Reckitt Surpasses Sales Forecasts, Reaffirms Annual Outlook
Reckitt, a leading consumer goods company, has exceeded market expectations with a 1.5% like-for-like sales increase in the first quarter. This performance is a positive indicator as the company aims to achieve full-year net revenue growth between 2% and 4%, with particular strength expected from its health and hygiene portfolios. Despite the overall increase, there was a noted 0.5% decrease in volumes, with the hygiene segment posting a robust 7.1% growth and the health division growing by 1.0%.
The company's nutrition business, however, experienced a 9.9% decline in sales, attributed to a normalization of market share following a temporary boost from competitor Abbott Laboratories' recall issues. This decrease reflects the comparison to the prior year's heightened demand for baby formula in the US market. Despite this setback, Reckitt maintains its full-year guidance, with an emphasis on mid-single-digit growth in key business units.
Shares of Reckitt rose by 5%, reflecting investor confidence in the company's performance and its ongoing £1.0 billion share buyback program. However, shares remain down by about a quarter since February, partly due to a recent court verdict involving the company's baby formula product, Enfamil. Reckitt plans to appeal the verdict, which awarded $60 million in damages over claims linked to the death of an infant.
CEO Kris Licht commented on the company's progress, highlighting a return to growth not solely driven by inflationary price increases but also by a balanced contribution from price, mix, and volume. The first-quarter volume rise of 2.9% and a 2% increase in the price/mix ratio are indicative of this trend. The company's strategy appears to focus on innovation and premium product offerings to drive future growth.
