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Reckitt Benckiser’s sales growth reversed last quarter as purchases of cold and flu medication as well as infant formula all dropped, sending shares in the group down as much as 10 per cent in early trading.
The maker of Dettol disinfectant, Durex condoms and Nurofen said on Wednesday that like-for-like sales fell 1.2 per cent in the final quarter, short of the 1.6 per cent growth expected by analysts.
Chief executive Kris Licht called the company’s fourth-quarter performance “unsatisfactory”.
Sales volumes at its nutrition business dropped 14.3 per cent in the three months to December, falling from highs touched in the same period in the previous year when Reckitt benefited from an infant formula shortage in the US.
Its health division suffered from an earlier cold and flu season, causing revenues to drop 2 per cent in the quarter.
Analysts at BernsteinAlliance said: “Reckitt can’t be blamed for the turbulence in its categories, but trying to filter out those impacts, we can’t help but see steady volume declines in hygiene and nutrition.”
Shares in Reckitt were down 8 per cent in early trading.
The quarter was also blighted by a £55mn hit to annual revenues stemming from a compliance issue in two of its Middle Eastern markets discovered late in the period.
The company said it was a case of a small group of employees under-recording liabilities, but “there was no indication of any issues in terms of financial irregularities”, Licht told reporters on Wednesday.
He insisted it was “an isolated issue” and a small part of overall sales. “We’ve dealt with the employees involved and it doesn’t affect our outlook for 2024,” he added. “It’s been correctly recorded in Q4 and we move on.”
“The restatement for unrecognition of trade spending . . . will not help confidence in controls at [the] group given historic similar issues as well,” analysts at Jefferies said.
Licht, who unveiled a new strategy in October, was bullish about its prospects in the year ahead, with the company expecting like-for-like net revenue growth of between 2 per cent and 4 per cent.
