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By Richa Naidu
LONDON (Reuters) - Some investors fear Reckitt may be forced to raise its prices in the United States or face higher costs as its low manufacturing capacity there compared to some rivals leaves the company more exposed to new U.S. tariffs on imports from Mexico.
Reckitt, which makes Lysol cleaning products and Durex condoms, has five factories in the United States. It told Reuters in early March that it manufactures about 57% of its U.S. sales volumes locally, with the other 43% coming from places including Mexico and Southeast Asia.
"We, of course, have been paying attention to what's happening with the topic of tariffs," Reckitt CEO Kris Licht said. "It's very difficult to say at this moment, what actually will be the tariffs that we will be operating with."
Licht said Reckitt, whose major rivals in the U.S. consumer goods market include Haleon and Unilever, had not yet discussed the new levies with U.S. President Donald Trump's administration.
Trump imposed new 25% tariffs on imports from Mexico and Canada in early March, along with new duties on Chinese goods.
The threat of levies on foreign imports has dominated corporate America's discussions this year, and major retailers such as Target and Best Buy have said they expect tariffs to increase prices, hurting already cautious consumers.
Some companies have taken a wait-and-see approach on investments and strategies to mitigate damage as Trump has altered his plans for tariffs several times since re-taking office.
Licht said Reckitt, whose products also include Mucinex cold and flu medication, imports some over-the-counter products from Mexico and some condoms from Southeast Asia. He added that he hoped healthcare products would not be subject to tariffs. North America accounts for about 32% of Reckitt's total revenue.
"We're just going to see what's happening here. It's very dynamic and in the meantime, we've been making investments in our American supply chain," Licht said, noting that Reckitt does not import products from Canada and ships in very little from China.
In December, Reckitt said it had acquired a pharmaceutical site in Wilson, North Carolina, to produce Mucinex tablets and liquids. Licht told Reuters, however, that these plans had been in place prior to the tariff announcement.
When the North Carolina factory comes online in 2027, the percentage of sales manufactured locally could rise to 75%, Reckitt said.
Consumer companies have been forced in recent years to choose between protecting margins and salvaging sales volumes that were battered during a global cost-of-living crisis following COVID-19 and Russia's invasion of Ukraine.