Nurofen and Dettel manufacturer Reckitt warns of potential £150m hit from Iran war oil costs
Household goods giant Reckitt Benckiser has warned over a possible cost hit of up to £150 million if oil prices stay high due to the Iran war and said consumer demand would also be impacted.
The company, which started in Hull in 1840 and retains a factory and research and development centre in the city, now owns major household brands such as Nurofen, Durex, Dettol, Vanish and Harpic.
The firm said if oil prices remain at 110 US dollars a barrel (£81.33) throughout 2026, it could leave the group nursing around £130 million to £150 million in higher costs.
It said this would be a “manageable level” to offset through actions including supply chain flexibility and pricing.
The group added: “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.”
Shares in the FTSE 100 firm dropped by more than 5 per cent in early trading on Wednesday.
Reckitt reported revenues rising by 0.6 per cent on a like-for-like basis in its first quarter, as higher prices offset a 2 per cent drop in sales by volume.
Its core business, excluding the Mead Johnson Nutrition arm, saw growth slow sharply to 1.3 per cent from 5.9 per cent in the previous three months as it was impacted by a weak cold and flu season globally, challenging trading in Europe and disruption from the Middle East conflict.
Sales in Europe dropped 4.2 per cent in the first quarter.
But Reckitt said it was on track with guidance for like-for-like net sales to rise by 4 per cent to 5 per cent over the full year.
The group warned that profit margins were expected to drop in the first six months, partly due to the cost impact of the Iran war, though this will be counteracted by stronger profitability in the second half.
Chief executive Kris Licht said: “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.”
Susannah Streeter, chief investment strategist at Wealth Club, said: “While the group maintained its full-year outlook, it has stressed that near-term trading conditions remain volatile and that margins are under pressure.
“Understandably the update has disappointed investors, with shares falling sharply in early trade. There’s a worry that the situation could deteriorate further given the uncertainty surrounding peace negotiations.
“Due to the supply crunch of petrochemical products, prices of plastics and polymers have headed to highs not seen for four years, and this may also have an impact on Reckitt down the line.”