Consumer goods group Reckitt Benckiser reported slower than expected sales due to a weak cold and flu season in the US and supply disruption in the Middle East.
Like-for-like sales edged up 0.6 per cent in the first quarter, Reckitt said Wednesday, short of analyst estimates. Sales of its top brands, including Strepsils lozenges and Dettol cleaning products, rose 1.3 per cent. Analysts had expected 2.8 per cent.
Reckitt had previously warned that slow sales of its over-the-counter drugs like cough medicine Mucinex would spill over into the new financial year, compounding Reckitt’s struggles in Europe due to steep competition and slow spending. Still, the company maintained its full-year guidance.
Shares of Reckitt have plummeted since the outbreak of conflict in the Middle East, and were down 21 per cent this year through Tuesday’s close. The shares fell again on Wednesday on the results, down another 5 per cent to levels not seen since October 2024.
Consumer companies like Reckitt face higher costs due to the Iran war, which has upended global shipping and energy supplies. It has also made consumers more wary of spending amid an uncertain global economy.
Chief executive Kris Licht is trying to overhaul the UK-based company by focusing on its 11 “Core Reckitt” brands, such as Durex condoms, Lysol cleaning products and Mucinex, and offloading underperforming businesses such as the home essentials division which it sold for $4.8 billion (€4.1 billion) in December.
It is still considering options for its litigation-hit baby formula business Mead Johnson, which reportedly attracted interest from Danone in recent weeks.
“While challenging to forecast, if commodity prices remain at significantly elevated levels throughout the year we would anticipate an impact on consumer demand as a result of pressure on household budgets,” Reckitt said in a statement.
Like-for-like revenue growth in its emerging markets, a key growth driver for Reckitt, was 7.6 per cent, also missing average market expectations in the quarter.
Reckitt warned of lower first-half margins, with operating profit now expected to come in around two percentage points below the 24.6 per cent it reported for the same period last year.
Still, the company maintained its full-year 2026 forecasts, assuming no further impact on its emerging markets from the war beyond the first half. – Bloomberg / Reuters
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