Reckitt Benckiser Group (LON:RKT) CFO Shannon Eisenhardt said the company’s recent acceleration in emerging markets reflects both the impact of its new operating model and the payback from long-term investment in key geographies, while cautioning that Europe is likely to remain a low-growth environment in 2026.
Emerging markets: structure shift and China momentum
Addressing questions about the sustainability of emerging-markets growth, Eisenhardt said the company saw “significant acceleration” in 2025 and attributed part of the improvement to Reckitt’s shift from a global business unit (GBU) model to a geography-led structure starting in January 2025. Under the previous model, she said, emerging markets were often a lower priority compared with larger developed-market opportunities. In the new setup, emerging markets have dedicated leadership focused on driving “outsized growth,” which she said is beginning to show through.
China: double-digit growth expected to continue
Eisenhardt said China delivered double-digit growth in 2025 and that the company reported its 10th consecutive quarter of double-digit growth there. Looking to 2026, she said her expectation is that China will deliver double-digit growth again, citing confidence in continued momentum and plans in place.
She outlined several factors she said differentiate Reckitt in China:
- Brand mix: The three largest brands in China are Durex, Dettol and Move Free, which she described as squarely in consumer health, an area where Chinese consumers show high interest.
- Perceived value of Western brands in consumer health: Eisenhardt said Western branding in consumer health carries “authentication,” which she suggested may be different from dynamics in categories such as beauty or personal care.
- E-commerce and live streaming scale: She said about 80% of Reckitt’s China business is e-commerce, up from roughly 20% pre-COVID, and described live streaming as a major channel where the company operates “many, many studios” on a 24/7 basis. She cited a statistic shared at CAGNY that 800 million Chinese consumers are on social commerce each month.
India: steady high single-digit growth, brick-and-mortar execution
In India, Eisenhardt said the market remains “vastly” brick-and-mortar, with success driven by distribution points and day-to-day operational execution. On the question of whether the GST change at the end of September affected demand, she said it created some phasing across quarters but that the company has not seen a “step change” in consumer demand.
She said the company expects India to continue delivering high single-digit growth and highlighted continued expansion of points of distribution, adding that Reckitt’s India sales team includes some of the company’s “very best operators.”
Mature markets: Europe flat categories, North America expected to improve
On mature markets, Eisenhardt said Europe deteriorated through 2025 from category growth of around 3%–4% early in the year to roughly 1% around mid-year, and to “nonexistent” category growth by the end of 2025. For 2026, she said she does not see a catalyst to return to growth and that the company is planning on flat categories in Europe.
She also said heightened promotional activity and value-seeking behavior are making volume growth difficult, citing more frequent shopping trips, smaller baskets, and demand for smaller pack sizes. Reckitt’s focus, she said, is on competitive execution across channels including large grocery, small pharmacy, and discounters.
In North America, Eisenhardt said she expects a stronger contribution to growth in 2026 versus the “flattish” performance in 2025, noting that when seasonal impacts are stripped out, the company saw acceleration over the course of 2025. She said Q1 2026 will likely be tough due to cough-and-cold seasonality and retailer destocking, but she expects strength in the non-seasonal portfolio across the year.
She cited continued growth in Lysol, including “categories we created” such as Lysol Air Sanitizer and Lysol Laundry Sanitizer, as well as strength in wipes. She also noted improvement in VMS in the back half of 2025, pointing to a Neuriva 3D launch. For Finish in the U.S., she described performance as closer to flat but said the category is growing and premiumizing.
Margins, costs, and transformation priorities
On margins, Eisenhardt said the company is not looking to expand gross margins in the core business in the near term, pointing to stepped-up capital investment in supply chain and manufacturing capabilities. She noted 2025 CapEx was 4.2% of net revenue, and said guidance for 2026 is around 4% as the company aims to sustain the investment level.
For Mead Johnson, she indicated a slight gross margin contraction, describing 2025 as having elevated manufacturing volumes as the business restocked the trade following a tornado.
Discussing operating margin, she noted the group exited 2025 at 24.9%, and said that excluding the Essential Home business, the comparable operating margin would be 25.6%. She said the company is working to offset stranded costs from the Essential Home transaction using “Fuel for Growth” savings, but is “not confident” it can fully offset those stranded costs within 2026. She added that the company expects to have more than offset stranded costs by exiting 2027, and said guidance had been changed to target fixed costs below 19% by that point.
Eisenhardt also referenced GBP 25 million in pre-tax income from transitional service agreements with Essential Home covering manufacturing, distribution, and service supply. She did not provide specific guidance on associate income from Reckitt’s 30% stake in Essential Home, saying profitability may look different under new ownership and that investors should consider that Reckitt is a minority shareholder going forward.
On the portfolio, Eisenhardt reiterated that Mead Johnson is non-core and said any transaction timing depends on U.S. litigation, with no new timeline to share. She said the potential transaction would differ from the Essential Home carve-out and could be “faster” and “more straightforward,” adding that Reckitt has seen consistent inbound interest in the business.
She also said Reckitt could be interested in bolt-on M&A, highlighting self-care as an attractive area given its structural economics and under-penetration in emerging markets.
On innovation, Eisenhardt said Reckitt is investing about 2.9% of net revenue in R&D and that the company is seeing benefits from the stepped-up investment. She cited innovations and launches including Lysol Air and Laundry Sanitizer, a new Mucinex 12-hour cold and flu multi-symptom product that she said has been 17 years in development, Dettol “Activ-Botany” variants in China, Neuriva developments, and Durex Intensity in Europe. She said the company is confident its innovation pipeline can sustain 4%–5% top-line growth.
On supply chain, she pointed to the Wilson facility in North Carolina, expected to go live in 2027, as a key investment for U.S. health manufacturing. She said the project would raise the share of product sold in the U.S. that is made in the U.S. from the mid-50s two years ago to above 80%, and would help the company respond more quickly to variable seasonal demand. She also said gross margin expansion could return longer term as manufacturing becomes more reliable and efficient, but framed that as a three-to-four-year horizon.
Finally, Eisenhardt said Fuel for Growth is running ahead of plan due to faster execution, with remaining major opportunities in shared services and GenAI. She described three shared-service hubs already set up and operational and said GenAI work began in marketing in October 2023 before expanding into R&D and supply, with plans to focus on enabling functions such as HR, finance and legal in 2026. She said AI opportunities are expected to support both productivity and faster innovation cycles, contributing to both investment capacity and top-line growth.
About Reckitt Benckiser Group (LON:RKT)
At Reckitt, we protect, heal and nurture. We are the company behind some of the world’s best known and most trusted Health and Hygiene consumer brands.
Delivering for a cleaner, healthier world requires strong brands with a global footprint. From Dettol, Lysol, Durex, Finish, Harpic and Vanish, Mucinex, Nurofen, Gaviscon, Veet and Strepsils, consumers love and rely on our brands to care for their families, as they have done for over 200 years.
We use our scientific expertise and deep human understanding to develop solutions to help people improve their lives – that is why over 30 million Reckitt products are sold each day worldwide.
At Reckitt, we’re all making a real difference to people all over the world, every day.
