- Shares drop to bottom of FTSE 100
- £1 billion share buyback announced
- Net group revenue £3.6 billion
Shares in consumer goods giant Reckitt Benckiser (RKT) were down more than 7% to £54.97 in morning trading, making them the worst performer in the blue-chip benchmark, as third quarter like-for-like sales missed analysts’ expectations.
The FTSE 100 company behind health and hygiene brands from Durex and Dettol to Air Wick, Nurofen and Gaviscon, reported like-for-like revenue growth of 3.4% to £3.6 billion, undershooting the consensus forecast of 3.7%.
The sell-off came despite the firm announcing a £1 billion share buyback programme which would start ‘imminently’.
ON TRACK FOR FULL YEAR TARGETS
Chief executive Kris Licht was quick to reassure investors the group was on track to deliver for full year targets for 2023 ‘despite some tough prior year comparatives’ which the company still faces in its US nutrition business.
While Hygiene sales were up 8.1% and Health sales rose 5.4%, Nutrition revenue fell 11.9% on a like-for-like basis in the third quarter.
Why Reckitt Benckiser shares fell 2.4% despite forecast-beating sales
Licht also unveiled a strategy update designed to assure investors the firm was focused on raising productivity and margins not just revenue.
‘We see a clear runway for sustainable growth, with superior gross margins, and we will extend our productivity programme to focus on fixed costs to fuel both growth and earnings. We are well positioned to grow adjusted operating profit ahead of net revenue in the medium term.’
EXPERT VIEW
Tom Gilbey, equity analyst at Quilter Cheviot, commented: ‘The newly appointed CEO, Kris Licht, has a clear vision for the future, emphasising a 3-5% revenue growth strategy and an intent to increase profits at an even faster rate. The announcement of a £1 billion stock buyback program further underlines the company's confidence in its own value.
‘At its core, Reckitt is a global powerhouse in the household and healthcare product market. Brands like Dettol, Lysol, and Nurofen are household names, and its increasing focus on consumer health with brands such as Mucinex and Gaviscon showcases its adaptability.’
LEARN MORE ABOUT RECKITT BENCKISER
