Durex maker reports flat like-for-like sales in Q1

British consumer goods maker Reckitt Benckiser reported flat like-for-like sales for the first quarter that missed analysts' estimates, hurt by the ongoing fallout from weak markets in Europe and North America, a South Korean safety scandal and a failed new Scholl product.

Still, the maker of Durex condoms, Lysol spray and Nurofen tablets said sales should improve over the course of the year, and stood by its target for full-year sales growth of 3 per cent.

Excluding the impact of currency fluctuations, acquisitions and disposals, Reckitt said first-quarter sales were flat, as increases in developing markets and in the hygiene business were not enough to offset declines in Europe and in the home products business.

Analysts on average were expecting growth of 1 per cent, according to a consensus compiled by the company. Of the seven large consumer packaged goods makers that reported results this week, including Nestle and Unilever, this is the first to miss expectations, said RBC Capital Markets analyst James Edwardes Jones. “Not a disastrous miss . . . but nonetheless things don’t seem to be getting much easier for RB,” Jones said in a note.

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On a reported basis, sales rose 15 per cent to £2.64 billion (€3.15 billion). Reckitt Benckiser’s business in South Korea has collapsed over its handling of a safety scandal in which it is said that 92 people were believed to have died from lung injuries related to humidifier sterilizers it once sold there.

Last year, sales were boosted by the launch of the “Wet & Dry Express pedi” footcare product that subsequently flopped.

In recent years, Reckitt has pursued deals that have taken it deeper into the market for consumer health products, which are getting a worldwide boost from ageing populations, urbanisation and growing interest in health and wellbeing. The $16.6 billion acquisition of baby formula maker Mead Johnson, announced in February, is progressing well, the company said, and should be completed by the end of the third quarter.

It said it would explore a range of options for its food business, which centres on French’s mustard and Frank’s RedHot sauce in North America, before reaching any decision and would update the market when appropriate.

The company confirmed earlier this month that it was reviewing strategic options for the business it called “non-core” as it looks to pay down debt from the Mead Johnson deal.

-(Reuters)