- Q1 like-for-like sales disappoint
- Essential Home sale may be delayed
- Full-year guidance reiterated
Reckitt Benckiser (RKT) shares fell 4.7% after the consumer and household goods giant missed first-quarter like-for-like sales growth estimates.
The maker of Dettol and Lysol cleaning products also said ‘challenging’ market conditions may impact its plans to exit the non-core Essential Home division in 2025.
The shares are down 3.4% year to date compared with a 2.5% advance for the FTSE 100 index.
MISSED ESTIMATES
First quarter like-for-like sales growth of 1.1% fell short of consensus estimates which called for 1.4% growth. Group price/mix increased 3% while volumes fell 1.9%, compared with expectations for price/mix to rise by 1.3% and volumes to be flat.
Despite taking market share in Europe, like-for-like sales fell 1.7% as price/mix increased 3% and volumes fell by 4.7%.
North America also delivered share gains but a drop in consumer confidence led to a fall in prices and volumes, leaving like-for-like net sales down 0.9%.
Reckitt continued to see strong growth in emerging markets which registered 10.7% like-for-like net revenue growth including double-digit growth in China, and high single-digit growth in India.
Core Reckitt delivered net revenue growth of 3.1% driven by the Germ Protection and Intimate Wellness divisions.
REITERATED OUTLOOK
Looking ahead, the company maintained its full-year outlook which calls for 2% to 4% growth in net revenue and 3% to 4% like-for-like net revenue growth in Core Reckitt.
Russ Mould, investment director at AJ Bell, commented: ‘While the company is sticking with its full-year guidance, investors may prove sceptical of its ability to deliver, given household spending in one of its largest markets was already under pressure even before the impact of the current US trade policy had been felt.
‘The risk for Reckitt is people trade down to less expensive supermarket own-label products and it makes sense in this context that the group is prioritising its strongest brands.
‘The robust performance of its Core Reckitt portfolio – particularly compared with the Essential Home basket which it is looking to offload in 2025 – suggests it has got the focus right.’
Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author (Martin Gamble) and the editor (James Crux) own shares in AJ Bell.
