- The consumer goods seller owns cleaning fluid brands Cillit Bang and Dettol
- It said like-for-like sales rose by 3.4% for the three months ending September
- Revenue growth was tempered by infant formula demand slumping in the US
Reckitt Benckiser has announced a £1billion share buyback programme, despite third-quarter revenues failing to meet expectations.
The consumer goods seller, which owns cleaning fluid brands Dettol and Cillit Bang, posted like-for-like turnover growth of 3.4 per cent for the three months ending September, below analyst forecasts of 3.7 per cent.
Sales growth was driven by price hikes, partly in response to worsening inflationary pressures, across all its core divisions and territories.
Below expectations: Dettol owner Reckitt Benckiser said like-for-like turnover increased by 3.4 per cent for the three months ending September, below analyst forecasts of 3.7 per cent
However, it was tempered by infant formula demand slumping in the US following a bumper comparative performance last year.
A major American formula maker, Abbott Laboratories, had to temporarily shut down its Michigan facility in 2022 due to flooding and the discovery of bacteria, causing a nationwide shortage of formula in America.
To try and alleviate the problem, Reckitt was allowed by US regulators to ship its formula products from manufacturing plants in Mexico and Singapore.
Supply issues have since improved, causing a drop in the firm’s market share and like-for-like sales in its nutrition business to plunge by 11.9 per cent in the third quarter.
This was offset by solid growth in Reckitt’s health and hygiene divisions, where revenues expanded by 6.7 per cent on a combined basis.
Trading in the former segment was boosted by orders for over-the-counter medicine across Europe and developing markets, while the latter benefited from rising sales of Lysol and Finish cleaning products.
Because of adverse currency fluctuations, the Slough-based group’s reported sales still slipped 3.6 per cent lower to £3.6billion.
On a year-to-date basis, though, total revenue increased by 4 per cent to just over £11billion as price hikes made up for weaker volumes.
Following the result, Reckitt declared that a £1billion share repurchase to take place over the next 12 months will begin ‘imminently’.
The firm also continues to aim for like-for-like net revenue growth of 3 to 5 per cent this year and adjusted operating margins that are ‘slightly above’ 2022 levels.
Kris Licht, Reckitt’s newly-appointed chief executive, said the company was ‘well positioned to deliver sustainable and leading total shareholder returns’ due to its solid cashflow levels and balance sheet.
Licht ascended to the top position at the start of October, taking over from Nicandro Durante, who had been interim CEO since September 2022 after former boss Laxman Narasimhan decided to relocate back to the US.
Danni Hewson, head of financial analysis at AJ Bell, said: ‘Licht has a job on his hands to demonstrate Reckitt can continue to thrive in a tough consumer environment.
‘Having stuck with full-year targets, he will be under significant pressure to achieve them when he unveils the 2023 results next year.’
Reckitt Benckiser shares slid 5.3 per cent to £57.38 just before midday, making them the second-biggest faller on the FTSE 100 Index.