Britain’s Reckitt Benckiser, the maker of Strepsils throat lozenges and Dettol cleaning products, missed expectations for fourth-quarter like-for-like net sales as a late flu and cold season dented demand for its over-the-counter medicines.
The firm’s shares, however, rebounded after an initial slide, rising as much as 3.5 per cent as it reported lower fixed costs, which analysts said had come through faster than expected.
Reckitt, whose products include Nurofen tablets, cold remedy Lemsip and Durex condoms, forecast full-year like-for-like net sales growth of 2 per cent to 4 per cent, and that it has so far this year seen a boost from sales in emerging markets India and China.
The firm expects low-single digit sales growth in North America in the first quarter of the year, however, as US pharmacies stock fewer products.
“Pharmacies in the US are under some pressure in terms of having less traffic,” CEO Kris Licht told Reuters in an interview. “Other retailers, large retailers that we work with, are doing quite well.”
Reckitt has had a mixed year, with its stock falling sharply early on in 2024 over an internal investigation into its Middle Eastern business and its involvement in litigation surrounding an infant nutrition product made by its US-based Mead Johnson business.
A lawsuit had accused the company of failing to warn of the medical risks of some premature baby formulas, but a jury found in November Mead Johnson was not responsible for a young boy’s debilitating intestinal disease.
The company said in July it was considering options for the nutrition business and that it would offload a portfolio of homecare brands by the end of 2025, planning to refocus on healthcare and hygiene.
Reckitt’s fourth-quarter like-for-like net sales rose 4.6 per cent, behind the 5.3 per cent growth analysts had expected in a company-supplied poll.
The company said sales from its hygiene business rose 5.5 per cent, beating analysts’ estimates of 4.1 per cent growth.
However, Reckitt sold fewer of its seasonal cold products during the quarter, and sales in its health unit rose only 2.4 per cent. Analysts had expected growth of 6.9 per cent.
For the full year to December 31, Reckitt’s operating profit rose 3 per cent to 3.48 billion pounds ($4.49 billion).
- Reporting by Richa Naidu; Editing by David Goodman, Jan Harvey and Tomasz Janowski, of Reuters.
