Reckitt shares slumped on Wednesday after the consumer goods giant warned it could take a hit of up to £150 million if the Iran war keeps oil prices high for the rest of the year. The FTSE 100 firm, which owns Durex condoms and cleaning brands like Dettol, Vanish, and Calgon, saw its stock fall by more than six per cent in early trading to 4,589p.
Revenue Dip in Europe
Reckitt has seen revenue dip in Europe as its Middle East operations are rocked by the Iran war, with the blockage to the Strait of Hormuz sending fuel and supply chain costs soaring. The firm said it will take a gross hit of between £130 million and £150 million from the conflict if oil prices remain at $110 per barrel for the rest of the year. Brent crude benchmark oil prices are currently around $100 and seem unlikely to rise again to $110 for the remainder of 2026.
Ceasefire Uncertainty
However, the fragile state of ceasefire talks makes oil prices unlikely to normalise in the coming months, meaning the real Iran war costs faced by Reckitt could reach the upper end of the £150 million maximum. Reckitt said it believes this £150 million hit is “manageable” because of its flexible supply chain and strong margins.
First Quarter Results
The Durex maker saw overall revenue inch up by 0.6 per cent to £3.2 billion in the first quarter, though revenue at its European arm shrank by 4.2 per cent to £873 million. The FTSE 100 giant, which owns a number of medicine brands like Mucinex and Nurofen, said it suffered from a soft flu season on the continent. The firm also expects the ongoing war in Iran to hit consumer demand across its markets, “as a result of pressure on household budgets”. Reckitt’s Middle East operations were disrupted by the war, it said, as it saw no revenue growth in the region.
Condom Sales in China
The Durex brand took a performance hit in China after the country implemented a 13 per cent VAT on condoms. Despite this, Reckitt saw its eleventh consecutive quarter of revenue growth in China, boosted by growth in its germ protection brands.
Analyst Views
While the share price slump may have been caused by Reckitt’s £150 million Iran war price tag, analysts say the firm seems confident it can weather the shocks caused by the conflict. Richard Hunter, market analyst at Interactive Investor, said: “While stocks such as Reckitt will never be seen as racy or high fashion, they are nonetheless rather more solid and dependable. The group is cautiously confident that it can mitigate the effects of the conflict and subsequent impact on consumer spending by pulling the levers at its disposal.” Wednesday morning’s share price slump left the stock down more than 26 per cent in the year so far.
