Reckitt Benckiser: analysts and investors grow sceptical over full-year targets Proactive uses images sourced from Shutterstock
Reckitt Benckiser Group PLC’s (LSE:RKT) first-quarter results have drawn a cautious response from investors and analysts, with a clear miss against expectations and fresh questions over the pace of its recovery.
The consumer goods group reported like-for-like sales growth of 0.6%, around a whole percentage point below consensus forecasts, with core business growth also falling short.
Seasonal cold and flu products were a key drag on the core business, with 1.3% like-for-like core revenues rising to 3.1% if these are excluded, as sales volumes slipped into decline.
UBS said three of Reckitt’s four main categories underperformed expectations, with weakness particularly evident in household and intimate wellness, while Europe and North America both lagged forecasts. Emerging markets remained a relative bright spot but still came in below estimates.
There were some positives. The Mead Johnson nutrition arm declined less than expected, while germ protection brands such as Dettol and Lysol continued to deliver strong growth.
Even so, analysts suggest the broader picture remains fragile.
Russ Mould at AJ Bell said chief executive Kris Licht is “likely to come under greater scrutiny” after the quarterly results.
A weak cold and flu season was acknowledged as having hit sales of Lemsip and Strepsils, with rising energy costs risk squeezing consumers and increasing costs.
“Households watching their pennies could accelerate a trend of people buying cheaper own-label products,” said Mould.
A disposal of the Mead Johnson division could provide a boost, though there is a good possibility that it would be a discounted price due to market uncertainty.
With RB shares down 5.5% to 4,647p on Wednesday, Mould said the muted share price reaction signals “healthy scepticism” over Reckitt’s ability to meet full-year targets.