Household products firm Reckitt beat first-quarter sales expectations, having increased prices to offset soaring raw material costs and flat volumes.
Reckitt said cost inflation has increased to percentages in the 'high teens'. The company had said in February that full-year costs had risen by about 11% and it expected expenses to be higher in 2022.
'The input environment remains highly volatile and unpredictable,' Reckitt said. 'It has become more adverse since our last market update in February due to the ongoing war in Ukraine.'
Reckitt raised prices by 5.3% during the quarter and said it now expects full-year like-for-like net revenue growth towards the upper end of its forecast of 1-4%.
Consumer goods makers from Procter & Gamble to Nestlé have for months sought to raise prices in the face of higher supply chain and commodity expenses, with Russia's invasion of Ukraine having also driven energy prices to record highs.
Full-Year Earnings Expectations
The company expects full-year adjusted operating margins in line with current market expectations, chief executive Laxman Narasimhan said in an earnings statement. Analysts expect an adjusted operating margin of 22.9%.
The maker of Lysol cleaning products and Durex condoms said quarterly like-for-like sales rose 5.6%, ahead of the 1.5% growth analysts had expected in a company-supplied poll.
'A Strong Start'
“We have made a strong start to the year across all our business units and geographies despite a challenging operating environment," Narasimhan said. "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."
He added that as the year progresses, the operating environment is likely to remain "highly unpredictable", and that the business is "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."