Reckitt trims sales outlook and reveals price hikes amid Iran war cost pressures
The London-listed group trimmed its group-wide annual revenue guidance to 3.5%-4.5% like-for-like growth within the core business.
Household goods giant Reckitt Benckiser has cut its annual sales outlook and revealed price hikes across some of its ranges in the face of rising costs from the Iran war.
The London-listed group trimmed its group-wide annual revenue guidance due to slumping sales in North America following disruption to the manufacturing of cleaning product Lysol.
It now expects 3.5% to 4.5% like-for-like growth for its core business this year, down from previous guidance of 4% to 5% growth.
The group behind brands such as Gaviscon and Vanish also said it took “selective pricing actions” across Europe to offset inflation caused by the Middle East conflict, with prices rising by 4% in the three months to September 30.
This helped the firm return to sales growth across the Europe, Australia and New Zealand division despite “subdued” consumer confidence as under-pressure shoppers turned to discount rivals.
It notched up a 0.8% rise in like-for-like sales in the division over the third quarter, though it revealed revenues by volume dropped 3.2%.
Reckitt said: “Consumer confidence across the area remains subdued, with elevated promotional activity and value-seeking behaviour driving share growth for discount retailers which has impacted volumes, particularly in germ protection.”
Reckitt’s sales across North America dropped 1.3% in the third quarter, but it said it expects both Lysol and the wider North American business to rebound during the final three months of the year when temporary manufacturing issues are resolved.
Overall like-for-like sales lifted 3.3% across its core business, with Mead Johnson Nutrition and the disposal of its Essential Home business stripped out.
Kris Licht, chief executive of Reckitt, said: “North America was below our expectations. While consumer demand for Lysol remains strong, temporary manufacturing constraints limited our ability to fully meet demand.”
Shares in FTSE 100 firm Reckitt slumped 6% in morning trading on Tuesday.
Chris Beauchamp, chief market analyst at IG, said: “Investors shouldn’t let the US miss sour them too much on the prospects for Reckitt.
“Growth looks much more broad-based, and with North American trading expected to recover in the fourth quarter, there are still reasons to be optimistic.”
