Published: Fri, April 21, 2017
World | By Paul Elliott

Reckitt's flat sales disappoint as problems persist (RB., ULVR, MJN, UNA)

Reckitt's flat sales disappoint as problems persist (RB., ULVR, MJN, UNA)

Reckitt Benckiser (RBGLY) shares fell sharply in early London trading Friday after the group posted first quarter sales that were largely in-line with expectations and said it was on track to meet full year targets for revenue growth.

While the company maintained its full-year outlook for growth of 3 percent in like-for-like sales, its flat result in the quarter marks the worst performance since the company was formed through a 1999 merger, Sanford C. Berstein analyst Andrew Wood wrote in a note to investors.

The consumer goods giant - which owns brands including Dettol, Airwick and Vanish - reported total revenue of GBP2.64 billion for the first quarter of 2017, up 15% at actual exchange rates.

Reckitt products also include Cillit Bang cleaning goods and painkiller Nurofen. It said the deal is due to complete in the third quarter. Like-for-like sales exclude acquisitions, disposals and currency shifts.

Reckitt Benckiser said its $16.6bn acquisition of U.S. baby formula maker Mead Johnson remained on track to be completed by the end of the third quarter.

Sales in Germany and Italy, for example, were lower than the year-ago period, when it launched the new Scholl "Wet & Dry Express pedi" foot file for hard skin, which failed to catch on.

Chief executive Rakesh Kapoor, who saw his pay slashed by more than a third to £14.6 million past year, said the "results are in line with expectations as macro conditions remain challenging".

Earlier this month, Reckitt confirmed it had begun a strategic review of its food business, which includes French's, the top-selling USA mustard brand.

Reckitt added that its 17.9 billion USA dollar (£14.2 billion) deal to acquire United States baby formula maker Mead Johnson is on track to complete by the end of the third quarter. We have commenced a strategic review of our Food business as we continue our focus on portfolio optimisation.

It intends to adjust for this in its like-for-like net revenue reporting, and said the ongoing impact on profit is expected to be small, but noted the implementation of the tax is likely to cause "some short-term disruption" for the industry and its India business.

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