Reckitt Benckiser Group plc

Good morning, everyone. Welcome to Records Q1 Trading Update. I'm delighted to have both our CEO, Nicandro Durante, and our CFO, Jeff Carr, here this morning for our Q1 call. Nicandro and Jeff will take you through some quick prepared remarks, and then both will be available to take you through any Q&As. Now, before we start, I would like to draw your attention to the usual disclaimer in respect to forward-looking statements, which are contained on page two of our R&S published this morning. Now, without any further ado, I'll hand you over to our CEO, Nicandro Taranti.

Thank you, Richard. Good morning to everyone who has dialed in and welcome to our Q1 trading update. I am pleased to report this morning we have made an excellent start to the year. Delivering group like-for-like net revenue growth of 7.9% in the quarter and further building on our momentum from 2022. I am particularly pleased with how broad-based this delivery has been across our three business units, including improving volume trends in our hygiene business, a very strong OTC performance, and the maintenance of our leading share position in our U.S. nutrition business. We highlighted in our RNS this morning a number of innovations we rolled out during the quarter, while its early days These have been well received in the market by our customers and consumers, and we have more to come in both Q2 and the second half. This is a strong start of the year. The early success of our innovations launch, an exciting pipeline we have yet to roll out, have enabled us to now target a group flag for like net revenue growth of 3% to 5% in 2022. Before I hand over to Jeff, you have seen this morning's announcement that Chris Licht has been appointed as CEO Designate of Records. I would like to congratulate him on his appointment and wish him success as the next CEO of this great company. He will become CEO Designate on the 1st of May 2023 and join the Board of Directors on the 1st of June. I will stay on up to December to ensure a smooth transition with Chris taking over as CEO by the end of 2023. Chris has been instrumental in Racket's transformation, both through his strategic role as Chief and Transformation Officer and his strong operational leadership in the significant turnaround of our health GPU over the last three years. He has a deep understanding of Racket's business and brands, and he lives our cultural values every day. I have got to know Chris well over the past few years, and he's an excellent fit to lead the racket in the next exciting phase of its journey. Jeff will now provide you with some further detail on our Q1 trading performance and full-year outlook.

Thank you, Nicandro. As you mentioned, we made an excellent start to the year with 7.9%. like-for-like net revenue growth in the quarter. As expected, this was due to the strong carryover of pricing from the second half of last year and some delayed pricing actions that we took in our U.S. nutrition business in February. Volumes showed improving trends, particularly in Europe, where we saw strong volumes in our health portfolio and improving trends in hygiene. So looking at our GBUs, high-team business grew 2% on a like-for-like basis, on a like-for-like net revenue basis, or high single digits, excluding the impact of Lysol. So specifically on Lysol, whilst it declined in the quarter due to comping the Omicron spike from last year, we did see a significant improvement in March. Now, let me just make this big announcement. This is the final quarter of COVID related normalization. We expect Lysol to be growing in Q2 and onwards, and we won't be quoting ex-Lysol numbers you'd be happy to know going forward. For the rest of the high-team portfolio, we had a very good start. Finnish had double-digit growth and improved share trends we saw in Europe behind the recent launch of our Finnish Ultimate Plus all in one innovation, delivering our best ever clean. Vanish and Harpic grew double digits, underpinned by innovation and penetration building programs. I'm pleased that we returned to growth with Airwick in Q1. During the quarter, we rolled out two innovations, Active Fresh, our first non-aerosol-based auto spray, and Airwick Vibrant, our most luxurious fragrance experience so far. net revenue growth. This was led by our OTC brands, driven by continued high instances of cold and flu, and some retailer inventory rebuilding in Europe where we'd had some issues with stopping at the end of last year. In intimate wellness, our portfolio delivered a strong mid-single-digit growth in the quarter, again with strong growth in Europe. Delta was slightly down in the quarter, impacted by some tough Omicron comps, especially in Asia, but we remain strongly on track for growth in the year. China had a slower quarter, as it's yet to fully show the benefit of reopening post-COVID lockdowns, although we did see our small cold and flu business do particularly well in the quarter in China. In nutrition, we delivered like-for-like growth of 11.9%. Our developing market portfolio delivered another consistent quarter of mid-single-digit growth behind the executional improvements we made last year. In the U.S., we maintained our market-leading share position in the non-WIC markets, showing that mothers already in the category are sticking with Enfamil, and we are seeing good signs of new mothers emerging. entering the category also sticking with Enfamil. In addition, the quarter was held by some retailer restocking due to the supply shortages that we had in the end of last year and during the whole of 2022, in fact. We know maintaining share will be difficult as we progress through the year when the competitive environment heats up, but we remain confident in our ability to maintain sustainable upside in market share versus our position prior to the supply issues. So moving on to the outlook for the year, we've made a strong start across all of our GBUs. We continue to expect more challenging competitive dynamics in our U.S. business in the future quarters. We therefore target group life-like net revenue growth of 3 to 5% in 2023. That includes the lapping of our U.S. nutrition business in 2022. On margins, there's no change to our outlook. So, Nicandro, back over to you. Thanks, Jeff.

To summarize, we had a strong performance in 2022, and we are firmly transitioned from transformation to delivery. We have made an excellent start to 2023, which has enabled us to improve our revenue outlook for the year and to build on what we set in March As I said in March, we continue our journey to improve execution muscle in 2023 and to provide strong support around our exciting pipeline of innovations that we are rolling out this year. We remain fully focused on the delivery of our strategy to protect, heal, and nurture in the relentless pursuit of a cleaner, healthier world. Thank you, and with that, We'll be happy to take your questions.

Thank you. We have our first question. It comes from Richard Kawan from Morgan Stanley. Richard, your line is now open.

Hey, good morning, Nicandra, Jeff, and Richard. Thanks for taking my call and congrats on the results. A couple of questions for me. First one, as you think about your margin guidance for the year, With cold and flu up 30% this quarter and trends seemingly broadly improving across the portfolio, why not raise your margin outlook for the year? Is there a level of conservatism built in there? And then my second question is around market share. I think over 50% of hygiene and health CMUs are losing share in the quarter. what gives you comfort that that will improve over the year, and how important will the step up in BEI investment and driving innovation that you've spoken about, how important would that be in driving that improvement over the course of the year? Thank you.

Hi, Richard. It's Jeff. Let me take the margin guidance question first. Firstly, it's Q1, so it's too early to be talking about upgrading guidance on margins for full year. Obviously, we are indicating an upgrade in terms of their revenues, and I'd expect to see a proportionate upgrade in the operating profit expectations for the full year. I would like to just point out that we have outperformed our peers in margin delivery in 2022, and if you look at the combination of 2021, 22, 23. So we've had a strong performance on margins, and I'm very proud of that performance, especially how we delivered in 2022. But all I'd say in terms of upgrading for this year is it's too early to be talking about that. If there's any news, then we'll bring that news at the half year, but it's too early at this stage.

Okay, let me take the questions on market share. Let me start from the beginning. I think that we have a very strong set of numbers in the first quarter of last year, mailing health, in which more than 75% of our portfolio was growing for a lot of different reasons, mainly supply issues. from some of our competitors. How do I see market share moving from first quarter throughout the year? Well, if you look at by business unit, you look at nutrition, we are holding almost all market share that we gained last year. That's a fantastic performance driven by our brands. As I said in the four years results, Our brand, Enfamil, is the number one preferred brand by pediatricians in the United States. It has not changed. So you have a strong portfolio. I'm very optimistic that you'll retain some or most of the shares during the year because we are in a good momentum. The competition is fully back, and we are retaining our share. You look at hygiene. We came from... I think that the second, third quarter last year, in which we were out of the trade, I explained this in the full year, we are recovering share quarter by quarter. So if you look at quarter one, it was better than quarter four next year. And with the innovations working and the early results are really great, I expect market sharing nutrition to improve in the coming quarters. So I'm not worried about that. I'm very optimistic that things are going to move into the right direction. The pipeline of innovations that we have just launched, the first results are really good. And what we still have to come, giving the confidence that you'll be in a good space in market share for hygiene and health. As I said, strong comparators from last year, but the brands are performing very well. Some of our brands, like Strepsil, for example, we just cannot supply to the demand. The brand is having a fantastic performance, Strepsil, Gapscom, Ucinex. So I'm not overwhelmed about that. It's very strong comparators against last year. And you see market share improving for health in the coming quarter. So I don't think that we have a problem on market shares. I'm optimistic that you see improving trends going forward.

Thank you very much. Very clear, gentlemen.

Thank you, Richard. I think we've got next on the call. We've got Guillaume Delmas from UBS. Go ahead, Guillaume.

Hi, Richard. Thank you. Good morning, Nick, Andrew, and Jeff. So two questions for me as well, please. The first one is on Chris' appointment as the company's next CEO. Given that, and you reminded us of that in your prepared remarks, given that Chris was one of the architects of Racket's turnaround strategy, basically the strategy which was presented in early 2020, would it be fair to assume, at least at this stage, that we should not expect any kind of major strategic U-turn, so likelihood of a margin reset or the opening of an other phase of transition, which often means limited bottom line growth. All of that is highly unlikely. And then my second question is on inflation. I remember that at the time of your fully results, you talked about single digit inflation for 2023. Nearly two months later, are you able to narrow a little bit this relatively wide inflation range? I guess another way to ask the question is how much of your commodity costs are now locked in for the year and what would be the underlying inflation you're seeing for this locked input cost? Thank you.

Okay, let me take the first question. Jeff, you take the second question. The first question is about strategy and margin reset. Listen, it is very clear. I think it is an announcement and what we have been saying so far. Chris has been part of the team that designed the strategy for REC. He was a very important member of that team. And he's participating in everything that you are doing in the company. I'm working here for the last eight months alongside these people. So we are doing everything that you are doing here together. So you are totally right. I don't expect any change in terms of the strategy that you have. I don't expect any significant changes in terms of the big aspects of what we are doing. Of course, you have the possibility as a CEO of the company fine-tune parts of the business that needs to be fine-tuned. That's normal. Any CEO, you have his own look of that. But yes, you should not expect any significant change on any change on the strategy, the course that we are, or margin reset. I think that I hope that I made it clear in the announcement.

Let me cover the inflation question. If you look at the balance of the year on cost of goods, we have about 60% of our costs, which are locked in to the end of the year. We said single-digit inflation. I mean, I don't think it's going to be low single digits, so I think it's fair to say 5% to 9% is the sort of inflation level that we're going to be seeing on balance. for 2023, much less significant than 2022. And that means our pricing obviously will be much more measured in 2023, where we did most of our heavy lifting on pricing in 2022. So it's about 60%, which is locked in. We do, I mean, obviously we are seeing some commodities coming down relative to where we were in the 1st of March. We've seen some movements in plastics and paper, for example, but there are some commodities which have actually gone the other way since March, like palm oil, for example. So we continue to track that, and I don't see a significant change in our outlook on commodities and cost of goods versus the 1st of March.

Thank you very much.

Next on the line, we've got Celine Panutti from J.P. Morgan. So go ahead, Celine.

Yes, good morning. I would like to come back to my first question to come back on what you just said about Chris. Thank you for that. But could you give us a bit more color on the process of selection and what made the difference for you to appoint Chris? My second question is on the consumer environment, specifically on the hygiene category. Could you talk about what a competitive landscape looks like, especially in terms of the private label market share performance, and in terms of pricing, am I right to expect that you are done at least in the hygiene category for this year? Thank you.

Okay. Let me start by the Chris Licht question. As I said, I stepped in September, beginning of September, to give the time for the pool, to make the right appointment. They had the luxury of time. As you know, I stepped in, as I said, the beginning of September. We look at the internal candidates. In the last 18 months, I have been mentoring these internal candidates and getting to know them well. We look at screen the markets to guarantee that you made the right choice because you had, as I said, the timing to do so. So after eight months, we came to the conclusion that Chris is the best candidate to take the company forward. If you look at his track record in the last four years, he turned around the health business in the last two years, three years under his leadership. business has grown quite well. It has shown very good leadership capabilities. But listen, we wanted to run a process with the timing to guarantee that you have the right candidates. And we look at the market, we look at the other internal candidates, and that's why it took eight months. I don't think that this was an issue. I was here. And I gave the board the time to do so. As you can see, the company is performing well. The strategy is delivering. All the investments made in the last three, four, five years is paying off now. So I think that the question on should we change the strategy, we have a great strategy in place. The company is delivering. That's why I think that we made the right choice. Let's take the second question about the consumer environment. And you asked the question about pricing, private label. Well, listen. In terms of pricing, most of the prices that you see this year in our numbers, they are carryover form 2022. We had a very strong pricing delivery last year. So most of the pricing is through carryover. Some of them will be through innovations as well, because all the innovations, we are asking consumers to pay a little bit more for a much better product. And it's going through very well. I don't see, in terms of down trading, a significant issue for us because we are more in elastic categories. You just look at AutoDish, for example. We have a 15% price increase, and the volume was down 1%. So it's very inelastic. The same we can say about Fanish, low elasticity, 12% price increase. Volume has not suffered with that. And there are some other categories like healthcare, for example, in which are more discretionary. But even in the healthcare, we are growing mid-single digit because of innovation. So we have fantastic portfolio of products going through. Private label. We haven't seen in record a loss for private label. A little bit, maybe 20, 30 base points in Europe, but it's growing. We are gaining in the United States. So has not been relevant in our numbers, has not been material to our numbers. So, as I said, we are more in the Alaska categories with a great portfolio, premium positions, and I think that we're well-placed to keep going forward.

Thank you. Okay.

Thanks, Celine. Next on the line, we've got Bruno Montaigne from Bernstein. Go ahead, Bruno.

Hi. Good morning. He did say, Jeff, that the final quarter of COVID normalization, you talk about quarter two being back to growth for Lysol. Now, all of these are presumably nominal numbers. So my question is on Lysol and Dettol is when do you expect the volumes to stop declining? And even sort of looking at your three-year CAGR or four-year CAGR's volume, it looks like you're at pre-COVID level volumes or possibly even below that. is that correct and if you're falling below pre-covered volumes on a sort of a like-for-like category country basis is there a reason for that and my second question is around you as infant nutrition you do mention that you're still restocking the retail channel as there were shortages is there any way you could quantify how big the benefit is in your quarter one growth number of that restocking thank you oh well look as i as i mentioned bruno yes we're very pleased that um

This was the final quarter of lapping the spikes on Lysol and Dettol from COVID. So as we go forward, we should start seeing revenue growth. Now, we haven't given guidance on volumes, but what I've said generally is that we expect to return to volume growth during the course of 2023. Like many of our competitors, our growth is mostly pricing-led today. Volumes will return. as we start annualizing the price increases that we took in the course of the second half of 2022. So I'm not specifically going to get into Lysol and Dettol volume projections, but what I would say is that Lysol's up over 45% versus 2019. There is a significant element of volume growth in that. There are some subsegments of the Lysol categories, like wipes, where volumes are pretty close to 2019 levels. But when you factor in the volume increases we've had in the new areas, new launches, like laundry sanitizer, the total parent Lysol category is up in terms of volumes. I think in terms of infant nutrition, The question was about restocking. You know, the shelves weren't fully restocked in December. They are pretty restocked now. It contributed to a bit of the growth. I'm not going to quantify how much of that growth, but it was a relatively small amount of the growth. But I think the key message is that we're now back to normal shelf stocking levels in the U.S. at the end of March 2023. That's the key message.

Can I just add something? The main drivers for the performance in nutrition in the first quarter, we cannot, I just want to highlight that it is the fantastic share performance that you have presented. We retained most of the share that we gained last year. That's one of the main drivers that we have. So I'd just like to highlight that.

Thank you.

Thanks, Bruno. Right, next on the line, we've got James Edwards-Jens from RBC. So go ahead, James.

Thanks, Richard. Can I come back to innovation? Can you say something about how the innovation process has changed over the last couple of years and what visibility you've got about new product launches over the next, say, two years? And secondly, Nicandro, what do you regard as your biggest achievements in your time as CEO of Reckitt?

Well, Let's start with the easy question, the innovation question. Listen, I think that innovation is a journey. We have been through this journey for a couple of years here, and we have been developing fantastic innovations for the company that are coming to fruition. So we have invested heavily in R&D, in our capabilities in markets, product superiority and things like that. If you don't have product superiority, consumers are not going to stick to our portfolio. So those are the things that have been focused in the last years. What I think that we have fine-tuned a little bit this year and at the end of last year is to deliver of innovations, how to deliver that, how to reach the trade and consumers in a smarter way, the right timing, the right innovation, with the right price points, and having some deals with the trade to get free innovations through. So it was a fine-tuning more on the delivery side. But listen, the important question is, do you have a strong pipeline of innovation for 2023, 2024, 2025? I am confident that you have new words for innovations coming in the coming years. I am very optimistic about that. The investments that we have made in the last years on our pipeline is paying off. And the question now is more about how to deliver that with the right timing and so on and so forth. We are working very strong on that. And I think that the results of the first quarter speaks by itself. We have a rate of success that's fantastic, that's really great. I'm very happy with that. and what we have in the coming quarters are very exciting as well. As I said, to give an example, in one of the most discretionary categories that we have, we had a mid-single-digit revenue growth, and if you look at the numbers last year, it's a fantastic achievement, but this is all due to innovations because we are asking consumers to pay more for our products, and they are trading up because they see the benefits. That's the first question. The second question, what would be my biggest achievement is to keep the ball rolling. We have a fantastic team in racket, iconic brands, a company with fantastic values. And my main objective in the last eight months is to keep the business on track. And I think that if you look at delivery of last year, and if you look at what we are delivering in 2023, and the fine-tuning of execution, I have to say I'm extremely happy with the company. Not with me, but with the company. Extremely happy. And honestly, I'm a shareholder of the company now, and I expect fantastic results going forward because the company is in a good shape, extremely good shape.

Good. Thanks, Nicandro. Right. Next on the line, we've got Ian Simpson from Barclays. Go ahead, Ian.

Thanks very much. A couple of questions from me, if I may. Firstly, just in near-term performance, looks like we've seen a bit of an inflection in Dish market shares in Europe, but also some other categories. Could you comment at all about your experience with retailers and delistings? And clearly, You suffered a number of delistings in the second half of last year that sort of gives you easy comps on the market share front. How have price negotiations gone this year? Are you sort of through the difficult part of that? Do you have confidence that we're not going to see more delistings this year and that we'll see shares continue to normalize? And then secondly, sort of longer-term question, which is looking across your categories, are there seems to be more volatile volume demand than we perhaps would have expected a few years ago. Some of your competitors have talked about putting more CapEx and also networking capital into their businesses just to have sort of redundant capacity and buffer stocks to cope with volatile demand going forwards. Is that something that you would consider doing or are perhaps already doing? Thank you very much.

Okay, let me go for the first question. Jeff, you take the second question. In terms of, yes, we faced some difficulties last year going through the price increases because we had significant price increases. As I said before, most of the price in this year is going to come from carryovers and the launches of innovation. Of course, negotiations, mainly in Europe, with the trade to go through pricing, are not simple, and I can understand why. Consumers are under stress. There is a lot of pressure in the trade nowadays. Consumers are looking for price. I don't expect to have the same problems as last year because the amount of prices that are going to go through this year is minimal because most of the pricing, as I said, is carryovers and driven by innovation, which is something very easy to sell to the trade and to the consumers because you are giving something else. for them to trade up. So I don't expect significant problems. The second question, Jeff is going to take it, but I'd just like to make a comment about volume. I think that Jeff highlighted quite well the last time that you have this stuff comparators on disinfection. But if you eliminate, I hate this elimination phase, but for the last time in history, I'm going to say that, If you take our volume numbers of the first quarter without Lysol, that's nothing related to the pressures of consumers, more related to the Omicron impact the first quarter of last year. Our volume decline the first quarter would be 1.6% only. I'm just trying to state the number here because 1.6% in this environment just shows the strength of our portfolio the strength of our strategy, and the strength of the delivery of the strategy, 1.6%. And if you look at March of this year, you see the numbers for ISO getting much better because Omicron was more on the January and February. I forgot to mention these numbers in the previous question.

But Jeff, please. Let me answer that question very clearly because as you know, we've been investing in supply chain resilience, both capital and operating expense over the last three years, and we've been through the most volatile of times. We've seen massive upticks in terms of disinfection volumes, Lysol, Dettol, wipes. We've been through very bumpy times and massive growth in cold and flu and VMS, if you remember the airborne peaks in terms of 2020. And we've been through in 2022 a huge increase in demand on infant formula in the US. We've been through all of that and successfully managed to keep our products on the shelf and done a fantastic job, much better than many of our competitors. So I think the investments we've been making in supply chain resilience set us up very well for the future. And I'm sure we're not going to see the sort of volatility that we've seen in the last three years over the next three years. I say that, I can never tell the future, but the last three years has been the most volatile of times. As I look now going forward to 2020, the balance of 2023, I expect to be in a much more normalized situation through the last of those peaks. Obviously, we're still annualizing the Abbott effect on infant formula, but our supply chain has held up incredibly well and we should be very proud of how that's delivered over the last three years in many areas.

Thanks, Ian. Next on the line, we've got Jeremy Fialkow from HSBC. So go ahead, Jeremy.

Hi, thanks for taking the questions. So first one, can you just go to a bit more detail on where you are in terms of your U.S. market shares within the non-reimbursed channels? I guess also how much pressure you saw if you take where you are at March, end of March versus where you were at the end of 22. And again, whether you update your expectations in terms of how much of that non-reimbursed business you're going to be able to maintain over the slightly longer term. And then second question is on BioFreeze, any update on how that brand is performing? Thanks.

I can't think of the sentence. Yeah, look, on infant formula, on the non-WIC aspects of infant formula, our market shares have remained very strong. I think they're pretty much in line with where they were at the end of last year in terms of market shares, which is significantly ahead of pre-crisis. So market shares have remained very strong. They haven't fallen significantly. And clearly, what that's saying to us is that mothers are not switching. And as I mentioned in our commentary, new mothers coming into the category are sticking with the ENFA formula. So we're very pleased with the market share development. Now, the question is, how much of that will we retain? And it's always a difficult one. You know, we know that Abbott is a formidable company. editor. They've stated publicly they will regain their market leadership position. I think it's just going to take some time for them to really get that traction. And I feel optimistic, as we said in the release, that we'll end this year with much higher shares than we started in the market, which give us confidence in that. But I can't put a figure on it in terms of what percentage of the business will keep from last year at this point.

Let me take the second question. It's about BioFreeze, if I understand well. Well, I'm always glad to report when we say something and it's confirmed two months later. So when it came to the full year's results, we said that BioFreeze was back to growth. If you remember well, Well, the capital is growing again and Biofreeze is performing extremely well without the different problems that we had last year with the market declining in Biofreeze and we had some supply issues. Just to give an idea how confident we are on Biofreeze, the first quarter we grew 31% and most of this is volume. On top of this, we launched in France and the performance of the brand in France is the return of this launch has been really great. So we are very optimistic about BioFreeze this year. It's going to grow double digit. I have no doubt about that. We grew 31% in the first quarter. And I see the brand, as we said in March, was a great addition to our portfolio, just showing that. So I'm very glad to report that.

Great. Thanks. Thanks, Jeremy. Next on the line, we've got Martin Dubu from Jefferies. So go ahead, Martin.

Yeah, thanks, Richard. And morning, Nicandra and Jeff. I just want to mop up incrementally on nutrition, just trying not to repeat what you said to Bruno and Jeremy. Just on WIC, the comments on price mix suggest that in Q1 you were still selling into some of Abbott's WIC contracts. And I just want to clarify that was the case and ask the question, does that now end as Abbott resupply? And is that at all material in Q1? And then secondly, I just want to clarify comments made on market share. Nicandra, I thought you said at one point you hope to increase market share of US infant nutrition, but I think having just heard what you said to Jeremy, what you're saying is you expect market share post the Abbott recall to be higher than it was pre the Abbott recall. Can I just clarify those two points? Thanks.

Again, let me get the second question. Jeff, you take the first question. If you understood that I expressed myself wrongly, what I said is that I expect to retain most of the market share that we gained last year, is what I said, because the first quarter we had a very good performance, and we retained most of the market share that we gained last year through the issue that we faced in the United States. So I don't expect to further improve market share on top of last year. It would be impossible. But I expect to retain most of the market share. As I said, our brand is in great shape. We have some new launches this year in some particular formulas there. Enfamil is as I said several times, is the preferred brand recommended by pediatricians. So we expect to have a very good year on nutrition. That's what I meant, Martin.

Martin, you're correct. You're correct on the WIC comment. There is some benefit from WIC still in the first quarter. The reimbursements ended at the end of February. so there will be no more benefits from that, and so that has finished now. It wasn't significant in terms of our overall growth, but there were some weak benefits in the first quarter. The reimbursement program finished at the end of February.

Good. Thanks, Martin. Okay, next on the line we've got Tom Sykes from Deutsche Bank, so go ahead, Tom.

Thanks, Richard. Morning, everybody. Just on the price increases that you've put through in U.S. infant nutrition, I think you said before you were putting low to mid-teens price increases through. I just wondered how you thought that had landed and whether your realized prices are similar to that level at the moment or are you having to step up promotion considerably now? And then just in OTC, it wasn't clear whether you were saying you had held or gained share in OTC, and I suppose specifically in cold and flu. Sorry, just a quick one. The 3% to 5%, does the upgrade implicitly, is that coming from nutrition, or do you see that an upgrade in other divisions as well, please?

Okay, let me take your first question. We had a price increase in nutrition at the beginning of February. It was double digits, as we said before in March during the presentation. It went very well, and this is a testament for the strength of our portfolio and the sector. We haven't felt any pushbacks from consumers and customers, so we are in a good space answering your first question. The second one, OTC. We had a 30% growth revenue OTC in the first quarter. It should show that you are performing extremely well. If you look at our competitors, they are not showing the same kind of numbers in terms of OTC growth. We will be keeping and growing market share. We have fantastic brands led by brands like Musenet, Lamsip, and things like that. And I think that you're in a very good momentum. an OTC in the United States, and I think that you keep growing. And the third question about the margin, you want to take this?

Yeah, it was the revenue guidance of three to five. No, this isn't just led by nutrition. I think all three GBUs, and that's why we call it broad-based, beat the consensus today. I think if you look forward to the next few quarters, I would expect to see a little bit of an uptick in terms of health as well as nutrition in terms of expectations because clearly health beat numbers quite considerably and we're on track to have a good year. So I would expect to see a more broad-based upgrade as opposed to just nutrition.

Okay. Thanks, Tom. Let's move on quickly. Chris Pitcher, Redburn. Go ahead, Chris.

Thank you very much. Got a question on intimate wellness, please. Can you say whether sales in China were specifically down in Q1 and how depressed are China's sales relative to its normal share? And then specific to Durex, are you still regaining market share with your innovations? How has the competitive environment developed? Do you feel like you're getting ahead of the curve on innovation there now in China? And then, forgive me if I missed it, did you give an overall sales growth for Rekit China in Q1? Thanks.

Okay. Let me talk a little bit about intimate wellness. And what I can tell you is that QREC is performing very well in Europe. It's performing very well across the world. But you look at the rate of growth, intimate wellness was a little depressed because despite China, We have had very strong growth in some of our brands and we grew double-digit finish, almost double-digit vanish, double-digit heartbeat. But the two biggest brands that we have there, they are stable or slightly growing, Durex and Detol, because we haven't seen China, the recovery of the market opening. We expect second quarter onward for the numbers that I'm seeing today, is that we'll see this recovery coming in the coming quarters, quarter two, quarter three, and quarter four. So Jurex, there was slightly growth in China, around 1%, but it's very modest for the China, for the opportunity in China. But I do expect, do I expect to see growth in China going forward in Jurex and the Dow? The answer is yes. I think that you see this coming. in the coming months. In terms of competitive environment, as I said, in Jurex, outside China, it's gaining market share, but in China it has been depressed. If you look at China volumes for Jurex, most half of the world, and of course you see that the intimate wellness have not grown double digit, but mid-single digit growth. But I expect this to improve throughout the year.

Total China growth in the first quarter was lower than we expect, but it was still positive in the low single digits.

Okay.

Thank you.

Thanks, Chris. All right. Final question we've got from Karel Zuetti from Kepler. So go ahead, Karel.

Thank you. As Karel has disconnected his line, we have Karel join back.

Okay. I don't see any further questions. I don't see any further questions. Oh, Karel, you're back. Okay, go ahead.

Yeah, I'm back. Yeah, sorry, Richard. Yeah, sorry, I disconnected. Yeah, one question on OTC capacity. We've seen a very significant growth. You already commented on Strepsil. How are you looking to increase capacity to meet demand? That was basically the one question I had left. Thank you.

Let me take that, Karel. Look, we've been stepping up our capital expenditure program since 2020. We have been increasing our capex and we've been increasing capacity into key areas. And we'll continue to make those strategic investments. We've been insourcing quite some manufacture that has been previously outsourced. And I think, as I said before, we've been improving our supply chain resilience and our performance over the last three years' evidence of that. And we'll continue to do that. Where we see the need to invest in new capacity, we'll continue to do that. So we have been doing that, and strepsils has been one of those areas that we have increased capacity, but the demand at the moment is just so large in Europe that it's tough to keep up with it.

Thank you.

Thanks very much. Thanks very much for your questions.

We'll end the call there. Thank you.