Reckitt Benckiser’s profits fell short of analysts’ expectations last year, despite burgeoning hopes of a turnaround at the consumer goods giant.
The owner of brands like Strepsils, Dettol and Lemsip, saw operating profit slump 4.2% to £2.4m for the year to 31 December, less than analysts’ consensus forecast of £3.3bn.
Total revenue was down 3% to £14.2bn, broadly in line with expectations.
Reckitt Benckiser’s shares hit an 11-year low in July after a tornado ripped through its US supply base, litigation was launched in the US over accusations its Enfamil infant formula was a health risk, and volumes appeared to be struggling after heavy price rises.
But a major turnaround strategy outlined by CEO Kris Licht in the summer has helped it discover some positive momentum with its stock up almost 25% since then.
Volumes appear to be regathering some momentum, with its nutrition and hygiene business both seeing growth in the fourth quarter by 5.3% and 4.4% respectively. Health volumes, by contrast, were down 2.1%.
It now expects like-for-like sales to grow between 2% and 4% in 2025, marginally less than expected, with progress weighted towards the second half of the year.
“We are reshaping Reckitt into a more efficient, world-class consumer health and hygiene company, focused on a portfolio of high-growth, high-margin powerbrands,” said Licht.
Reckitt’s new strategy sees it structured into three divisions: Reckitt, Essential Home and Mead Johnson Nutrition.
The Reckitt segment makes up over 70% of income and is made up of the group’s ‘power brands’. This division saw sales rise 3.7% in the fourth quarter, led mainly by price rises of 3.2% while volumes were up 0.5%.
Essential Home includes Air Wick and Cilit Bang, and is on track to be sold by the end of 2025, Reckitt said this week.
The company is still deciding what to do with its Mead Johnson Nutrition business, which has proved troublesome since it was bought in 2017, in large part due to the issues around Enfamil.
In March last year, a US court awarded $60m to a mother who said her baby died after consuming Enfamil. However, in a separate case later in the year, a judge ruled in Reckitt’s favour.
Further payouts could prove damaging for Reckitt yet it claims “an economic outflow is not considered probable”.
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