The manufacturer of Dettol and Lysol cleaning products, Reckitt (RKT.L.), missed third-quarter like-for-like sales targets on Wednesday due to lower volume but said that a 1 billion pound ($1.22 billion) share repurchase program will begin “imminently.”
At 0710 GMT, the FTSE 100 (.FTSE), a blue-chip index of shares traded in London, was down 2.2%, with Reckitt having the worst performance.
Since the COVID-19 epidemic, major consumer goods corporations have significantly increased prices to cover increasing costs, which has increased competition from less expensive products as consumers search for better offers.
Reckitt’s hygiene sector had a fall in volumes despite an increase in its health business. The business’s third-quarter sales volumes were also up against a challenging comparative period from the previous year when Reckitt’s Enfamil products were sold more there due to the recall of infant formula made by a competitor U.S. manufacturer.
The CEO, Kris Licht, who took over on October 1, stated, “It’s not a uniform picture in our portfolio, and health has been very resilient.”
“I’m going to stay away from declaring exactly when we’ll cross over into positive volume territory, but we are very encouraged by the trends we are seeing.”
Reckitt reported that quarterly like-for-like net sales rose 3.4%, falling short of the 3.7% increase analysts had predicted in the company’s survey.
“The third-quarter miss is a bit surprising, as the 15.7% volume decline in third-quarter nutrition is a lot bigger than the 7.1% tough volume comparison they had last year,” Bruno Monteyne, a Bernstein analyst, said.
Rival manufacturers of consumer goods who have increased prices over the previous two years have recently stated that sales volumes may improve. For instance, P&G, a personal care and home goods manufacturer, predicted that volumes would stabilize and gradually increase throughout the rest of the year.
Reckitt’s goods, which include Durex condoms and Nurofen tablets, had an increase in price/mix of 7.5%. Volumes decreased by 4.1% over the previous year. Other than that, Reckitt’s hygiene and health sectors saw a 1.6% fall in volumes. Over the following 12 months, the repurchase program will be implemented.
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