By Noah Rothstein
Disinfectants and hand sanitizer have been in high demand since the COVID-19 pandemic, but now Lysol maker Reckitt is facing slowing sales of disinfectants and rising inflation.
Trends of record sales and high demand for things like Lysol spray and Dettol soap and wipes have faded in recent months as the COVID-19 vaccine rolled out across the world and restrictions lifted.
“We are seeing shifts in behavior,” Chief Executive Laxman Narasimhan said of demand for hygiene products. “What we did see in Q2, in the U.S. in particular, was a tail off that was higher than we thought.”
On Tuesday, July 27, Reckitt reported a 1% fall in overall like-for-like sales and warned it expects third-quarter sales growth to be lower than last year.
Slowing growth and rising prices are something that many companies are contending within the consumer goods industry for products like plastics and paper.
Reckitt said its operating profit margin for the first six months of the year fell 2.9 percentage points to 21.6%.
Reckitt said it was expecting inflation of 8-9% on the cost of goods over the entire year, a level that it wouldn’t be able to address through raising prices in the short term. The company raised prices for its infant and child nutrition products in the U.S., Latin America, and China. Reckitt also worked to increase the price of its hygiene products this year.
“Cost inflation accelerated in the second quarter, and it will take time to offset this headwind,” Mr. Narasimhan said. Reckitt lowered its margin guidance for the whole year, making a similar move to consumer-goods giant Unilever PLC last week.
To maintain some of the momentum gained from the pandemic, Reckitt is rolling out its products to more countries and has set up a new unit selling its cleaning materials and expertise to businesses in the travel and hospitality industries.
Other parts of the company’s portfolio have benefited from eased restrictions. Sales of Mucinex, Lemsip, and Strepsils have all shown signs of life after significant falls last year because of a historically weak flu season. Brands such as Durex condoms and Nurofen painkillers have also returned to growth as the world gets back to socializing.
