
Chief executive Laxman Narasimhan said: “We have delivered an excellent first-half performance in 2022.
“Innovation and improved in-market execution are driving sustained, broad-based revenue growth and market share momentum across our portfolio.
“Our brands less sensitive to the impact of Covid are growing ahead of our mid-single digit target, whilst our disinfection brands are performing as expected, well above pre-pandemic levels.
“The actions we have taken to broaden the shoulders of our Lysol and Dettol franchises, combined with our innovation and penetration building initiatives, have built a significantly larger, sustainable base from which we will grow.”