28th Feb 2024 08:42
(Alliance News) - Shares in Reckitt Benckiser Group PLC on Wednesday tumbled after it reported a surprise fall in sales after an "unsatisfactory" fourth quarter.
Shares in Reckitt slumped 9.8% to 5,267.99 pence 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 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.
Reckitt said for the full year, growth was broad-based, with mid-single-digit growth across Hygiene and Health at 5.1% combined. Nutrition sales declined by 4.0%.
But Reckitt said the strong performance in the first three quarters was partially offset by a weaker fourth quarter.
In the fourth quarter, 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.
Reckitt said sales in its Hygiene global business unit grew 5.2%, led by Lysol and Finish.
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 GBP55 million lower than previously expected with an adjusted operating profit impact of GBP35 million.
Reckitt said it was confident this was "an isolated incident" specific to these two markets and does not impact 2024 outlook and medium-term goals.
Looking ahead, Chief Executive Kris Licht said: "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 pledged 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.
By Jeremy Cutler, Alliance News reporter
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