Reckitt hit by Middle Eastern accounting debacle as shares suffer

dettol manufacturer Reckitt saw last year’s revenues come in around £55m less than expected due to a discrepancy in financial reporting in the Middle East.

It said compliance procedures found “an understatement” of business expenses for the fourth quarter and preceding quarters of 2023. These have hit the company’s adjusted profits to the tune of around £35 million.

The company told investors that an investigation had found that “a small group of employees had acted inappropriately” and that Reckitt is “taking appropriate disciplinary action.”

He added: “We are confident that this is an isolated incident, specific to these two markets and that it will not affect our outlook for 2024 or our medium-term objectives.”

reckitt stock They were down 11.68 per cent or 682.00 pence to 5,156.00 pence on Wednesday, having fallen more than 10 per cent in the last year.

The group revealed an “unsatisfactory” decline in sales during the latest quarter and pointed to more modest growth last year.

Reckitt said comparable net income fell 1.2 per cent during the final quarter of 2023, and overall net income fell 7 per cent to £3.56 billion.

This included a 2 percent drop in its healthcare division, which was affected by the ‘Phases and Shape of Cold and Flu Season’, while comparable nutrition volumes fell 14.8 percent.

russian mold, AJ Bell’s chief investment officer: ‘So much for the idea that big brand owners are bulletproof during periods of higher inflation. It is clear from industry trends that cash-strapped consumers have turned to cheaper alternatives, including supermarket own-brand items.

‘As the owner of a large portfolio of well-known brands, Reckitt has found life much more difficult and its latest results suggest that its pricing power is not as strong as some people thought.

‘The idea that you can keep raising prices without hurting demand has gone out the window as the fourth quarter numbers are really miserable. It seems like people are voting with their feet and opting for the cheapest option.

Reckitt said full-year like-for-like revenue rose, on a like-for-like basis, 3.5 per cent to £14.6 billion in 2023, driven by increases in its hygiene and health arms.

Operating profits for the full year fell 22 per cent to £2.5 billion.

The group said it now expects to achieve comparable revenue growth of 2 to 4 percent next year.

Kris Licht, CEO of Reckitt, said: “While our performance in the fourth quarter was unsatisfactory, we look to 2024 and beyond with confidence.”

“We are targeting another year of mid-single-digit growth in Health & Hygiene, driven by a more balanced contribution from price, mix and volume.”

AJ Bell’s Mr Mold added: “For a company once seen as an industry leader, Reckitt has been a huge disappointment in recent years and the latest results continue that theme.”