The FTSE 100 fell around 1.5% to 10,131.97p on Monday, according to multiple reports, as oil prices surged above $100 a barrel for the first time since the 2022 energy crisis. The effective blockage of the Strait of Hormuz has sent energy and supply chain costs soaring since war broke out in February, multiple reports said. The oil price surge fanned inflation fears and led investors to price against an interest rate cut at the next Bank of England meeting, according to multiple reports.
Reckitt Benckiser missed quarterly revenue expectations due to disruption from the Iran war and changes to EU sanctions on Russia, according to multiple reports. The company reported 1.3% growth in like-for-like net revenue for its core business in Q1, below expectations, and warned of lower margins in the first half of the year due to higher oil prices and lower demand for cold and flu products, multiple reports said. Reckitt's group adjusted operating profit margin in the first half is expected to be around 200 basis points below the 24.6% reported for the same period last year, according to multiple reports.
In light of the uncertainty arising from the conflict in the Middle East, the group is taking a more cautious outlook reflecting the impact on passenger numbers and weaker consumer confidence. Much will depend on the peak summer trading period and the group assumes no immediate improvement in consumer confidence and assumes that jet fuel supplies can be maintained.
Reckitt experienced a 'double-digit' decline in its emerging-market household care business due to changes to Russian sanctions banning exports of germ protection and cleaning products, multiple reports said. The company is still in the process of transferring ownership of its Russian business, which began in April 2022, according to multiple reports. Reckitt was also hit by higher supply costs caused by the conflict in the Middle East, and if oil remains at $110 a barrel for the rest of 2026, it estimates a £130-150 million hit to its input cost base, multiple reports said. The company expects to offset costs through supply chain efficiencies, hedging and price rises, but anticipates an impact on consumer demand due to pressure on household budgets, according to multiple reports. Reckitt's operations and supply in its Middle East business were disrupted, resulting in no like-for-like net revenue growth in Q1, multiple reports said. Despite the headwinds, Reckitt maintained its full-year forecasts, assuming no further impact from the war beyond the first half, and its germ protection brands such as Dettol and Lysol delivered growth of 9.5%, according to multiple reports.
WH Smith suspended dividends to shareholders and slashed its full-year profit outlook due to the ongoing impact of the Iran war on travel, multiple reports said. The company reduced profit expectations to between £90 million and £105 million, and its like-for-like UK revenues flatlined in the first seven weeks of its second half due to lower passenger numbers amid the Iran war disruption, according to multiple reports. Group-wide revenues edged 2% higher in the period, multiple reports said. WH Smith also faced a costly accounting blunder in its US division, leading to share price declines, the departure of former CEO Carl Cowling, and an FCA probe, according to multiple reports. An independent review by Deloitte found WH Smith overstated profits in the US business by as much as £50 million due to issues with its audit process, multiple reports said. Leo Quinn was brought in as executive chairman on April 7, and WH Smith's underlying pre-tax profits tumbled to £3 million for the six months to February, according to multiple reports.
The immediate focus is to restore confidence and ensure the right foundations are in place to support profitable growth and long‑term value creation. Moving forward, the board and management team will have a relentless focus on driving cash, cost discipline and strengthening the balance sheet. As a first step, the board has taken the prudent decision to suspend the dividend.
Global air travel demand worries weighed on Rolls-Royce due to flight path disruptions from the Middle East conflict, according to multiple reports. Airspace over the southern half of Azerbaijan faced closure, adding pressure on limited airspace after flight traffic disruption in the Gulf, multiple reports said. Wizz Air warned the conflict would reduce its income by €50 for the financial year ending March 31, according to multiple reports. British Airways owner IAG and Easyjet shares sank over 10% in the last week, multiple reports said. According to City AM, Dan Coatsworth described investors as weighing up the prospect of the Iran conflict lasting longer than previously thought.
Rolls-Royce shares fell as much as 5% at open, then recovered to a 3% loss at 1,225.00p, according to multiple reports. Lloyds shares were down 1.7% in early trading, and gold miner Fresnillo shares tumbled 2%, multiple reports said. Shell shares rose 1.7% to 3,188.00p and BP shares rose 1.3% to 505.50p, according to multiple reports. Mondi shares slumped 5% in early trading after warning of higher energy, raw material and logistics costs due to the Iran war, multiple reports said. Mondi's earlier decision to shut plants in Hungary, Poland and Germany will cost 450 jobs, according to multiple reports.
Investors are now weighing up the prospect of the Iran conflict lasting longer than they previously thought.
Reckitt shares fell as much as 5.6% to their lowest level since October 2024, before recovering to trade down 4.96% at 4,674p, according to multiple reports.
Significantly heightened geopolitical tensions in the Middle East further increased volatility in an already complex operating environment. We are actively responding with pricing actions. While there is a customary lag, we expect the impact of these price increases to take full effect in the third quarter of this year.