Reckitt Benckiser sees resilient Q1 2025 as Asia drives powerbrand expansion

Reckitt Benckiser Group plc delivered a steady performance in the first quarter of financial year 2025, underpinned by robust growth in emerging markets and strategic momentum across its core business segments. The company’s Q1 results reflected its ongoing transition into a leaner and more agile consumer health and hygiene player, even as macroeconomic uncertainties weighed on performance in developed markets.

How Did Reckitt Perform in Q1 2025?

For the quarter ended 31 March 2025, Reckitt posted group net revenue of £3,683 million, reflecting a like-for-like (LFL) growth of 1.1%. However, on an IFRS basis, revenue declined 1.4% due to unfavourable currency movements and a marginal impact from M&A activity. The performance was largely supported by the company’s Core Reckitt segment, which accounts for 71% of total revenue and reported LFL growth of 3.1%.

A critical driver of this growth was the Emerging Markets region, which achieved a standout LFL revenue increase of 10.7%. This surge was propelled by double-digit gains in China and high single-digit growth in India. By contrast, Europe saw a 1.7% LFL decline, primarily due to shipment timing in the prior year, while North America slipped 0.9% as consumer confidence weakened and retailer destocking impacted volumes.

What’s Behind the Strong Emerging Markets Momentum?

Reckitt’s performance in emerging markets continues to be a cornerstone of its growth strategy. The region, which contributed 40% to Core Reckitt’s revenue this quarter, witnessed broad-based growth. Strong adoption of Durex and Intima brands supported the Intimate Wellness category, while Dettol posted double-digit growth driven by innovation in segments such as washing machine cleaners.

India and China remained pivotal, benefiting from distribution expansion and new product rollouts. Harpic gained further traction in India with the launch of drain cleaners, while Move Free and other VMS (Vitamins, Minerals and Supplements) offerings achieved strong momentum in China.

What Headwinds Did Reckitt Face in Europe and North America?

Despite positive share gains, Europe’s revenue fell 1.7% LFL, due to a 4.7% decline in volumes. Reckitt cited shipment phasing as a key factor in the downturn. Categories such as Self Care and Finish faced tough prior-year comparisons, although brands like Nurofen and Strepsils reported year-to-date share gains.

In North America, the company experienced a 1.8% volume drop, primarily due to elevated retailer inventories in the VMS category. Innovations such as Lysol Laundry and Air Sanitiser, Mucinex Sinus Nasal Spray, and Durex product rollouts continued to support share gains, but did not fully offset macroeconomic pressures. Reckitt reported improved execution in mass retail and club channels, although drug channel performance remained subdued.

Which Categories Drove Core Reckitt’s Growth?

Among Core Reckitt’s product divisions, Intimate Wellness emerged as the best performer, with LFL growth of 16.6% driven by a 12.1% increase in volumes. Durex Performance, Durex Hyaluronic Acid condoms in China, and Durex Intensity nitrile condoms in Europe helped expand market share.

Germ Protection delivered 7.5% LFL growth, underpinned by strong Dettol and Harpic sales in emerging markets. In contrast, Self Care revenues declined 3.6%, largely due to shipment phasing issues and higher retailer inventory levels in Q4 2024. Household Care declined marginally by 0.2% as Finish posted mixed results and Vanish lagged in Brazil.

What’s the Outlook for Essential Home and Mead Johnson Nutrition?

Reckitt’s non-core segments continued to weigh on overall performance. Essential Home, which contributed 13% to total revenue, saw a 7.0% LFL decline, reflecting competitive pressures in North American air care and the high base of Q1 2024. The company reiterated its plans to divest the business in 2025, subject to market conditions.

Mead Johnson Nutrition, which represents 16% of total revenue, also declined 0.5% LFL, impacted by the aftermath of supply disruptions from the Mount Vernon tornado in late 2024. The business is gradually regaining shelf space, and new family product adoption is underway.

How Is Reckitt Advancing Strategic Priorities?

Reckitt continues to pursue its “Fuel for Growth” initiative, targeting a fixed cost base reduction to 19% by the end of 2027. The GenAI programme, already rolled out across marketing, is now expanding to R&D, with expectations of driving productivity and faster innovation cycles.

The company has also continued shareholder returns via its £1 billion share buyback programme. As of mid-April 2025, £815 million in shares had been repurchased under the initiative, reinforcing management’s confidence in long-term value creation.

How Are Markets Reacting to Reckitt’s Strategy and Earnings?

The market response to Reckitt’s Q1 earnings has been cautious. Shares in Reckitt Benckiser Group plc (LSE: RKT) dropped nearly 6.8% following the earnings release, closing at 4,597 GBp on April 23, down from 4,933 GBp the previous day. Analysts attributed this sell-off to underwhelming like-for-like growth, particularly in developed markets like North America and Europe, where challenges such as retailer destocking and subdued consumer demand impacted results.

Institutional investors currently hold approximately 84% of Reckitt’s shares, meaning stock movements are heavily influenced by institutional sentiment. The recent decline could prompt reevaluation among large funds, introducing short-term volatility. Despite this, analyst consensus indicates a modest upside, with price targets ranging between 4,400 GBp and 5,177 GBp, averaging 4,788.50 GBp.

From a broader investment landscape, foreign institutional investors (FIIs) remained net buyers in Indian equities on April 23, injecting ₹3,332.93 crore, while domestic institutional investors (DIIs) pulled back ₹1,234.46 crore. While this activity doesn’t directly impact Reckitt, it reflects an investment climate that remains selective and cautious.

Investors may take a wait-and-watch stance on Reckitt in the near term, given mixed signals from Q1. However, the company’s resilience in emerging markets, ongoing innovation strategy, and cost control efforts continue to support its long-term investment thesis.