RBGLY Reckitt Benckiser PLC (PK)

By Saabira Chaudhuri 

Consumers are cleaning their hands and homes more during the coronavirus pandemic, a trend makers of big hygiene brands are betting will outlast the Covid-19 crisis.

Lysol owner Reckitt Benckiser Group PLC on Thursday reported a surge in first-quarter sales as shoppers stocked up on cleaning products during lockdowns. While the company said it expects some of that demand to unwind, like others in the industry, it also thinks people will continue to clean more even when they are spending less time at home.

"Over time we fully expect there will be more fundamental changes happening as people will want to be in a cleaner environment," said Reckitt Chief Executive Laxman Narasimhan. His comments echo those of Dove soap owner Unilever PLC, which last week said it expects the rise in interest for cleaning household surfaces and hands to persist. Procter & Gamble Co. has also said it expects consumers to clean more in the future.

Reckitt reported a 13.3% rise in like-for-like sales to GBP3.54 billion ($4.4 billion) for the first three months of the year, driven by its hygiene and health divisions. Unilever and P&G also posted gains in their corresponding operations for the period.

Reckitt and Unilever have for years pushed behavioral marketing campaigns trying to convince consumers to wash their hands more often. The pandemic has offered a huge boost to those efforts, with World Health Organization guidelines -- echoed by governments and national health organizations -- recommending people regularly wash their hands using soap for at least 20 seconds to protect themselves.

A handwash challenge launched by Reckitt's Dettol brand on TikTok, encouraging people to post videos of themselves dancing while washing their hands, has been viewed more than 88 billion times since mid-March, Mr. Narasimhan said.

The company's products got less-welcome publicity last week when President Trump speculated that using disinfectants inside the body could be an effective coronavirus treatment. The comments, later walked back, prompted Reckitt to issue a statement warning against ingesting its products.

To meet surging demand, Reckitt has ramped up production of hand sanitizer and cleaning products in recent weeks. To boost efficiency it has cut less popular variants of some brands, allowing it to make bigger volumes of fewer products. The company has also bought new equipment, repurposed production lines and worked more closely with suppliers, Mr. Narasimhan said. In May alone, Reckitt expects to make the same volume of hand sanitizer that it made all of last year.

"We feared that Reckitt Benckiser's supply chain might not be up to accommodating additional demand. We were very wrong," said RBC analyst James Edwardes Jones.

However, Reckitt did caution that meeting higher demand while practicing social distancing would result in higher costs for some time. For instance, it has built makeshift cafes at some factories and put in place more buses for workers traveling to its plants.

Mr. Narasimhan also told analysts Thursday the company was investing to capitalize on new growth opportunities as they emerge. Lysol recently said it would work with Hilton Worldwide Holdings Inc. to develop a more thorough cleaning regime for hotel rooms and fitness centers that would reassure guests they are virus free.

Unilever has also adjusted its supply chain to capitalize on greater demand for hygiene products. Last week the Anglo-Dutch company said it had quickly rolled out soap and hand sanitizers under its Lifebuoy antibacterial soap brand to 43 new countries. It also sped up the launch of a new germ-killing line of products in China called Botanical Hygiene.

P&G -- which owns Tide laundry detergent and Swiffer dusters -- earlier this month said its five largest North American plants produced and shipped 22% more cases in March than the average of the prior 12 months.

In late February, the company launched Microban 24, a new brand of cleaners it says work for 24 hours by binding bacteria-fighting ingredients to surfaces.

On Thursday, Reckitt reported Lysol's like-for-like revenue jumped more than 50% in the quarter in North America, helping drive the region's hygiene unit's revenue on this basis up 20% overall. In developing markets like-for-like hygiene revenue climbed by a more modest 8% as rises in Latin America, the Middle East and South East Asia offset declines in India, which has faced one of the world's strictest lockdowns, hampering movement.

The company's over-the-counter health arm also reported higher sales as consumers stocked up on drugstore staples, like the Mucinex cough and cold brand in North America and Nurofen pain relief in Europe, Australia and New Zealand.

Those gains offset a weaker performance for some of the company's other products. Its infant formula unit reported a 2% drop in like-for-like sales as weakness in China outweighed stockpiling in North America. Reckitt's Durex brand, which mainly sells condoms, also reported modest declines in sales.

Reflecting on weaker condom sales, Mr. Narasimhan said consumer surveys show that an increase in proximity as couples stay at home together has, in some countries, been outweighed by a rise in anxiety about money, jobs and other issues that is dampening sexual appetite.

In the U.K., 42% of people polled by Durex said they are having less sex, compared with 29% saying they were having more, while in Italy such behavior has "declined a lot," he said. The company doesn't yet have a survey from the U.S.

Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com

(END) Dow Jones Newswires

April 30, 2020 12:57 ET (16:57 GMT)

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