Reckitt Benckiser cuts full-year guidance after ‘slow start to the year’
Consumer goods company Reckitt Benckiser cut its full-year revenue guidance today, blaming poor performance in its health division.
The Nurofen-maker said it was cutting its 2019 net revenue target to plus two-to-three per cent like-for-like growth from a previous target of plus three-to-four per cent.
For the first half the firm posted a like-for-like performance of plus one per cent, which outgoing chief executive Rakesh Kapoor said was “somewhat below our expectations”.
Its health business shrank by one per cent in the first half, which it blamed on a slowdown in China market growth and slower growth from its Dettol and Durex brands.
Kapoor said: “Our like for like performance in H1 was plus one per cent, somewhat below our expectations. Hygiene Home delivered another quarter of consistent top line growth but progress in Health in Q2 was disappointing.”
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Kapoor announced in January that he would step down before the end of 2019 after a tough couple of years which included a major cyber attack that wreaked havoc with its systems and factory disruption at baby formula-maker Mead Johnson, Kapoor’s high profile $17.9bn (£13.91bn) acquisition.
Kapoor said: “On our journey to be a world leader in consumer health, we have work to do to deliver consistent financial performance.
“However, we believe that much of this is behind us and strong plans are in place to restore growth, including an exciting innovation pipeline such as Mucinex Night Relief and Enfa Grass Fed. We are further stepping up our investment in BEI and medical marketing to drive our growth.
“We therefore expect H2 to be back to our more normal level of growth.”
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Net revenue grew one per cent at constant currency to £6.2bn in the first half.
Reported operating profit grew six per cent at constant currency to £1.4bn, but adjusted operating profit fell one per cent at constant currency to £1.47bn.
The company said it faced a less uncertain future as a result of a $1.4bn settlement with the US Department of Justice over the marketing of opioid drug Suboxone by Indivior, which the company owned until 2014.
It also said the appointment of new chief executive Laxman Narasimhan gave a more settled outlook for the future.
Chairman Chris Sinclair said: “We have made good progress during the quarter in reducing uncertainty, with the appointment of Laxman Narasimhan, our new CEO, and drawing a line under Indivior related matters.
“On behalf of the board I would like to thank Rakesh for his outstanding contribution to RB over his 32 years at the company, eight of which were as CEO. During his tenure he has transformed RB from a household cleaning company to a global leader in consumer health. He has lived, and, indeed improved, RB’s values whilst maintaining the culture of entrepreneurship and ownership.
“We still have work to do in restoring growth and outperformance. This is the board’s and Laxman’s key priority. However, the future opportunities created by RB 2.0 have never been more exciting.”