28th Feb 2024 15:15
(Alliance News) - Reckitt Benckiser Group PLC on Wednesday reported a sales miss which rocked its shares, in a tough start to life as chief executive for Kris Licht.
Shares in the consumer goods and hygiene products maker plunged 13% to 5,098.00 pence each in London on Wednesday afternoon.
The firm, 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 GBP3.56 billion from GBP3.83 billion a year ago.
For 2023 as a whole, revenue edged up by 1.1% to GBP14.61 billion from GBP14.45 billion.
This reflected like-for-like sales growth of 3.5% compared to 2022.
Pretax profit fell 25% to GBP2.40 billion from GBP3.01 billion and diluted earnings per share from continuing operations slid to 227.4 pence from 325.7p in 2022.
"So much for the idea that big brand owners are bulletproof during periods of higher inflation. It's clear from industry trends that cash-strapped consumers have shifted to cheaper alternatives including supermarket own-brand items," AJ Bell analyst Russ Mould commented.
"As the owner of a large portfolio of well-known brands, Reckitt has found life a lot tougher and its latest results suggest its pricing power isn't as strong as some people thought. The idea that it can keep pushing up prices without damaging demand has gone out the window as its fourth quarter numbers are truly miserable. It looks like people are voting with their feet and going for the cheaper option."
Mould continued: "For a company that was once seen as an industry leader, Reckitt has been a big disappointment in recent years and the latest results keep that theme going."
Licht succeeded Nicandro Durante as CEO at the start of October 1. Licht has been chief customer officer and served as president of Reckitt's Health business since July 2020. Prior to this, he was chief transformation officer from November 2019 to July 2020.
interactive investor analyst Keith Bowman commented: "New CEO Kris Licht is at the early stage of a journey to return Reckitt to growth across its businesses.
"For investors, ongoing challenges, particularly at the Nutrition business, remain front and centre. Consumer spending pressures including high borrowing costs are likely behind market share losses at its Health business, with customers trading down to cheaper brands such as those offered by the supermarkets. Costs generally for businesses also remain elevated.
"More favourably, Reckitt is diverse across both business type and geographical region. Investment in product innovation continues, costs remain a focus, while a forecast dividend yield in the region of 3.5% should not to be forgotten.
"For now, and while Reckitt's array of household brand names is clearly attractive, its journey back to consistent growth very much continues, with analyst consensus opinion unlikely to improve from a 'hold'."
By Eric Cunha, Alliance News news editor
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