Shares in Reckitt Benckiser (LON:RB) have fallen deep into the red in today’s session with the group’s first-quarter sales falling short of analyst expectations. The results follow blue-chip peer Unilever’s (LON:ULVR) update yesterday.
As of 10:28 BST, Reckitt Benckiser’s share price had slumped 6.45 percent to 5,413.00p, weighing on the benchmark FTSE 100 index which currently stands 0.35 percent higher at 7,354.58 points. The group’s shares have lost a little over a quarter of their value over the past year, as compared with about a three-percent rise in the Footsie.
Reckitt Benckiser posts results
Reckitt Benckiser announced in a statement today that its like-for-like sales had grown two percent to £3.11 billion in the first quarter of the year. The Financial Times noted in its coverage of the news that the number was below the 2.6-percent rise forecast by analysts.
“A solid start overall in Q1, operating under our new organisational structure,” Reckitt’s chief executive officer Rakesh Kapoor said in the statement.
The company’s results, however, were dragged down by ‘significant underperformance’ in its Scholl business, which the consumer goods giant said that it was addressing through acceleration of its pipeline, penetration improvement programmes and streamlining its range.
Going forward, Reckitt Benckiser expects to achieve its full-year net revenue target of 13-14 percent total revenue growth at constant rates, which implies like-for-like growth in the range of two-three percent.
Analysts weigh in on update
“In common with several other consumer-staples companies to have reported so far, this year’s earlier Easter doesn’t seem to have helped first-quarter performance – or if it has, the underlying picture is pretty grim,” RBC Capital Markets analyst James Edwardes Jones wrote in a note to investors, as quoted by Bloomberg. Proactive Investors meanwhile quoted Liberum as noting that it expected slow acceleration in organic sales growth in 2018 rising to four percent long-term.
“Management is committed to “moderate” EBIT margin uplift which drives sustainable high single-digit clean EPS growth (constant FX). RB’s split into Health and Hygiene Home divisions creates significant optionality,” the analysts pointed out.