© Reuters. FILE PHOTO: Lysol, a brand of Reckitt Benckiser Group PLC, is seen on display in a store in Manhattan, New York City, U.S., March 24, 2022. REUTERS/Andrew Kelly/File Photo
By Richa Naidu
LONDON (Reuters) -Consumer goods group Reckitt missed fourth-quarter like-for-like net sales expectations, it said on Wednesday, citing declining sales of cold and flu season products.
The maker of Nurofen pain medication and Dettol cleaning products said it is “confident in the year ahead” and expects like-for-like net revenue growth of 2-4%, with mid-single-digit growth for its health and hygiene portfolios.
Reckitt said quarterly like-for-like net revenue fell 1.2% while analysts in a company-supplied poll had expected 1.6% growth.
“While our performance in the fourth quarter was unsatisfactory, we look to 2024 and beyond with confidence,” CEO Kris Licht said.
The company also said it recently identified “an understatement of trade spend in two Middle Eastern markets related to the fourth quarter and prior quarters of 2023”.
As a result, full year net revenue was 55 million pounds ($69.59 million) lower than previously expected.
Reckitt’s full-year adjusted operating profit was 3.37 billion pounds, down from 3.44 billion pounds.
“Following an investigation, we concluded a small group of employees had acted inappropriately and we are taking necessary disciplinary action,” Reckitt said in its earnings statement. “We are confident this is an isolated incident specific to these two markets and does not impact our 2024 outlook and medium-term goals.”
Sales volumes at Reckitt’s health business, which contributes over 40% of the company’s net revenue, fell 2.2% in the fourth quarter.
“All in all, a weak close to the year,” said Waverton Asset Management portfolio manager Tineke Frikkee. “Volumes were below expectations, price/mix was below consensus and therefore organic growth was a 1.2% decline compared to the expected increase.”
“2024 (sales) forecasts are likely to come down about 4% on these results,” Frikkee added.
Some other consumer companies also disappointed the market this quarter.
Nestle reported full-year organic sales growth below expectations last week as the world’s biggest packaged food company continued to hike prices, prompting some shoppers to turn to competing brands.
“For Reckitt, as for a few other companies in the sector, unvarnished communication will be essential in rebuilding investor confidence,” Bernstein analyst Bruno Monteyne said. “All the talk of product superiority and growing penetration clashes with the numbers.”
($1 = 0.7904 pounds)
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