Reckitt Benckiser Group PLC (LSE:RKT, ETR:3RB) said it was ready to raise prices and cut costs further to maintain margin this year and in 2022 in the face of surging inflation.
Costs of goods (COGS) inflation continues to be challenging, it said, particularly in areas such as surfactants, paper, tinplate and ocean freight, and is currently running at around 10%.
The FTSE 100 group kept margin guidance unchanged at 22.7%-23.2% for 2021, excluding the sale of IFCN China, but today said: “We have pricing actions and productivity plans firmly in place” to protect these.
Last week, rival consumer goods giant Unilever had put its prices up by 4.1% on average in its third quarter.
Coronavirus also continues to influence demand, added Reckitt, and is affecting buying patterns for disinfection, and cold and flu relief products.
Lower sales for Lysol, its hand sanitiser, in particular, hit revenues in the three months to end September 2021.
Sales of Lysol soared during the pandemic and on a like-for-like basis revenue growth dropped to 3.3% comprising half volume and half price from 15.3% a year ago.
Total sales fell 6.8% in the quarter to £3.28bn, and over the nine months of the year so far are down by 5.3% to £9.87bn.
Reckitt added it is expecting softer sales in the final quarter due to the likelihood of less COVID-19 in the US
“70% of our portfolio is less sensitive to COVID dynamics and growing at mid-single digits and we, therefore, remain confident in delivering margin improvement in 2022.”
“We are on track to exit 2022 with mid-single-digit LFL net revenue growth.”