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Reckitt saw sales beat expectations in the third quarter as the consumer giant was boosted by healthcare brands including Durex and Nurofen condoms.
Sales fell 0.5 percent year-on-year to £3.46 billion on a like-for-like basis during the period, taking 2024 revenue growth so far to 0.4 percent to £10, £62 billion.
Health and hygiene sales growth of 3.2 and 2.1 percent respectively during the quarter helped offset a 17.4 percent decline in nutrition sales.
Reckitt shares have been under pressure from legal action in the United States over its Enfamil formula for premature babies.
The sharp drop in sales of nutritional products was the result of a £100 million hit from “supply-related” issues related to the July tornado in Mount Vernon, Indiana, where Reckitt has storage facilities.
However, Reckitt said the impact reflected a “better than expected inventory recovery.”
Health revenue was driven by brands Durex, Dettol, Gaviscon, Nurofen and VMS, while hygiene revenue was boosted by “strong contributions” from Lysol and Finish.
Reckitt warned in July that short-term sales of Mead Johnson’s powdered baby formula would likely be hit after a tornado hit the group’s third-party warehouse.
Boss Kris Licht said: “Our categories are resilient, our brands are strong and we are now seeing a more balanced growth algorithm.”
‘We are on track to meet our 2024 net revenue and profit targets, with increased investment in our most competitive categories and markets, improving market share performance in our health and hygiene portfolios and a normalizing market environment in Nutrition from the USA
“We are making good progress in executing the reshaping of Reckitt by enhancing our portfolio, streamlining the organization and improving returns for shareholders.”
Shares in Reckitt, which have been under pressure from US legal action over its Enfamil formula for premature babies, were up 3.1 per cent in late morning trading at 4,912 pence.
Like its rivals, Reckitt has also faced declining volumes, slower growth and weaker demand amid a difficult consumer environment in many markets.
It has left Reckitt, which continues to defend itself against the allegations, among London-listed stocks considered so undervalued that they have become “easy targets” for foreign takeovers, City analysts have suggested.
The group is in talks about selling its home care assets as part of a strategic restructuring.
Instead, Reckitt plans to focus on its most profitable health products, including Strepsils cough sweets, Nurofen painkillers and Durex.
Adam Vettese, market analyst at eToro, said: “The stock is up 20 percent since falling to decade lows due to legal issues, which is fantastic for any opportunist who has reached that level and sort of long-term relief. term investors, although they are not out of the woods yet.
‘The company says it is on track to meet its full-year targets, which I’m sure shareholders will be happy to hear. However, what they really want to see is an end to the legal problems.’
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