Reckitt Benckiser Shares Slide on Disappointing Q4 Sales

The consumer goods stock behind Dettol and Nurofen fell almost 10% as Reckitt missed forecasts

Alliance News 28 February, 2024 | 12:28PM
Facebook Twitter LinkedIn

down arrow graphic

Shares in Reckitt Benckiser (RKT) on Wednesday tumbled after it reported a surprise fall in sales in what the CEO called an "unsatisfactory" fourth quarter.

The stock price slumped 9.8% to £52.67 in London on Wednesday morning.

The consumer goods and hygiene products maker which owns brands such as painkiller Nurofen and disinfectant Dettol said like-for-like sales in the three months to December 31 fell 1.2%, compared to growth of 5.6% in the same quarter a year ago. This was below the market consensus, which had expected growth of 1.8%.

Revenue in the period declined 7.0% to £3.56 billion from £3.83 billion a year ago. For 2023 as a whole, revenue edged up by 1.1% to £14.61 billion from £14.45 billion. This reflected like-for-like sales growth of 3.5% compared to 2022.

Pretax profit fell 25% to £2.40 billion from £3.01 billion and diluted earnings per share from continuing operations slid to 227.4p from 325.7p in 2022.

For the full year, growth was broad-based, and hygiene and health categories grew at 5.1% combined. Nutrition sales declined by 4.0%.

Reckitt revealed that the strong performance in the first three quarters was partially offset by a weaker fourth quarter, where price increases of 3.1% were offset by volumes declines of 4.3%.

Hygiene sales grew 5.3% but health volumes declined by 2.2% and nutrition volumes slipped 14.3%, due to the rebasing of its US business, and category-led volume declines in developing markets. Sales in its hygiene global business unit grew 5.2%, led by Lysol and Finish.

Reckitt's Middle East Market - Spend Was Higher

Reckitt also disclosed 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 performance was £55 million lower than previously expected with an adjusted operating profit impact of £35 million.

The company is however confident this was "an isolated incident" specific to these two markets and does not impact 2024 outlook and medium-term goals.

Looking ahead, Reckitt Benckiser’s CEO Kris Licht says: "While our performance in Q4 was unsatisfactory, we look to 2024 and beyond with confidence.

"We target another year of mid-single-digit growth in health and hygiene, driven by a more balanced contribution from price, mix and volume. We expect nutrition to return to growth late in the year."

Reckitt predicted like-for-like net revenue growth of 2% to 4% for the group, with mid-single-digit growth for the health and hygiene portfolios.

It expects a mid-to high-single-digit decline for the nutrition business. It forecast adjusted operating profit to grow ahead of net revenue growth. Reckitt said revenue and profit growth will be second-half weighted.

Licht also pledges increased cash returns to shareholders, "aiming to double what we returned in 2019".

Reckitt paid a final dividend of 115.9p per share, rising from 110.3p last year, making the total payout 192.5p, 5.0% higher than 2022's 183.3p payment.

Subscribe to Our Newsletters

Sign Up Here

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Facebook Twitter LinkedIn

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Reckitt Benckiser Group PLC4,626.00 GBX-1.07Rating

About Author

Alliance News  provides Morningstar with continuously updating coverage of news affecting listed companies.

© Copyright 2024 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Modern Slavery Statement        Cookie Settings        Disclosures