Reckitt Benckiser Q3 sales miss estimates

Consumer goods giant Reckitt Benckiser posted a 2% increase in third-quarter like-for-like revenue on Tuesday as it reiterated its 2018 target for revenue growth.

Sales in the third quarter were boosted by the company's health and hygiene home businesses, which saw growth of 4% on a life-for-like basis against a backdrop of "mixed" market conditions. Analysts had been expecting total LFL sales growth of 4%.

Total growth was hit by a 2% drop, or £70m, caused by a temporary manufacturing disruption at its European Infant Formula and Child Nutrition (IFCN) plant. As a result, the IFCN business delivered an organic sales decline of 6% compared with company-compiled consensus expectations of a 5% rise.

Reckitt said the disruption - which occurred during a period of unusually high market growth and before its new facilities in Australia were operational and able to diversify its supply chain - affected sales to a number of markets. It was resolved and supply was restored before the end of the quarter, but the group does expect some residual impact in the fourth quarter and into next year.

Reckitt said its IFCN business delivered a strong performance in North America, with the launch of its recent innovation, Enfamil NeuroPro, and progress in new channels. In addition, the company said it remains firmly on track to deliver the medium-term targets its communicated at the time of the MJN acquisition.

Chief executive officer Rakesh Kapoor said: "We have sufficient momentum and progress in our business to absorb this temporary manufacturing disruption. We therefore reiterate our 2018 target of +14-15% total net revenue growth at constant rates."

Steve Clayton, manager of the HL Select funds, which have positions in Reckitt, said: "RB have had an unfortunate run of events recently. First there was the Korean sanitiser tragedy, which is still ongoing, then there was the disruption caused by last year’s cyber-attack.

"This latest issue is clearly of RB’s own making and the company will need to convince investors that they have fixed this and that there is nothing else on the horizon. Elsewhere, the rest of the group looks to be performing to plan and the long term attractions of the stock are strong."

At 0830 GMT, the shares were down 4.7% to 6,300p.