Rising commodity costs hit Reckitt Benckiser share price

27 July 2021

Reckitt Benckiser has seen its shares fall in value as rising commodity costs risk price increases. 

In quarterly results the owner of Dettol, Nurofen and Durex reported it had seen the cost of commodities rise by 8-9% and rising costs had seen its operating profits fall by 5% to £1.4bn. 

Reckitt Benckiser chief executive Laxman Narasimhan said: “Cost inflation accelerated in the second quarter and it will take time to offset this headwind with productivity and pricing actions being implemented in the back half of the year and early next year.”

He said the rising costs of commodities were “historically, some of the highest inflation we have seen in a short period of time”. 

Shares of Reckitt fell by as much as 9% after the company said operating margins during 2021 would be lower than 2020.

The company saw a fall in sales of its cleaning products following a demand surge during the pandemic, but Dettol and Lysol now accounted for a quarter of Reckitt’s revenue, up on 16% in 2019. 

The company said while they didn’t expect to be able to offset the commodity inflation by the end of this year, they hope to do so by the end of 2022. 

This comes after rival brands Unilever and Procter & Gamble warned of price increases. 

The news comes as rival Unilever, which owns Dove and Domestos, warned it was facing the biggest cost increases for a decade for raw materials, packaging and transport.

Last month Procter & Gamble reported higher commodity and freight costs had added an additional $600m to the company’s costs in 2021. 

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