Reckitt Benckiser cuts FY sales growth forecast
Consumer goods giant Reckitt Benckiser cut its full-year sales growth forecast on Tuesday after a "disappointing" third quarter, amid slowing demand for some of its products in the US and China.
The company said in a third-quarter update that it now expects full-year 2019 net revenue growth to be flat to 2% lower, down from previous guidance of between 2% to 3%. This had already been reduced at the half-year results from 3% to 4% growth.
Reckitt said the downgrade reflects a weak performance from its health business in Q3, "the inherent uncertainties of the season" and associated retailer inventory levels.
Full-year adjusted operating margins are now expected to see a "modest" decline as Reckitt continues to invest in its brands and businesses.
The group posted a 5.3% jump in third-quarter total revenue to £3.3bn, with like-for-like sales growth of 1.6%.
Like-for-like revenue in the health division, which makes up 61% of group net revenue, was down 0.3% during the quarter to £2bn.
Chief executive officer Laxman Narasimhan said the company's performance in the third quarter had been "disappointing".
"Our health business, despite good market growth and stable consumer offtake, delivered a weak net revenue performance. This was primarily due to issues in the US and China. In the US, we saw more cautious retailer seasonal purchasing patterns. In China, Infant Formula and Child Nutrition continues to face challenging market conditions," he said.
"This performance is a reflection of an extended period of significant change and disruption in the company. I am prioritising execution and operational performance as a matter of urgency. I have made it clear within the organisation that any activities that detract focus and attention from improving our operational performance, be paused."