By Richa Naidu LONDON, April 22 (Reuters) - Reckitt's Russian unit is developing products and registering intellectual property to replace the majority of its hygiene portfolio in that country in
Reckitt's Russia Unit Responds to Sanctions with New Local Hygiene Products
Reckitt Faces Challenges and Strategic Shifts Amid EU Sanctions
By Richa Naidu
Impact of EU Sanctions on Reckitt's Russian Operations
LONDON, April 22 (Reuters) - Reckitt's Russian unit is developing products and registering intellectual property to replace the majority of its hygiene portfolio in that country in response to harsher EU sanctions, the British consumer goods group told Reuters on Wednesday.
It earlier reported lower-than-expected like-for-like net revenue for its core business for the first quarter and warned of lower first-half margins due to high oil prices and lower demand for cold and flu products.
Revenue Decline and Market Impact
The Dettol soap maker also said that changes to the European Union sanctions regime impacted its Russian household care and germ protection business, leading to a double-digit percentage decline in like-for-like revenue in Russia and a 200-basis-point like-for-like revenue hit for emerging markets as a whole.
Operational and Intellectual Property Challenges
"The sanctions changes have impacted our ability to both supply household care and germ protection products in the market and use global brands where the underlying product is restricted under EU sanctions, and the IP (intellectual property) is owned by an EU entity," a Reckitt spokesperson told Reuters in an email.
The spokesperson said Reckitt's team in Russia was "in the process of developing products and registering new IP to replace the majority of the hygiene portfolio."
The portfolio replacement work is being managed locally and Reckitt's head office is not providing any support, the spokesperson said.
Ownership Transfer and Ongoing Developments
Following Russia's full-scale invasion of Ukraine four years ago, Reckitt in April 2022 said it had begun a process aimed at transferring ownership of its Russian business, becoming the first major personal goods maker to do so.
Reckitt said on Wednesday that this process "remains ongoing and we will provide a further update if, and when, appropriate."
Investor Concerns and Market Outlook
Bernstein analyst Callum Elliot said investors would have questions around Reckitt's ability to meet full-year sales expectations, given the unexpected material hit from Russia.
(Reporting by Richa Naidu, Editing by Louise Heavens and Tomasz Janowski)
