Household goods giant Reckitt Benckiser has issued a stark warning about the potential financial impact of the ongoing conflict in Iran, cautioning that persistently high oil prices could inflate costs by up to £150 million and dampen consumer demand.
Cost Pressures from Oil Prices
The company, known for brands such as Dettol and Durex, stated that if oil prices remain at $110 per barrel (approximately £81.33) throughout 2026, it could face additional costs ranging from £130 million to £150 million. However, Reckitt described this as a "manageable level" that can be mitigated through measures including supply chain flexibility and pricing adjustments.
Impact on Consumer Demand
Reckitt also highlighted the potential knock-on effect on consumer behaviour. "While challenging to forecast, if commodity prices remain at significantly elevated levels throughout the year we would anticipate an impact on consumer demand as a result of pressure on household budgets," the group said.
First-Quarter Performance
The warning came as Reckitt reported a modest 0.6% rise in like-for-like revenues for the first quarter, driven by higher prices that offset a 2% decline in sales volumes. Excluding its Mead Johnson Nutrition arm, core business growth slowed sharply to 1.3%, down from 5.9% in the previous quarter, due to a weak cold and flu season globally, challenging trading conditions in Europe, and disruption from the Middle East conflict.
Sales in Europe fell by 4.2% in the first quarter. Despite these headwinds, Reckitt reaffirmed its full-year guidance for like-for-like net sales growth of 4% to 5%.
Profit Margin Outlook
The company warned that profit margins are expected to decline in the first half of the year, partly due to the cost impact of the Iran war, but this should be offset by stronger profitability in the second half.
Chief Executive Kris Licht commented: "We maintain our like-for-like net revenue guidance for 2026. This will be driven by sequential growth from our market-leading Powerbrands, as the season resets and we continue to launch superior innovations including Mucinex 12-hour Cold and Fever, improved performance in Europe and continued strong growth across China, India and non-seasonal North America."
Shares in the FTSE 100 company fell by more than 5% in early trading on Wednesday following the announcement.
