Source: Sharecast
Berenberg said Reckitt's core first quarter performance "disappointed across all three regions", with several factors hindering performance - included changes to EU sanctions on Russia, which the company believes will persist throughout 2026; consumption softness from
the Middle East conflict, which it expects to weigh on growth in Q2; and Durex volume weakness in China resulting from the introduction of 13% VAT on condoms, as well as elevated promotional levels from competitors.
The German bank also highlighted that a weaker-than-expected cold and flu season weighed on performance, although management expects this headwind to abate from Q2 as it laps a reset baseline.
"Despite this, management reiterated its lfl growth guidance for FY26, anticipating a return to growth for Durex in China, positive momentum on innovations and continued strength in its non-seasonal North America business," said Berenberg, which reiterated its 'hold' rating due to limited near-term visibility on Reckitt's ability to navigate headwinds and deliver a "sustained acceleration" in top-line growth and margin expansion.
Berenberg said it had adjusted its numbers to reflect incremental top-line and margin headwinds highlighted in Reckitt's Q1 results and noted that its updated figures also reflected latest FX rates.
Reporting by Iain Gilbert at Sharecast.com