Dettol owner sees profits improving despite ‘unprecedented’ inflation

Fourth-quarter revenue grew 3.3% on a like-for-like basis, which was faster than analysts expected. 
Image: Bloomberg

Reckitt Benckiser Group Plc forecast that its profit margin would grow this year despite significant commodity cost pressures that have led rivals to warn about slowing growth.

The company expects full-year adjusted operating margin to exceed its current 22.9%, according to a statement Thursday. Fourth-quarter revenue grew 3.3% on a like-for-like basis, which was faster than analysts expected.

Reckitt Chief Executive Officer Laxman Narasimhan is unwinding the missteps of his predecesssor Rakesh Kapoor by selling off parts of the portfolio such as its infant formula business in China.

Narasimhan also warned in the statement of an “unprecedented inflationary environment,” joining a growing list of consumer goods companies, including Nestle SA and Unilever Plc, voicing concern over input prices as the worst inflation in a decade eats into profits. Unilever last week said it would take about two years to return to 2021 profitability levels.

Some have expressed doubt that demand will hold up amid the price increases. Brewer Heineken NV said earlier this week that consumers may cut back on beer, threatening the industry’s recovery from the pandemic. Carlsberg A/S said earlier in February that it may not see any profit growth this year given the impact of rising supply chain expenses.

The shares fell 3.1% last year.

© 2022 Bloomberg

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