Reckitt reported 1.3% growth in like-for-like net revenue for its core business in the three months to March, below expectations. The company experienced a 'double-digit' decline in its emerging-market household care business due to changes to Russian sanctions that ban exports of germ protection and cleaning products. Operations and supply in Reckitt's Middle East business were disrupted, resulting in no like-for-like net revenue growth in the first quarter, and it was hit by higher supply costs caused by the conflict. In the first half, Reckitt's group adjusted operating profit margin is expected to be around 200 basis points below the 24.6% reported for the same period last year, but it maintained its forecasts for the full year, assuming no further impact from the war beyond the first half.
The broader market impact saw the FTSE 100 fall around 1.5% to 10,131.97p on Monday morning. Shares in Rolls-Royce were down as much as five percent at open, with global air travel demand worries weighing on the sector. The airspace over the southern half of Azerbaijan faced closure last week, putting additional pressure on limited airspace after flight traffic had already faced disruption in the Gulf. Wizz Air warned last week the conflict would reduce its income by €50 million for the financial year ending March 31, while British Airways owner IAG and Easyjet have sank over ten percent in the last week.
Oil prices breached the $100 mark for the first time since the energy crisis in 2022 on Monday morning, benefiting energy stocks. Oil giant Shell rose 1.7% to 3,188.00p and its rival BP up 1.3% to 505.50p. The exact duration and future economic impact of the Iran conflict beyond the first half of the year remain uncertain, as do the specific details of the changes to EU sanctions on Russia affecting Reckitt's exports.