Reckitt Benckiser sales fell in the second quarter as an increase in the price of raw materials offset price hike gains.
Reckitt, which own Nurofen painkillers and Durex condoms among other products, saw sales fall 7.3 per cent in the three months to 30 June despite its price mix rising 5.5 per cent on a like-for-like basis to tackle higher expenses.
The price of key raw materials such as plastic have sky rocketed in the aftermath Russia’s invasion of Ukraine.
Reckitt, who own Nurofen painkillers, Durex condoms among other products, said on Wednesday that sales were down by 7.3 per cent for the second quarter and its price mix rose 5.5 per cent on a like-for-like basis to tackle higher expenses
Companies such as Reckitt have tried to offset the price hikes by raising the price of products to compensate.
The group retained its 2023 target range of 3 per cent to 5 per cent for group like-for-like net revenue growth.
The Veet and Vanish owner said its second-quarter like-for-like revenue rose 4.1 per cent on a constant-currency basis.
The results come after rival Unilever this week also smashed underlying sales growth forecasts after again raising prices to offset higher costs.
Unilever warned on Tuesday it could increase the prices of dozens of household favourites – even after a 20 per cent boost in profits.
A mixture of price hikes and cutting pack sizes has helped the makers of Hellmann’s, Marmite and Magnum to increase revenues despite the squeeze on customers.
Unilever reported 9.1 per cent growth in the value of sales over the six months to the end of June as a 9.4 per cent rise in prices offset a slight fall in volumes.
Victoria Scholar, head of investment at Interactive Investor, said: ‘Following on from results from rival Unilever on Tuesday, which sent shares sharply higher, Reckitt Benckiser has benefitted from improved pricing, productivity efficiencies and foreign exchange benefits.
‘However, it has been dealing with headwinds from higher fixed costs and employee compensation driven by the inflationary backdrop. It is also facing tough comparables versus last year when it benefitted from a rival’s baby formula shortage in the US.
‘Reckitt has been among the businesses accused of ‘profiteering’ from the inflationary environment this year by hiking prices to preserve profit margins at the expense of its customers.
‘As a vendor of essential items such as cleaning products, arguably it has the pricing power to charge customers more without denting demand.
‘However, the risk is that customers trade down to cheaper supermarket unbranded alternatives amid the cost-of-living crisis.’
Reckitt shares were down 3.2 per cent to 5,748p by midday on Wednesday.
