Earnings call transcript: Reckitt’s Q1 2025 sees modest revenue growth

Reckitt Benckiser Group PLC reported a modest start to 2025, with like-for-like net revenue growth of 1.1% in the first quarter, driven by strong performance in emerging markets. The company’s stock saw a slight increase to $12.34, reflecting cautious optimism among investors. According to InvestingPro data, the stock has gained 15.81% year-to-date, outperforming expectations despite challenging market conditions in North America and Europe. InvestingPro analysis suggests the stock is currently slightly undervalued, with a Fair Value calculation based on multiple valuation methods.

Key Takeaways

• Reckitt achieved 1.1% like-for-like net revenue growth in Q1 2025.
• Emerging markets, particularly China and India, showed robust growth.
• North American sales declined by 0.9%, while Europe saw a 1.7% decline.
• The company is progressing with its £1 billion share buyback program.

Company Performance

Reckitt’s Q1 2025 results indicate a stable start to the year, with overall like-for-like net revenue growth of 1.1%. The company’s core segment experienced a more robust 3.1% growth, thanks to strong innovation in products like Lysol Air and Mucinex. Despite challenges in North America and Europe, emerging markets bolstered the company’s performance, achieving a 10.7% increase in net revenue.

Financial Highlights

• Like-for-like net revenue growth: 1.1% overall, 3.1% for core Reckitt.
• Volume growth: 0.3%, nearing 1% when adjusted for SAP pull-forward impact.
• Share buyback: £815 million completed out of a £1 billion program.

Outlook & Guidance

Reckitt maintains its full-year 2025 guidance, expecting group like-for-like net revenue growth of 2-4%. The company anticipates low single-digit growth in Europe and mid to high single-digit growth in emerging markets for the second quarter, while North America may see a low single-digit decline.

Executive Commentary

CEO Chris Licht stated, "We’ve delivered a solid start to 2025 with our overall Q1 performance in line with the guidance provided in March." He emphasized the company’s strategic focus, saying, "We continue to execute against our strategy to make Reckitt a more efficient world-class consumer health and hygiene company."

Risks and Challenges

• North American market slowdown: Consumer slowdown could impact future sales.
• Competitive pricing: Intense competition in North America may pressure margins.
• Manufacturing constraints: Capacity limitations for Lysol could hinder growth.
• Macroeconomic pressures: Global economic uncertainties may affect consumer spending.
• Essential Home business exit: Market conditions could impact the separation process.

Reckitt’s Q1 2025 performance reflects a mixed picture, with strong gains in emerging markets offsetting challenges in more mature regions. The company’s strategic initiatives and innovation continue to support its growth trajectory, though external market conditions pose ongoing risks. With the next earnings report due in 8 days, InvestingPro subscribers can access comprehensive pre-earnings analysis and Fair Value projections. The Pro Research Report, available for Reckitt and 1,400+ other top stocks, provides deep-dive analysis and actionable insights for informed investment decisions.

Full transcript - Reckitt Benckiser Group PLC (RKT) Q1 2025:

Operator: Good morning, everyone, and welcome to Wreckert’s First Quarter twenty twenty five Trading Update. My name is Lydia, and I’ll be your operator today. After the prepared remarks, there’ll be an opportunity to ask questions. I’ll now hand you over to Nick Ashworth, Head of Investor Relations to begin. Please go ahead.

Nick Ashworth, Head of Investor Relations, Reckitt: Thank you, Lydia. Good morning and welcome to Racket’s Q1 trading update. I’m here with our CEO, Chris Licht and our CFO, Shannon Heisenhart, who will take you through some prepared remarks before we then take your questions. Before we start, I would like to draw your attention to the usual disclaimer in respect to forward looking statements contained on Page five of our RNS published published this morning. I’ll now hand over to Chris.

Chris Licht, CEO, Reckitt: Thank you, Nick. Good morning, everyone, and thank you for joining us. We have delivered a solid start to 2025 with our overall Q1 performance in line with the guidance provided in March. Core record delivered 3.1% like for like net revenue growth and volume growth of plus 0.3%, closer to 1% when excluding the SAP pull forward impact in Q1 last year. Emerging Markets was especially strong, reflecting improved in market execution, double digit growth in intimate wellness, Dettol and BMS and continued momentum in China and India.

We’ve continued execute our strategy to transform Wreck It into a more efficient world class consumer health and hygiene company. Our sharpened focus on our power brands is delivering both better results and market share gains. Innovation is continuing to drive category growth across many of our markets with Lysol Air and laundry sanitizers as well as Mucinex recent launches, all delivering strong performances and share gains in North America. We have not been immune to market wide trends within certain categories, in particular with the timing of the peak of the cold and flu season this year, retailers held higher inventory levels in seasonal OTC as we entered the quarter with destocking evident through Q1. As you would expect, we’ve been closely monitoring the evolving situation around tariffs.

From what we know and given where tariffs sit today, we are confident in our ability to mitigate the impact over the short to medium term through a number of levers, including our strong gross margins, our excellent brand equities with pricing power, our geographically diversified supply footprint, including limited Chinese imports to The U. S. And our in flight manufacturing investments to increase local production such as our new Wilson, North Carolina facility. Despite the macroeconomic and consumer backdrop becoming more uncertain in recent weeks, we are maintaining our outlook for the year, while remaining watchful of the evolving landscape. With respect to our planned exit of Essential Home, we are continuing to progress the separation.

The new management team is focused on improving the performance and completing the separation process that is well underway. We are encouraged by the interest that we have seen in the business and we continue to seek an exit in 2025, although we recognize that market conditions may impact this timeframe. All other elements of our strategic delivery are progressing well. Our Fuel for Growth program has continued to deliver in line with our expectations. Mead Johnson Nutrition is trading well despite a challenging comparative period and we continue to defend ourselves against all cases in the ongoing litigation.

Our new organizational structure is working effectively and we look forward to sharing insights from our leadership team around how our category organization is driving growth and operational excellence at our investor seminar in May. Let me now pass you to Shannon to take you through our group and segmental performance in Q1 and the drivers behind that.

Shannon Heisenhart, CFO, Reckitt: Thank you, Chris, and good morning. As previously outlined, from the January 1 this year, we have moved to our new reporting segments of Core Wreck It, Essential Home and Mead Johnson Nutrition. Within Core Wreck we are reporting three geographic areas and are also providing like for like net revenue growth across our four global categories. In Q1, we’ve reported like for like net revenue growth of 1.1 across the group, driven by 3.1% growth in core record. As Chris highlighted, within core record, we saw very strong growth in emerging markets, up 10.7% with 6.8% volume growth and a 3.9% price mix impact.

China continued to deliver strong results with excellent volume and share performance across key power brands in intimate wellness and germ protection, as well as in the BMS segment of self care. India also performed well, up high single digits driven by strength in dental and Harpic. Our business saw a modest year on year decline as it cycled a tough comparative Q1 due to the sell in phasing ahead of an SAP implementation in Q2 of last year. Europe saw a 1.7% like for like net revenue decline with volume down 4.7% and price mix of plus 3%. This performance was against a strong Q1 comp last year, which saw significant inventory restocking and a positive phasing of shipments.

In the context of slowing market growth in the quarter, we did see good market share momentum, particularly in self care. Finish also saw market market share momentum, although like for like net revenue was broadly flat as we lapped a high base due to innovation launches in the prior period. Our North American business saw volume decline of 1.8% and price mix of positive 0.9%, leading to a like for like net sales decline of 0.9%. Sellout in the quarter remained in growth despite retailer inventory destocking impacting BMS and Mucinex performance, particularly in the drug channel. We saw improved end market execution with good growth in mass retail and club.

Lysol grew low single digits as it continued to benefit from recent innovation launches despite a slower than expected capacity ramp up to meet strong consumer demand. Now moving on to our global categories. Across self care, seasonal OTC brands declined mid single digits, primarily result of higher retailer inventory levels at the start of the period, partially offset by strong double digit growth across our VMS portfolio led by Mufry in China. Germ protection saw high single digit like for like net revenue growth led by double digit growth in Dettol as the brand benefited from new innovations with growth also supported by Lysol where emerging market adoption continues at pace. Household Care saw a modest decline as a function of continued competitive dynamics across the auto dish category, particularly in North America.

In Europe, we’ve seen improved market share performance in Finish in Q1 as it moves back into game territory for the quarter. Emerging markets performance was solid as market penetration continues to drive sales growth. We saw very strong performance in intimate wellness, driving strong market share gains through innovation and in market execution. We launched our first first to the world innovation, Durex Intensity Condoms in Europe made from Nitrile and had continued success with our Intima brand in China. Now turning to our non core segments.

As anticipated, Essential Home like for like net revenue declined in Q1. Essential Home includes our pest brands in Latin America, which lapped a strong pest season and much of our business in Brazil, which lapped additional sell in ahead of an SAP implementation in Q1 last year. We estimate that implementation had roughly a 2% impact on Essential Home performance. In North America and Europe, we saw market share decline, reflecting continued particularly in The U. S.

Air care category with some improving share trends in Latin America. Mead Johnson Nutrition saw like for like net revenue growth of negative 0.5%. As we move through 2025, we’ve rebuilt our supply and availability positioning following last year’s disruption from the Mount Vernon tornado. We’re pleased to be rebuilding market shares as expected, noting the supply constraints in the second half of twenty twenty four led to a missed cohort of babies when samples and supply were reduced. The quarter also challenging comp with Q1 twenty twenty four benefiting from the private label supply challenges and Nutramigen stock refill following our voluntary recall the prior year.

We are continuing to progress our £1,000,000,000 share buyback program. And as of last Thursday, we had bought back £815,000,000 of shares since this current program commenced in July 2024. Looking ahead to the remainder of the year, we are maintaining our fiscal twenty twenty five guidance as set out with our full year results, while remaining mindful of the evolving landscape. We expect group like for like net revenue growth of plus 2% to plus 4% with growth in Mead Johnson and Essential Home second half weighted. In Core Wreck It, we continue to target 3% to 4% revenue like for like growth for the year.

More specifically, for Q2, we expect Europe to deliver low single digit growth. We expect North America to show low single digit decline given the weaker consumer backdrop as well as the reset of our seasonal OTC business with PE free reformulated products. We expect emerging markets to continue to deliver mid to high single digit growth in Q2 and into the second half of the year. And we expect both Europe and North America to deliver growth in the back half as well. As we said previously, our Fuel for Growth program is expected to help drive adjusted operating profit ahead of net revenue growth and we expect to deliver another year of adjusted diluted EPS growth.

With that, let me hand back to Chris to wrap us up.

Chris Licht, CEO, Reckitt: Thank you, Shannon. Let me briefly summarize the key messages from the call this morning. We’ve delivered a solid start to the year with strong performance in emerging markets, good market share momentum and strong sellout. We continue to execute against our strategy to make Rekt a more efficient world class consumer health and hygiene company. And while we’re mindful of the macroeconomic backdrop, our resilience reflects the performance of our high growth, high margin power brands across global markets, and we are on track to deliver our full year 2025 in line with our guidance.

Now let me stop there and we’re very happy to take your questions.

Operator: Thank Our first question today comes from Rishad Khawan with Morgan Stanley. Please go ahead. Your line is open.

Rishad Khawan, Analyst, Morgan Stanley: Hey, good morning, Nick, Shannon and Chris. Thanks for taking my questions. A couple for me please. So within core, Europe and North America came in weaker than what you had guided in early March for the quarter. Clearly, environment has gotten weaker since then and you talked about slowing category growth in Europe in particular Shannon in remarks.

But can you talk about what drove the delta versus expectations and what gives you confidence in your guide for the rest of the year? And then second question on Essential Home, so minus 7% in Q1. I think you had talked about Q2 being negative as well. What gives you confidence that you can offset that in the second half to deliver on the low single digit growth for the year? And does the delivery here so far in the quarter change how you’re thinking about any eventual exit and timing?

Thank you.

Shannon Heisenhart, CFO, Reckitt: Sure. Thanks, Rishad, for your questions. So I mean, I think you sort of hit the nail on the head with your first answer or your first question, which is certainly, if you look back to where we were at when we shared our full year results with where we currently sit today, I think the overall macro environment has gotten weaker and has been more volatile than certainly what we would have seen when we were guiding for the front half of the year. We did see strength in emerging markets, obviously, with double digit growth in Q1. If you look at Europe and North America both coming in slightly short of our original guide, I’d pick it apart as follows.

I think for North America, what we saw frankly was a bit of a steeper drop off of the season than what we would have expected. And then that was compounded with the fact that we did see more significant retailer destocking. And so that had a bit stronger impact on our seasonal OTC business than what we would have expected. I think as well what we have seen is that as we look month by month, we are seeing a bit of a slowdown in the category growth rates of the categories where we play in North America. However, what I do want to emphasize is that we do continue to see strong sellout results in North America and we continue to see market share developing positively in North America across most of our categories.

From a Europe standpoint, I would emphasize those positive points, which is that our categories are continuing to grow across Europe and we are seeing again strong sellouts and we’re seeing market share momentum and market share gains across Europe. I think that we have, however, seen again a bit of that volatility around the consumer. And while it’s to a lesser extent, we are seeing these macro volatility and uncertainty impacting consumers in Europe a bit as well?

Chris Licht, CEO, Reckitt: On Essential Home, look, I would say, obviously, it’s a soft performance in the quarter. As we talked about, there’s a number of really good reasons for that. We’re lapping a very high pest season. We had the phasing of shipments in Latin America from the SAP transition. And so we expected this.

We also finished ’24 a bit ahead of what we thought and that caused January be a bit softer. What I’ll tell you though is that this business is a very stable business. The earnings model is very resilient and we’re satisfied with what the business is doing from an earnings model standpoint as we’ve started the year. We expect Q2 to be sequentially significantly improved from Q1, and we expect growth in the back half, as Shannon said. And those expectations are grounded in a series of concrete building blocks, promo activity and calendar launches, etcetera.

So I actually am not so concerned about the performance in Essential Home as I look ahead. I don’t think that is what would cause us to have maybe a different time frame for the transaction than we initially indicated. When we say market conditions, it’s not because we’re seeing some change in the demand picture that would meaningfully alter performance in the business. When we say market conditions, it’s just more of a question of the fact that I think all stakeholders in the global markets are less certain about the outlook, right? There’s simply more concerns about where the economies that we’re talking about are going and transactions are either taking longer to get done or currently not getting done.

And so we are highlighting the fact that those market conditions could cause the timeline to shift for Essential Home and that exit. However, that’s certainly not what we’re looking to execute on that and we’re continuing to seek that exit and we’ll keep you posted when we can share more about that. But we thought it was reasonable to indicate that obviously we’ve seen a very significant change in the market context.

Rishad Khawan, Analyst, Morgan Stanley: Our

Operator: next question comes from Guillaume Dalmas with UBS. Go ahead.

Guillaume Dalmas, Analyst, UBS: Thank you very much and good morning, Chris, Shannon and Nick. Two questions from me as well, please. The first one is on the very strong volume performance of both intimate wellness Protection in the quarter. Just wondering here if there were any one offs in the quarter that flattered a little bit this performance? Or should we just see it as genuine combination of good underlying demand and share gains on your part?

And therefore, we should expect some continued strong volume development for both divisions in the coming quarters. And then, I mean, going back to Essential Home and you saying this morning that market conditions could impact your plan to exit the business by the end of this year. I’m wondering, is there any alternative plan? So is it just down to owning the business maybe a bit longer until market conditions improve? Or would you also consider other options such as a separate listing or even bringing back Essential Home into core racket?

Chris Licht, CEO, Reckitt: Great. Let me take those in turn. So I think as you rightly point out, we’ve seen some really strong volume growth in emerging markets led by China and India and really in the germ protection and intimate wellness spaces. There are no meaningful one offs in that. That is just simply strong organic performance.

Our businesses have very good momentum. We are launching a lot of successful innovation into the market and we’re scaling other innovation platforms. And so we absolutely expect that to continue. Now of course, these economies may also not be immune to any shocks that could roll through the global economy. But as we sit here today, we fully expect sustained strong volume growth in China and India and in other emerging markets as we go through this year.

So I’m very pleased with that. This is a clean performance and there’s no significant one offs to highlight. In terms of Essential Home, look, we’ve said from the get go that we will be open to consider any options for this exit, but that we think that Essential Home is an attractive business and provides a platform for strong value creation. That belief of ours has been confirmed in the interactions we’ve had to date. There’s been good interest in this business.

And so I don’t today think that there’s any reason for us to actively pursue any other avenues of exit. But as you say, it certainly is possible that the current environment for transactions could impact the time line. Should we learn more about that as we go along, we’ll keep an open mind. But as I sit here today, I don’t have any sense that we need to change direction.

Guillaume Dalmas, Analyst, UBS: Thank you very much.

Operator: Our next question is from Jeremy Fialko with HSBC. Your line is open.

Jeremy Fialko, Analyst, HSBC: Yes. Hi, there. Could you tell us a bit about what just a bit more detail about what the sellout trends are across your business in sort of North America and Europe? I guess particularly if you take sort of the latest ones as we go into the quarter. So bearing that in mind, the fact that your sell out is positive, why do you expect that North America goes negative?

Is there still going to be some sort of a kind of a destocking effect? Or can you spell out the size of this phenylephrine impact there? And then the second thing is just on Essential Home. You talked about the new management team there. Can you talk about some of the changes that they have implemented since coming into the business?

And to where you see any kind of concrete signs of improvement given the relatively soft number that you printed today? Thanks.

Shannon Heisenhart, CFO, Reckitt: Sure. So I’ll take the first question around sellout in Europe and North America as well as the guide for North America for Q2. So I’d start with Europe. I’d say we’ve talked about the fact we continue to see strong momentum of our market shares. We talked about that in Q4 and we’re very happy to see that trend continuing in Q1 in Europe.

From a sellout standpoint, we’ve generally been seeing sellout in our categories across Europe in the mid single digit range. And so we talk about in our release the fact that we have some comps from prior year that are causing that distortion between what we’re seeing from in market sales versus the reported net revenue for Europe. From North America, I’d say we have seen a bit of a consumer slowdown as we look month by month. And so our sellout started sort of mid single digit. We’re seeing that as more low single digit in the most recent reads in North America, which I think is probably intuitive and consistent with what you might be seeing or hearing elsewhere.

The reason that we’re guiding North America down for Q2, the primary driver of that is really the fact that we will be resetting our Mucinex shelf towards the end of Q2 in advance of the season to reflect our new formulations of Mucinex that are PE free. And so that’s something that we take care of in advance of the season coming in to ensure that the shelf is set and ready for the season in q three. And frankly, there’s a bad guy associated that with that that you see in q two. And then as we have reorders, you’ll see a good guy from that transpire in Q3. So that’s really the biggest driver of the guide for North America being down in Q2.

Jeremy Fialko, Analyst, HSBC: And what’s the sort of approximate magnitude of that, sorry, that P impact from North America do you think? How much do think shifts Q2 to Q2 just because of that issue?

Shannon Heisenhart, CFO, Reckitt: Yes. I don’t have a specific number to say, but what I’d say is if you think of North America being down low single digit, that would be the biggest driver for that. Chris? Yes.

Chris Licht, CEO, Reckitt: I think the only thing I’d add is, I mean, generally, sellout trends are positive, as Shannon is saying. And even though we’re seeing some slowdown, we’re still in positive territory, and we do expect that to continue. So I think that’s an important thing to take away from the call today. In terms of the management team, look, I’m pleased with the work that the new team in Essential Home has done to date. They are working hard on the separation process, which is going well.

They’ve designed the new organization for Essential Home and they’re well along the path of staffing that and operating that as a separate commercial business. And I think they’re moving at pace. I know that they also would like to post some stronger numbers and that’s their entire focus now. What they’re very focused on is executional excellence and rolling out what has been a successful playbook for AirWake in Europe to other markets. And then really capitalizing on what is a strong high margin cash generative business and realizing its full potential.

So I’m pleased with what they’re doing. They’re very experienced team. They have spent a lot of time in these businesses and I have a lot of confidence in them. And as we talked about Q1 performance in Essential Home is not indicative of the underlying strength of these categories and brands. There’s a number of one offs that helped explain that number for the quarter.

And as we’ve said, we fully expect Q2 to look meaningfully better and for the back half to generate growth.

Operator: Our next question comes from Victoria Petrova with Bank of America. Your line is open.

Victoria Petrova, Analyst, Bank of America: Thank you very much, Chris. Thank you very much, Shannon. Last time you talked to the market, disclosed your winning market share metrics. Can you maybe provide an update for the first quarter? And also briefly talk about increasing U.

S. Competition on one side or North America competition on one side and quite significant pricing on the other side of things. How should we think about pricing in line with the market? Should we expect further price increases on the back of palm oil price dynamics and overall? And maybe you could also put it in the context of price elasticity of the demand globally and in North America specifically.

And my second question is related to your seasonal OTC products. Are you confident that destocking is over towards the end of the first quarter and that you will be entering the new flu season with clean inventories in retail channel? How confident are you about that? And yes, but because and is it embedded in your second half positive organic growth guidance. Thank you.

Chris Licht, CEO, Reckitt: Okay. Sounds good. I will take those in turn. So on market shares, look, we disclosed the CMU metric at the full year and we give an update at the half year in terms of how we’re doing. So we’re not normally disclosing those numbers in the quarter, but I understand that there’s interest in this topic.

And the fact is that we’ve started the year really well with market share. So I’m pleased with where we are. As you might recall, we showed steady progression in our market shares through the course of 2024 and ended up just shy of our long term goal of 60% in whole or gain. And I’m really pleased that we’ve continued that trend and it’s looking quite positive on market shares. Finish is doing meaningfully better, which was a big priority for us.

Mucinex is back in game. So I mean these are really big businesses for us that are showing their strength. And so on market shares, while we’re not disclosing the metric, I can tell you I’m quite confident in where things are shaping up as we’ve come through the first quarter. In terms of pricing, look, in North America, it is quite competitive market in many places. Like I said, we are actually seeing some good share results with Finnish, with Lysol, with Mucinex.

But I think North America will remain competitive. The consumer is concerned, right? We know consumer confidence is down. We can see consumption patterns are changing. And so I think it will remain competitive.

We’re actually not taking a lot of pricing in that context. So the vast majority of our price mix that we’re reporting for Q1 is coming from Europe and emerging markets. So I think that’s an important thing to note. And I don’t think in general we’re pricing ahead of our market. Obviously, we launched premium innovation, we launched that at higher price points and we always work to drive some mix benefits in our business.

So I would say those are the main drivers. As it relates to palm oil, it’s an important ingredient for our soaps business and we’re paying a lot of attention to it. But I don’t think that that’s going to keep us from being successful. Our Dead Toll franchise is gaining share and is doing well in a place like India. And that’s really where that issue is the most profound.

In terms of seasonal OTC, what I would say is you never know what a season looks like before you’re in it and you don’t really know what retailers do on the margin. But we have seen some pretty significant destocking. And so I don’t expect that to continue. The normal rhythm of this business, which I don’t think will be any different this year is that as we sit here in April, we’re sort of done with the season. And then it’s a clean slate and people make decisions in terms of orders and everyone generally in the retail environment wants to be in stock with these high margin important products that drive traffic to the store, especially with strong brands like Mucinex.

So I don’t really see any change in the outlook for the season. We’re expecting a normal season next year or this year and next year. And we’ll update on that as we get closer to it. But I don’t see any changes until we’re in the midst of that season.

Victoria Petrova, Analyst, Bank of America: Thank you very much.

Jeremy Fialko, Analyst, HSBC: You’re welcome.

Operator: Next we have David Hayes with Jefferies. Please go ahead.

David Hayes, Analyst, Jefferies: Thank you. Good morning all. A couple from me. So just on the guide for the core in the second quarter, you obviously guided very helpful with the regions as we’ve touched on. So when we run those numbers, it looks like second quarter is about a three as well.

So the first half is low 3s. And you talked at March about being very similar first half and second half in core. Is there a guide really towards the bottom end of the three to four now? Or maybe going back to your NPE ingredient, Mousse, the next point, was that not expected in March and that you do expect now a bit more of an acceleration, better performance in core in the second half, which means you could be well within the three to four range that you’re still got in the outlook? And then second question, just in terms of the restructuring cost save ongoing process.

I mean, is there an element of mindset distraction going on here that maybe means you’re not as focused on full performance in the markets? And or I guess in terms of margin levels, you’re obviously looking to get margins up. To be fully competitive consistently, is that something that you look at and consider whether price points brand spend needs to be maybe a little bit more competitive to your point about competitive markets at the moment. And I guess maybe related to that as well, last 2.5 question, sorry. Just on the lyso capacity uplift that seems to be behind plan, can you just talk about why that is and whether that is something that’s running a few weeks late or whether that’s something that will be back to where you want it to be as later in the year?

Okay.

Chris Licht, CEO, Reckitt: Let’s take those between Shannon and I. Let me just hit on the point around execution. Look, I’m actually pleased with how our teams are executing. I mean, we are seeing excellent performance in emerging markets. We’re seeing, like we said, good positive sellout in Europe and North America, notwithstanding the shipments have moved the way they’ve moved, and we’ve discussed the details of that.

But I think the best indication of how we’re executing is how we’re doing on market share. And like I said, it’s continuing to improve. It’s quite strong as we expected. And so I actually think that that’s a very good indication that we are able to execute through the changes that we’re going through and through a very difficult external macro picture. So I’m pleased with our ability to execute and I suspect that, that will continue.

That’s our whole focus. Over to you, Shannon.

Shannon Heisenhart, CFO, Reckitt: Okay. Great. So David, for the guide for Q2, I mean the guide by geography for Q2 was really intended to provide increased level of granularity for all of you, particularly given the fact that we are seeing a slightly different composition of growth across the three geographies. While for the group or for core record, we’re still coming in very much in line or slightly ahead of expectations for Q1. I believe the language I used at full year was that we expected our growth to be relatively balanced across the year when I was describing core record.

And that would continue to be my guide. But there was certainly no intention that I’m trying to now guide to the lower end of 3% to four My expectation is that core record will grow 3% to 4% for the year. I think we’re off to a strong start. If your model is showing the front half around 3%, but I wasn’t in any way trying to signal something at the lower end of our 3% to 4% guidance. And then on Lysol, what I would say to that is that we saw some impacts of that in Q1.

As we look at Q2, our Lysol manufacturing is fully up and running. We’re confident that we’ll be meeting consumer demand. We shared the fact that in Q1, Lysol North America grew low single digits. We talked a lot at full year of the strength of Lysol growth in 2024, and my expectation is that we continue to see strong consumer demand. And now that, that manufacturing is up and running, we will meet that demand.

David Hayes, Analyst, Jefferies: Great. Thank you.

Operator: Thank you. Our next question comes from Jeff Stent with BNP Paribas. Please go ahead.

Rishad Khawan, Analyst, Morgan Stanley: Thank you and good morning everyone. Just reflecting on the call, there’s been a lot of sort of discussion of various kind of one offs and phasing impacts, etcetera. Could you quantify just for the group as a whole, what you estimate record sell out would have been in Q1? Thank you.

Shannon Heisenhart, CFO, Reckitt: Hey, Jeff. I can take that one. So I’m sure not surprisingly, I don’t know that I have a specific number that I’d give you. What I’d say is if I piece it apart by geography, emerging markets, as you know, came in, in Q1 ’10 point ’7 percent, so call that double digit growth. Europe, we’ve talked about the fact that what we’re seeing our categories grow at in Europe is mid single digit, so 4% to 6% growth.

And we’re pleased with the market share performance and the fact that we continue to gain market shares in Europe. And then those are our two largest geographies. Our smallest geography, North America, I’d say low single digit is sort of where we’re seeing the market or the category growth. And again, pleased with our share performance in North America. So I guess I would let you sort of piece that together on what that math looks like versus the 3% we’ve reported.

Rishad Khawan, Analyst, Morgan Stanley: Okay. Thank you very much.

Shannon Heisenhart, CFO, Reckitt: Yes.

Operator: Thank you. And our next question comes from Tom Sykes with Deutsche Bank. Your line is open.

Tom Sykes, Analyst, Deutsche Bank: Good morning. Thank you. Just firstly on the sale or a delayed sale of Essential Home, how would this affect your thinking about cash return this year and next, please? And any buyback and financing that? And then just on the margin guidance you’ve given, could you just confirm, is that all in, including translation and transaction effects or constant currency?

Or could you just confirm in what context for FX the margin guidance is given, please?

Chris Licht, CEO, Reckitt: Yes. Let me start on Essential Home. Listen, want to be very, very clear about this. Thank you for the question. We are not announcing any delay today to our Essential Home process at all.

We are simply highlighting the fact that getting transactions done in this environment, as you know, is more difficult for lots of people and that it takes longer to execute transactions in an environment like the one we’re operating in. And that could change constant for a while, and we don’t know. So we’re just letting you know that we’re aware of that. And obviously, it could potentially impact the timing of Essential Home. But I have no information today that and we’re not intending to share that there’s any delay whatsoever.

We don’t have any certainty about that information. We’re still proceeding with this and seeking the exit and we’ll continue to do that. On margins?

Shannon Heisenhart, CFO, Reckitt: Hey Tom, on margin, the margin guidance is all in.

Tom Sykes, Analyst, Deutsche Bank: Okay. Thank you. If I could just maybe just you have spoken a lot about destocking. Is destocking becoming apparent outside of OTC VMS at all in higher frequency? I guess particularly in North America, is that something you think is going to become a little bit more pervasive across other categories at all?

Sorry, thank you.

Chris Licht, CEO, Reckitt: Yes. I think the most pronounced impact we’ve seen is certainly in OTC, like you indicated, and in vitamins and supplements. But I think different retailers are making different decisions. As you’re aware, different retailers in the situations in terms of their performance in the marketplace and other things going on in their business. We know that there’s a lot of change in the pharma channel, as an example.

And so I think different retailers are making different choices, but the significant impact that we have seen is predominantly in OTC and VMS.

Tom Sykes, Analyst, Deutsche Bank: Okay. Thank you.

Operator: Thank you. No further questions in queue.

Nick Ashworth, Head of Investor Relations, Reckitt: Thank you very much for taking the time to listen to the call. And yes, we’ll be in touch with you guys shortly. And you know where we are if you have any questions today. See you soon.

Operator: Thank you. This concludes today’s call. Thank you very much for joining. You may now disconnect your line.

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